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COMMITTEE REPORT
January 26, 2005
S. 27
S. Printed 1/26/05--S.
Read the first time January 11, 2005.
To whom was referred a Bill (S. 27) to amend Section 6-4-35 of the 1976 code, relating to the Tourism Expenditure Review Committee's determination of noncompliant expenditure of accommodations tax revenue, to establish a procedure, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass:
HUGH K. LEATHERMAN, SR. for Committee.
REVENUE IMPACT 1/
This bill has no impact on state or local general fund revenue in FY2005-06.
Explanation
This bill would amend Section 6-4-35 of the Code of Laws of South Carolina to allow a municipality or county to avoid future withholding of accommodations tax revenue for spending accommodations tax revenue on non-tourism related items and projects. Currently, municipalities and counties are required to file an expenditure report with the Tourism Expenditure Review Committee (Committee) within the Department of Revenue pursuant to Section 6-4-25(D)(3). The committee reviews the report(s) to determine whether the expenditure of accommodations tax revenue is in compliance with the provisions of this chapter. If the committee decides that a municipality or county spent accommodations tax revenue on noncompliant items or projects, the committee notifies the municipality or county of its decision and the Department of Revenue instructs the State Treasurer to withhold future disbursement(s) to the municipality or county equal to the amount of the noncompliant expenditure made by the municipality or county. In FY2003-04, the State Treasurer withheld $394,716 of noncompliant disbursements. This bill would allow a municipality of county, upon notification by the committee, to refund an amount equal to the noncompliant expenditure, and thus, avoid any future withholding of accommodations tax revenue by the State Treasurer. Once the noncompliant funds have been refunded, the municipality or county may spend the funds on a compliant tourism-related item or project. If the committee determines that any refunded amounts have been spent for noncompliant purposes, the municipality of county may not refund an equivalent amount to avoid future withholdings. All appeals under this section must be made to the Administrative Law Judge Division. This bill has no impact on state or local General Fund revenue in FY2005-06.
Approved By:
William C. Gillespie
Board of Economic Advisors
1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact, Section 2-7-76 for a local revenue impact, and Section 6-1-85(B) for an estimate of the shift in local property tax incidence.
TO AMEND SECTION 6-4-35 OF THE 1976 CODE, RELATING TO THE TOURISM EXPENDITURE REVIEW COMMITTEE'S DETERMINATION OF NONCOMPLIANT EXPENDITURE OF ACCOMMODATIONS TAX REVENUE, TO ESTABLISH A PROCEDURE BY WHICH A MUNICIPALITY OR COUNTY MAY REFUND ANY AMOUNT DETERMINED TO BE IN NONCOMPLIANCE AND AVOID FUTURE WITHHOLDINGS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 6-4-35(B)(1)(a) of the 1976 Code is amended to read:
"(B)(1)(a) The Tourism Expenditure Review Committee shall serve as the oversight authority on all questionable tourism-related expenditures and to that end, all reports filed pursuant to Section 6-4-25(D)(3) must be forwarded to the committee for review to determine if they are in compliance with this chapter. The municipality or county must be notified if an expenditure is questioned, and the committee may consider any further supporting information the municipality or county may provide. If the committee finds an expenditure to be in noncompliance, the committee must notify the municipality or county of the finding. Upon notification, the municipality or county may refund an amount equivalent to the amount determined to be in non-compliance to the appropriate fund. If the municipality or county certifies to the committee that the amount has been refunded, the municipality or county is not subject to future withholdings of the amount determined to be in noncompliance. After the amount determined to be in noncompliance has been refunded, the county municipality or county may expend the funds for a compliant tourism-related purpose. Any subsequent expenditure of a refunded amount is subject to the reporting and review requirements of this chapter. If the committee informs the county or municipality of an expenditure determined to be in noncompliance and the county or municipality does not refund the noncompliant amount, the committee it shall certify the noncompliance to the State Treasurer, who shall withhold the amount of the expenditure found in noncompliance from subsequent distributions in accommodations tax revenue otherwise due the municipality or county. If the committee determines an expenditure of any refunded amount to be in noncompliance, the municipality or county may not refund an equivalent amount in order to avoid future withholdings. An appeal from an action of the committee under this subitem lies with the Administrative Law Judge Division."
SECTION 2. Beginning with accommodations tax allocations for Fiscal Year 2003, any municipality or county subject to a determination of noncompliance by the committee may utilize the refunding procedures provided by this act. If the municipality or county certifies to the committee that the amount previously determined to be in noncompliance has been refunded to the appropriate fund, then any amount withheld from the municipality or county from subsequent allocations must be returned in same amount and manner that it was withheld.
SECTION 3. This act takes effect upon approval by the Governor.
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