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North Myrtle Beach City Hall. Photo by Ruben Lowman

North Myrtle Beach experiences a large drop in revenue during COVID-19 times

By Ruben Lowman

The city of North Myrtle Beach has taken a huge hit to its revenues, over $2 million, since March when the COVID-19 pandemic outbreak first forced government officials all over the country to move into various states of lockdown and implement strict regulations designed to safeguard public health and safety. 

A major source of the city’s funds comes directly from accommodations and hospitality tax revenues, both of which are highly dependent on visitors coming and spending their money here. The city recently disclosed detailed data for the A-Tax and hospitality tax revenues they have brought in this year and how it compares to last year’s numbers.   

Pre-COVID-19, North Myrtle Beach was actually set for what was projected to be a record year. During the months of January and February the city took in roughly $43,000 more in accommodations taxes, which is about a 13 percent increase, than in 2019. Similarly, the hospitality taxes brought in by the city saw a jump of $32,000 or about eight percent more than last year.       

In mid-March businesses and municipal buildings were shuttered temporarily in order to prevent the spread of the coronavirus, “social distancing” became commonplace in our daily vernacular and behavior, and hand sanitizer became a ubiquitous presence. 

At the same time, officials began to see the first inklings of the heavy toll on the city’s coffers that what would soon become the reality they would be forced to act upon. March saw the city take in $5,552 less, or about a six percent drop-off, in accommodations taxes, but managed to make $9,378 more, or just over a two-percent rise, from hospitality taxes derived from food and amusements.   

For the Grand Strand, with nearly the entire economy dependent on tourism, closing stores and the beach as Gov. Henry McMaster initially did through executive order, meant a sharp downturn in the economic reality and outlook of both municipalities and businesses. 

That downturn would be felt most acutely during the lockdown in April and May and continued even after the governor allowed beaches and certain businesses to reopen under strict guidelines to protect public safety. In accommodations taxes, North Myrtle Beach generated nearly $194,000 less in April, or a 48 percent reduction, and over $343,000 less in May, an 88 percent drop-off from last year. In hospitality taxes, the city experienced a loss of over $162,000 in April, a 47 percent decrease, and nearly $438,000 in May, a loss of over 70 percent from 2019’s numbers. 

Altogether, the city brought in well over a million dollars less than they did the year before, just during those two months.  

As officials scrambled to try and mitigate the effect COVID-19 had on public safety, they also had to devise a way to deal with the major loss of revenue they were beginning to see. 

North Myrtle Beach’s City Council passed several emergency ordinances that dealt with the different aspects of the initial impact the pandemic was having at the time. They altered the city’s budget after several deliberations, culminating with over $30 million in projects halted for the time being, with no set date to resume them. 

These included a multi-phased expansion of the Park & Sports Complex, the construction of an Emergency Operations Center and Data Center, the placement of the 18th Avenue North Ocean Outfall and several smaller drainage and stormwater projects, and freezing 41 full-time vacant and proposed job openings within the city. 

North Myrtle Beach spokesperson Pat Dowling said these decisions that were made decisively by city officials have helped to cushion the loss of revenue the city has experienced and weather the storm until after the veil of coronavirus is lifted. As a result, Dowling said that residents and tourists do not have to worry about the reduction in revenue affecting how the city functions or operates going forward.  

“Through employee furloughs early in the pandemic, and with adjustments to the city’s FY 2021 Budget, we were able to generally absorb the revenue hit caused by COVID-19 having impacted the tourism industry so negatively,” Dowling said. “We have employee positions open and projects on the sidelines but at this point nothing critical that would affect the provision of services to taxpayers and visitors.”

Dowling also said that it was not necessary to shelve any other projects the city is undertaking at this time. “Currently, we are able to undertake all remaining projects, and we do not at this time anticipate having to sideline additional projects,” he said. 

Eventually, everyone began to adjust to the “new normal” and acclimate to the safety precautions, like washing or sanitizing our hands constantly, wearing a facial covering whenever we go out in public around people and maintaining social distancing throughout our daily lives. 

As the new city ordinances set in and people started getting used to the new normal way of life, tourists began to return to the area in smaller numbers than usual, helping the revenue streams local municipalities depend on to somewhat rebound. 

During the summer months of June, July and August, typically the busiest time of year on the Grand Strand, North Myrtle Beach continued to generate far less than 2019 but the percentage lost stabilized to around a 20 percent reduction. The A-Tax numbers show $104,476 less for June, $99,975 less in July and $179,190 less in August. The hospitality tax saw an $82,525 reduction for June, $311,753 less in July and $268,600 less brought in versus last summer. 

Altogether, the city lost over another million dollars in revenue during the summer months compared to last year, but stemmed the tide to keep the losses right around 20 percent each month. For September, the most recent month they have data for, North Myrtle Beach saw a $168,031 reduction in the accommodations tax revenues and a $247,706 reduction in the hospitality tax revenues based on the figures for 2019. 

Dowling reiterated that any loss in revenue from those two tax sources would not be met with an increase in the rates. “Accommodations Tax and Hospitality Tax rates are limited by law, so the city would not increase those taxes,” he stated.

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