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Thursday
May092019

Hospitality Tax Would Help Council in Budgeting for FY 2019-20

By Greg Wilson/Anderson Observer

It's time for another reminder of the county to revist one of its greatest needs, and it's up to citizens to contact their representative and demand new consideration for a two-percent hospitality tax in unincorporated ares of Anderson County.

A hospitality tax in the unicorporated areas continues to be long overdue. It's been close to passing council on two occasions, only to fail at the last minute. Then the measure was put to an ill-advised and ill-fated "advisory referendum" in November, which though non-binding has kept the issue off council's agenda. But as Anderson County Council looks to a new budget year, funding for parks and recreation remain elusive without the tax.

Reasons for the opposition continues to be vague and generally obfuscate the facts surrounding what the hospitality tax is and how it will be used.

In 2018, Spartanburg County’s two percent hospitality tax generated $4.7 million for recreation and tourism. In the City of Anderson, the tax put almost $2.5 million on the books. 

Meanwhile, Anderson County’s unincorporated areas, which include, month other areas, the restaurants at Exit 19 off I-85 and Powdersville are without the tax, even almost of the county’s municipalities and townships already have the tax in place and are reaping the benefits.

This two-percent hospitality tax on prepared food sold in those unincorporated areas of Anderson County would generate more than $3 million per year for recreation and tourism.

Here, once again, are the facts:

On social media and elsewhere, the issue is being clouded by both misunderstanding and misinformation on the funds and how they can be used. 

Funds cannot be used for roads (with exceptions), schools or other infrastructure (not related to tourism/recreation) needs in the county. State law restricts use of such funds to recreation opportunities and facilities.

Here’s the South Carolina statute on how the funds may be used: 

“The revenue generated by the hospitality tax must be used exclusively for the following purposes:

(1) tourism-related buildings including, but not limited to, civic centers, coliseums, and aquariums;

(2) tourism-related cultural, recreational, or historic facilities;

(3) beach access and renourishment;

(4) highways, roads, streets, and bridges providing access to tourist destinations;

(5) advertisements and promotions related to tourism development; or

(6) water and sewer infrastructure to serve tourism-related demand. 

A master plan for recreation created 10 years ago, found that $10 million was needed to upgrade the 37 parks the county helps maintain. (The number of active parks is really smaller, with some parks such as Morningside Park shut down, a few being little more than small boat ramps and others lying in wait of funding) Sadly, the study came out just as the national economy took a severe downturn, and no money was available to act on the study. The 2018 study did no include Green Pond Landing or most of the work done at the Brown Road Boat Ramp/Fishing Dock. 

Opposition to tax has been primarily expressed in the following ways:

  • “Recreation in the county should be left to the private sector.” None of our neighboring counties see it that way, and neither do the companies from around the world looking for a place to locate or relocate - something essential to Anderson County since we have more international business than any other county in the state, 51 firms from 23 countries have brought good, high-paying jobs, helping us survive and pull out of the Depression of 2008. Even domestic companies rate recreation activities as very high on their punch list when choosing a location. 
  • “We want to know exactly how the money is going to be spent before we vote for the tax.” The study currently under way will answer this objection.
  • “We need to more funds roads, schools, etc.” The bulk of all county tax payer dollars goes to schools already. There is a great need for money for roads, but hospitality tax revenue cannot be used for this unless it is paving roads directly related to recreation and tourism (there will be some of these). A countywide annual $25 vehicle tax has been repeated proposed to pay for road maintenance and construction, one which would completely cover the costs. That is not part of this discussion.
  • “We should review what we are already spending on recreation and tourism and find ways to fund everything.” That review has been done, and short of raising money through taxation of landowners, the funds are simply not there. Moving them around won’t solve the deficit. 
  • “We already pay too much in taxes.” This is an emotional response lacking substance based on the facts. County taxes have seen almost no increase for taxpayers over the past 10 years due to substantial success by the county’s department of economic development, the administrator and county council.

Misinformation, due to lack of education on the topic (a fact sheet should have already been released officially by Anderson County explaining much of what is being explained here), is also still floating around from the last attempt to pass the hospitality tax in 2016.  

The tax will not:

  • Raise rates to four percent anywhere. It will not be added to the two percent already being charged in most incorporated areas, but will only be in effect in places not already covered by the tax. The move would simply put the unincorporated areas of the county in line with all other restaurants. 
  • Be some sort of slush fund for council. This is ludicrous. The tax has been discussed for years in open council meetings, and the current proposal complies with all laws and rules, with complete transparency, voted upon in open meetings.
  • Negatively mpact business in local restaurants. None of the restaurants which I talked to, more than two dozen at last count, which already have the hospitality tax have seen any decline in business.  Hamid Mohsseni, who owns both Carson’s Steakhouse and Tucker’s - one of which is in the city and one in the county’s unincorporated areas even though their parking lots are adjacent - said in 2016 he hasn’t seen any difference in business between the two, even though one currently has the tax and the other does not.
  • Be a burden on those with fixed incomes. Any argument saying the tax would be a burden on consumers is a little silly. It is hard to imagine anyone who can afford to dine out being unable to pay an extra two cents on every dollar spent on food. A $50 bill would bring an extra charge of only $1. In addition, more than half of the areas impacted by the new tax are places frequented largely by those who don’t live in the county. (see below for more on this information).

Why we need a hospitality tax in unincorporated areas of Anderson. County:

Anderson is already behind our neighboring counties in our approach to recreation, and it is time to catch up. The county’s recreation is currently largely the efforts of 18 non-profit groups in Anderson. The county does have facilities, the civic center, for example. But it is these local groups which fill the fields with sporting events and tournaments, putting us well behind Greenville and Spartanburg, which fund recreation through a combination of general revenue from property taxes and hospitality taxes. 

The civic center would be one of the biggest winners of the hospitality tax, but the funds generated will save property owners money long-term. Why? Because as the civic center ages and the population grows, the facilities there are going to require funding, and that money will have to come from either raising taxes on property owners or the proposed hospitality tax. I vote for the money to be generated through two cents on the dollar spent eating out rather than by raising taxes, especially when more than 60 percent of the revenue is being paid by visitors to this county. A 2010 study counting out-of-state license plates at Cracker Barrel at Exit 19 found that 72 percent of the cars entering the parking lot were from someplace other than South Carolina. A recent count at Outback on a Saturday night found that 50 percent of the cars in the parking lot were from states other than South Carolina. While this kind of study is not worthy of academic review, owners of many of the restaurants near the interstate suggest many of their customers are from other states. No matter the exact number, a significant amount of funding for recreation and tourism in Anderson County would be paid for by visitors under the hospitality tax. 

The hospitality tax is about economic development. The hospitality tax is really about economic development. Without a vision for the future of recreation in the county, there will be trouble ahead attracting the kind of new investment we want here. Hartwell Lake is an amazing resource, but one the county has only managed to take advantage in any meaningful way through federal settlement money. Green Pond’s Phase One has been a good start, but there is more to be done, and no money to do it. Roughly 90 percent of the work at Green Pond to date has been through PCB settlement money and grants. Many of our parks are in poor shape, and only three are Americans with Disabilities Act compliant (which is now law, not a suggestion). It cannot be denied that both Greenville and Spartanburg counties are aggressively marketing their recreation opportunities in economic development, especially to international firms. Two pennies on the dollar dining out could completely revolutionize our ability to compete. In less than a decade we could make our recreation and tourism opportunities a talking point, and not a sore spot, when it comes to recruiting new industry and bringing more good jobs to Anderson County.  

Local recreation needs are growing. The Powdersville area, like the county as a whole, has grown exponentially, too rapidly to keep up with the needs of the population in many areas - including recreation. As an unincorporated area, they have no other way to generate revenue. These residents deserve better, as do all the residents of Anderson County when it comes to improving and continuing to improve the quality of life here. Recreation is a key component of this quality of life. As growth continues, a hospitality tax will likely generate far more than $3 million, well above the county’s very conservative estimates, based on how much per capita the hospitality tax has generated for municipalities and townships in the other parts of the county. If there is a flaw in the county’s proposal, it’s that they are underestimating how much this new hospitality tax can accomplish both immediately and in the future. 

There are no downsides to a hospitality tax for Anderson County’s unincorporated areas. It is a crucial move for the future of economic development and for the quality of life of our citizens.

Many of the same opponents to this tax opposed the East-West Parkway, something most of them probably use every day. Anderson has a long history of missing or delaying progress due to lack of visionary leadership who thinks beyond the current fiscal quarter and seeks the path of long term financial and other investments/benefits for our citizens. The hospitality tax offers a way to help fund this future without adding to the tax burden of property owners.  

Economic development, an improved quality of life for all citizens and keeping property taxes in check; all point to the wisdom of approving the hospitality tax for unincorporated areas of Anderson County ballot in November. 

Unless those who oppose this tax can put forth a specific plan to accomplish the same goals, and so far no one has, all the meetings and opinions in the county expressing opposition are not worth much.

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