Commissioners Will Have Final Say On Proposed Room Tax Hike

SNOW HILL – Without a formal request, it is not time for the County Commissioners to take action on a half-percent increase to the county room tax to fund tourism advertising proposed by Ocean City business owners, Worcester County elected officials concluded at Tuesday’s meeting.

The Ocean City Hotel-Motel-Restaurant Association (OCHMRA) has asked the Ocean City Council to request an increase in the room tax from 4 percent to 4.5 percent, with Ocean City’s additional revenues directed specifically to destination marketing. The remainder of the money would go to the general fund.

The Ocean City Council held its first reading of the room tax ordinance on Monday, earmarking any increase in room tax revenue specifically for tourism advertising.

There are implications outside the beach resort town, as any change would apply across Worcester County. The County Commissioners must enact the increase. Ocean City cannot make that change itself.

As Ocean City’s County Commissioner, Louise Gulyas, pointed out at this week’s commissioner meeting, “This will affect the room tax in the county.”

“This is not Ocean City’s room tax, this is the county room tax,” said Gerry Mason, chief administrator of Worcester County. “Ocean City’s just telling us how they’re going to spend it.”

Gulyas wondered would there by any formal acknowledgement the funds will be used for tourism.

 “Are we going to make any stipulation the money be used in tourism?” Gulyas said.

Gulyas’ comment echoed a controversy from earlier this summer.

The OCHMRA first mentioned a possible increase in room taxes to fund tourism advertising to the County Commissioners in early July.

Some elected officials said then that they had understood that the new funds from the 2000 room tax increase were to be used for tourism advertising, which did not happen.

Del. Jim Mathias, then mayor of Ocean City, said in 2000 that the funds could be used to support tourism, but Ocean City also had other purposes in mind, specifically, staff salaries because a recent report indicated city employee pay was not in line with other municipalities the town’s size.

When the OCHMRA or the City Council comes to Snow Hill with the request, Commissioner Judy Boggs said, “It certainly would be an opportunity for us to designate half a percent to tourism.”

Mason said the spring budget process is the proper time to address the room tax matter, but the code allows the change at any time.

Commissioner Virgil Shockley questioned whether the room tax increase being enacted Jan. 1, 2008 was following the county code.

“I didn’t see anything in the code, and that’s what I’m going by,” said Shockley. “I thought this became part of a budget process and we could only do this at budget time.”

County Attorney Ed Hammond answered Shockley, saying, “I think you can do it at any point in the year.”

Hammond said that the real question was whether tax revenue could be earmarked, adding that he thought it could.

The OCHMRA made a conservative projection of $11,250,00 room tax revenue a year if the additional half percent is approved. The organization rounded down the actual gross room revenues from 2006 to get that amount.

Under the five-year plan, the OCHMRA proposed dedicating 2 percent of the revenue, $5 million at that level gross room revenue, to tourism advertising.

“It’s Ocean City that gets all the benefit,” said Shockley.

The preponderance of lodging is located in Ocean City.

Gulyas asked Worcester County Finance Officer Harold Higgins to look into the amounts that would be generated through the change.

The OCHMRA proposal calls for the tax to go into effect on Jan. 1, 2008. The decision needs to be made by October, said Higgins, to allow county tax forms to be changed in time.

“You need to sit tight till we get a formal request,” Mason told the commissioners.

Two public hearings will be held during the approval process, once for a bill and once for a resolution, giving the public two opportunities to weigh in on the change on the county level.

Although it’s unclear how the body as a whole feels, at least one commissioner is in favor of the measure.

“I can’t speak for the other commissioners. I see no problem with it,” said Gulyas later in a phone interview.

The commissioners have repeatedly said they will not raise taxes for Worcester County residents. However, Gulyas said the room tax is unique and should not be considered along the same lines as property or income taxes.

“This doesn’t hurt the people who live here. This is paid for by visitors,” said Gulyas. “This has nothing to do with the tax for the residents.”

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