Debate Ensues Over Room Tax Increase Funding Intent

SNOW HILL – Tourism advertising needs more funds, resort and county business owners report, but that funding was provided for Ocean City at least through a room tax increase in 2000, some say, and the town used the money elsewhere.

Now the town’s businesses have approached the County Commissioners for financial support to advertise the resort to prospective vacationers, meeting with the commissioners in late June to plead their case.

“There was never a guarantee to fund anything specific,” Delegate Jim Mathias, who was mayor of Ocean City from 1996-2006, said at the June 19 meeting. He added, “There was no dedication at all, none.”

According to the June 20, 2000 County Commissioner meeting minutes, however, the money from the increased room tax was intended at least in part for tourism spending.

The June 20, 2000 meeting minutes read: “Ocean City Mayor Jim Mathias asked for the Commissioners’ support by increasing the Hotel Rental Tax Rate from 3% to 4%. He stated that the monies from the increase in the rate will be used to help tourism grow in Ocean City, as well as help support the residential areas within the town.”

Mathias denied that tourism was ever part of the focus of the discussion of raising the room tax, after the relevant portion of the minutes was read to him.

The town’s request to add another 1 percent to the tax stemmed from a need to increase salaries for town staff after a study determined that compensation was below standard, Mathias said.

“At the time, the private sector was really heating up and our pay scale was really below average,” said Mathias.

In a story in The Dispatch in June of 2000, Mathias defended the room tax increase to help offset the cost of funding the employee raises.

“As a host community, we have a moral obligation to provide a safe community. It is our No. 1 priority. These salary increases keep us competitive in the job market and allow us to hire and retain the staff to do that,” Mathias said.

In essence, to maintain those salary levels, the increase in the room tax was dedicated to the pay scale.        

“We never talked definitively about the 1 percent going to advertising,” Council member Nancy Howard said.

Howard agreed that the town really needed the extra funding in 2000 for the pay increases.

Ocean City is currently exploring ways to increase funding for tourism advertising, she said.

“It takes money to make money. We’ve not kept up with our advertising spending the way we should have,” Howard said. “By the next budget, we have to increase that figure.”

Critics point to the high amount of cash brought in by the room tax in recent years, about $9.6 million last year, and question why Ocean City staff salaries jumped once again in 2006, some by as much as 20 percent, while advertising funds went up slowly or, in some years, not at all.

According to City Manager Dennis Dare, the sharp increases shown in some management salaries were an attempt to bring pay levels parallel with management pay in the Ocean City Police Department. Due to the new collective bargaining agreement, police management staff salaries ballooned.

“The Mayor and City Council were faced with managers in the police department being paid proportionally more than managers in the balance of the city,” said Dare.

Tourism advertising funding from Ocean City actually went down between fiscal year 2000 and fiscal year 2001, when the 1 percent increase went into effect, decreasing by $3,000.

From fiscal year 2001, through fiscal year 2008, Ocean City’s tourism advertising budget went from $1.27 million to $1.76 million.

Worcester County businesses are also feeling a need for county help. The Worcester County Tourism Board went before the County Commissioners this week with specific requests to the county.

“I would argue that the number of people visiting Worcester County is steadily declining and not flat,” said Annemarie Dickerson, chair of the tourism board and owner of the Francis Scott Key Motel in West Ocean City.

The county is 17th in tourism spending in Maryland and fifth out of six jurisdictions on the Eastern Shore.

“We want to make destination marketing the priority of the Worcester County Commissioners,” said Dickerson. “Tourism is who we are. I believe it’s time Worcester County takes an active role in defining who we are.”

Dickerson asked the commissioners to provide $300,000 to the marketing budget in March, which would allow advertising to be purchased in time for the summer season.

“This is an investment that’s going to pay back to the county,” said Dickerson, citing statistics that show a seven-fold return for each advertising dollar spent.

Worcester County would combine efforts with Ocean City, she said. The plan calls for each municipality to advertise under the umbrella of Worcester County.

“We can do better and we need funds in which to do it,” Dickerson said.

Commissioner Judy Boggs said what the Tourism Board was seeking was possible

“What they presented to us was very doable,” said Boggs. “It’s close enough to the budget, if all the commissioners agree, we could front the money and recover it July 1.”

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