Loss of tourism-related taxes has statewide impact

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The CEO of one of the largest festivals in the area is saying that the lack of incoming accommodations tax funds is going to severely hinder people from coming to Charleston to spend money.

The state is anticipating the loss of millions of dollars in tax revenue as a result of tourism being down in 2020.

The Southeastern Wildlife Exposition is one of many events that count on accommodations tax money for their nationwide marketing. SEWE President and CEO Jimmy Huggins said the annual event is still planned for February, and he hopes to find funding to make up for the organization’s $13,700 loss.

The state is now anticipating $3.9 million in total revenue, down from its original estimate of $8.4 million, said Matthew Frohlich, deputy CFO for Charleston. An additional $2.5 million in fund balance — reserves the state has been able to add in — brings that total slightly closer to the goal, but it still isn’t enough to offset the projected loss.

Each year, municipal and state accommodations taxes are broken up to support various efforts, festivals, organizations and other tourism-related projects across the state.

In Charleston, accommodations taxes help the city’s general fund, capital improvements and the Charleston Area Convention & Visitors Bureau’s budget to promote tourism. If people aren’t staying in hotels, the businesses aren’t paying these taxes, creating a statewide trickle-down effect.

SEWE’s Huggins said, “All of this severely effects our ability to market the event and bring people in from out of town who spend the money here in Charleston. When we are afforded funding from these different entities, we count on it to come in.”

Because Mount Pleasant and Charleston impose their own hotel taxes, the hit there comes twice as hard. The lack of revenue also affects recipients of Community Assistance & Accommodations Tax grants, who were set to receive $2.36 million of funding from the city directly — contingent on the money being there, Frohlich said.

“We find ourselves in a situation where we’re having to project the revenue throughout the course of the year and adjust expenditures,” Frohlich said. “We’ll re-evaluate in the third quarter and will take it on a quarter-by-quarter basis.”

With a sheer lack of revenue during the pandemic, the state has been able to pay out just $592,000 through the first two quarters. Recipients were notified in writing that future payments are unable to be made without incoming money.

“We also advised them, similar to the county, that we don’t see much opportunity in 2021 to re-establish that funding,” Frohlich said.

Other projects affected by the Municipal and State Accommodations Tax Fund include the upkeep of the downtown Market Head Hall and the refurbishment of the Low Battery sea wall, both improvements beneficial to the tourism industry, according to Charleston’s 2020 formal budget. The State Accommodations Tax Fund also supports the free downtown area shuttle and publication of the Charleston Area Convention and Visitors Bureau’s Visitors Guide.