Accommodations tax revenue rose in Summerville during the fiscal year that ended June 30, yet local nonprofits have been approved for less funding as the town reserves a larger share of the money for its own use.
Last year, the town approved more than 30 funding applications in full, totaling more than $1 million, some of which had accumulated and gone unspent within a required two-year timeframe, according to Town Administrator Scott Slatton. Despite the record distribution, town officials say nonprofits should not count on accommodations tax funding when planning their yearly budgets, since the town can choose to keep more of the money for town-initiated projects, as they did this year.
State ATAX regulations
South Carolina has two separate accommodations tax laws, known as ATAX. On the state level, a 2 percent ATAX is imposed on overnight lodging establishments, such as hotels, motels, bed and breakfasts and other short-term rentals.
In addition, local governments cannot impose their own ATAX at a rate greater than 3 percent. Summerville collects between 1 to 2 percent local ATAX depending on which county, within town limits, the lodging establishment is in. One percent is levied in Berkeley and Charleston counties, and two percent in Dorchester County.
Spending of state and local ATAX money is treated similarly, with some key differences between the two. The first $25,000 of ATAX funds distributed by the state, plus another 5 percent, must go toward a general fund. Another 30 percent from the remaining balance must go to a nonprofit involved in tourism promotion, like a chamber of commerce. State law states that if no such organization exists, one must be created. There is no requirement stating this amount must be spread across multiple organizations.
No part of ATAX money collected at the local level, however, has to be distributed to a nonprofit if the town or municipality is collecting more than $900,000 in state ATAX. A local government can choose to spend all of its local ATAX revenue on things like operations or maintenance. Yet, local officials can elect to reserve some of this funding for nonprofits to boost what is set aside from the state distribution. This is what the town of Summerville has done for many years.
Each year, the Summerville Accommodations Tax Advisory Committee determines how much to allocate to local nonprofits, then presents its recommendations to the Town Council for approval. Groups seeking funding must submit a detailed application listing the requested amount, the projects involved and how they impact local tourism. Town Clerk Beth Messervy reviews the applications for compliance before they go before the committee. All expenditures are also subject to review by South Carolina’s Tourism Expenditure Review Committee, or TERC, which confirms the activities directly affect out-of-town foot traffic.
Distributions to nonprofits
According to the town’s financial reporting, it has received about $1.06 million in state ATAX funding during the 2025-2026 fiscal year and has collected $448,937 locally.
This year, the committee recommended $463,000 from local ATAX funds to be distributed to area nonprofits, slightly above their local collections.
Eighteen nonprofits requested a cumulative $959,145 for a variety of projects and events.
The committee voted to fund about 50 percent of all requests, or $479,572. The $16,572 difference will come from 2026 revenues and the fund balance, said Finance Director Rhonda Moore in a statement to the Journal Scene.
In a statement forwarded to the Journal Scene by ATAX committee member, Belinda Harper, the town stated it had $600,000 available in state ATAX funds to put toward town projects and tourism-related expenditures, such as capital projects. However, using the formula required by state law, that amount should be closer to $688,000.
The statement also indicated that Messervy requested the council authorize $117,000 for improvements at Gahagan Park and the Sweet Tea Half-Marathon. These two projects originated from the town’s planning and were not requested by outside organizations.
These motions were approved by Councilwoman Tiffany Johnson and Councilman Richard G. Waring.
“Given the limited amount of funds provided by the State in accommodations tax funding that the Town is allowed to distribute to organizations that promote and support tourism, I am happy that we were able to find a way to give something to everyone who qualified for the funding,” Mayor Russ Touchberry said in an email to the Journal Scene. “The state statute on accommodations tax does not require the town to distribute ATAX funds to local organizations at all, but this Council feels that it is important to give back to the community, which can further increase the number of tourists that stay overnight in our Town.”
Local ATAX collections are not required to go to a nonprofit, but a portion of the state distribution is mandated. Funding has not necessarily decreased, as state ATAX revenue increased this fiscal year by $114,249, and local ATAX also rose by over $47,000.
Immediate impacts
In speaking to the Journal Scene, this year’s recipients expressed gratitude for the funding they received. However, some questioned how the allocations were handled. A few organization leaders wonder whether the projects that received funding truly met the committee’s criteria. Others were surprised by how the committee and town council ultimately voted.
Public Works Art Center Executive Director Jana Riley said several factors went into the center’s total funding request of $242,000, compared with last year’s request of $100,306. Because the town approved 50 percent of what was requested, Public Works Art Center was recommended to receive $121,000.
This year’s application sought help to cover the center’s free admission program and its building expansion. The Public Works Art Center draws over 30,000 visitors annually, benefitting local businesses.
“Those people shop, dine and stay in Summerville, bringing a lot of dollars into this community,” said Riley.
Riley said she originally approached the town directly about supporting the art center’s building expansion. She was instead told to request $500,000 in ATAX funding. Riley decided to split that amount into three, planning to request a third each year.
“In an attempt to be more responsible with the ask…[we tried] not try to take too much out of the budget,” Riley said.
Like Riley, some have questioned if any of the annual events for which organizations are seeking funding could be written into the town’s budget. This would free up more ATAX money for organizations with smaller or irregular requests. Other cities like North Charleston include cultural art centers in their budgets.
“We heavily rely on things like ATAX to help support us bringing in so many tourists,” Riley said. “We started with nothing but a dream, and, you know, we’ll figure it out…Of course we are grateful for what we can get.”
The Summerville YMCA is another nonprofit that relies on a significant contribution from ATAX funding. Events like its Flowertown Festival require contracting police and EMS services through the town of Summerville.
The festival, a major economic driver, has historically received around $200,000 annually in ATAX money. About 200,000 people attend the three-day event, with 45,000 coming from within a 50-mile radius of Summerville. This year, the YMCA requested $232,417 for the festival and received $116,208.
“That festival, on top of our annual campaign to raise dollars, goes right back into our community,” said YMCA CEO Joe Debney. “It stays in this community, and what we do with it are things like scholarships [for] kids who can’t afford to have childcare…community health programming. And without that, those things go away. Who’s going to fill that hole?”
Debney said making up the shortfall will be tough but remains hopeful.
Future strategies
While the town plans to continue allocating ATAX revenue to nonprofit organizations, officials are considering ways to tighten the process. At a town council meeting in June, Johnson proposed a stricter auditing process for organizations that use ATAX funding and limiting allocations to those who directly impact local tourism.
However, Messervy said projects like the Timrod Library kitchen renovation may not seem tourist-related on the surface but were vetted to be such. The Journal Scene obtained copies of this year’s application pool. According to the library’s application, it qualified for ATAX funding because the space is used for events that attract locals and visitors alike; the library cited 5,000 annual visitors and stated 10 percent its membership and donor base is from out of state.
Meals on Wheels, another nonprofit that is not directly tourism-related, received funding to support its pickleball tournament in April 2027. This was approved due to the event’s intended audience being pickleball enthusiasts and other active adults throughout the surrounding Southeast area, thus increasing overnight stays and other tourism activities. They estimate 1,500 people will attend the tournament, with 450 being out of town visitors. The tournament earlier this year saw visitors from New Jersey and Mississippi.
Nonprofit leaders who spoke to the Journal Scene believe ATAX funding should proportionally be poured back into organizations and events that drive tourism the most.
“We are exploring methods to quantify the economic impact of tourists who visit the Town of Summerville,” said Touchberry in an email. “With this data, we will be able to refine our marketing strategies to more effectively target potential visitors and encourage overnight stays in town. This approach aims to increase accommodations tax revenue received from the state each year.”
