In an effort to do his small part for our state’s $18.4 billion tourism industry, our founding editor recently took his family to Myrtle Beach (a.k.a. the “Dirty Myrtle”) for some sun and fun with the unwashed masses.
And yes, he (begrudgingly) paid the new “hospitality tax” that forms the basis of the “Coastal Kickback” – which could wind up being the biggest campaign finance scandal in South Carolina history.
What is the “Coastal Kickback?”
It all started back in May 2009 when the city of Myrtle Beach, S.C. passed a one cent sales tax increase – ostensibly to fund tourism efforts at the Myrtle Beach Area Chamber of Commerce. This tax hike was approved by the Horry County legislative delegation – which is comprised almost exclusively of “Republican” state lawmakers.
Not long after the tax hike passed, the Myrtle Beach Chamber was accused of orchestrating a massive kickback scheme that routed nearly $350,000 in campaign contributions to Myrtle Beach area politicians (including legislative delegation members and then-U.S. Rep. Gresham Barrett) as payback for their support of the measure. Later it was revealed that these campaign contributions were doled out in cashier’s checks cut from a shadowy network of “corporations” all affiliated with a former chamber executive.
Each of the checks were cut at the same bank – on the same day (in sequential order, no less). They were then stuffed into envelopes and hand-delivered to numerous politicians including S.C. Senator Ray Cleary and S.C. Reps. Thad Viers, Nelson Hardwick, George Hearn and Alan Clemmons (all “Republicans”). State Rep. Tracy Edge, another Republican, declined the contributions.
After initially denying any involvement with the scam, Chamber leaders later admitted that they had helped deliver the stuffed envelopes to several of the politicians involved. In fact one of the individuals who handed out the checks is Mark Kelley, a former lawmaker and lobbyist for the chamber. Another is Brant Branham, a former chamber chairman who is currently serving as chief of staff to S.C. Lt. Governor Ken Ard (who is obviously no stranger to campaign finance problems).
Sadly, this whole scandal was on the verge of being swept under the rug last spring – but local activists kept making noise and blogs like FITS kept applying pressure.
Now not only is a major federal investigation underway, but the local mainstream media finally got off of its ass and started digging …
The latest result of those investigative efforts? A major piece in Sunday’s editions of The Sun News by reporter David Wren which exposes yet another untied loose end in this ongoing saga.
From Wren’s story:
Political donations purportedly given by 14 corporations with ties to the Myrtle Beach Area Chamber of Commerce were not reported on at least some of those corporations’ tax returns, and a business partner in some of the corporations said last week that he wants to know the true source of the campaign contributions.
“I have no idea where the money came from,” said Mark Lazarus, a partner in two of the corporations. “I’d like to know. That money was never in the [corporations'] bank accounts.”
Lazarus said he wants to know who gave the money because there could be tax consequences for not reporting the donations to the Internal Revenue Service.
Um, ya think?
In a previous report published last December, Wren discovered that millions of dollars in proceeds from the tax hike had been routed to businesses that financially supported the tax increase – without any transparency or competitive bidding.
Apparently the politicians weren’t the only ones getting a little “kickback.”
For those of you keeping score at home, the “Coastal Kickback” is expected to generate around $18 million a year – with all of that money dumped directly into the chamber’s coffers. In fact, in 2010 the tax hike actually exceeded projections – providing the chamber with $19.3 million in public money.
To her credit, S.C. Gov. Nikki Haley has opposed the tourism tax – although she has made false statements in voicing her opposition.
Unless revoked, the “tourism tax” will remain in place until 2019.