Unanimous Vote Needed By Commissioners On Room Tax

SNOW HILL – The public will have two opportunities to weigh in on the higher room tax rate proposed by Ocean City, with enabling legislation to allow the County Commissioners to raise the room tax rate to 4.5 percent introduced Tuesday, to be followed later this fall by a bill to actually raise the rate.

“The public will have the opportunity to comment on two separate occasions,” said Gerry Mason, Worcester County’s chief administrator.

The enabling legislation introduced this week, if passed, would only change what the commissioners are permitted to raise the tax to, and is not the legislation that would increase the tax.

If the enabling legislation is passed Oct. 16, after the public hearing, another piece of legislation to actually increase the room tax would be introduced at a future meeting. That resolution would also require a public hearing. A final vote is not likely until November at the earliest.

The commissioners must vote unanimously to pass an increase in the room tax rate. If there is even one dissenting vote, the county would have to go the Maryland General Assembly to have the unanimous vote requirement changed.

Although the introduction of the legislation is typically a formal step with little to no discussion by the commissioners or public, Commission President Jim Purnell asked Ocean City Mayor Rick Meehan to speak.

Meehan reminded the commissioners that regional competitors Virginia Beach and Myrtle Beach annually spend over $5 million each on destination marketing, while Ocean City currently spends only $1.7 million.

The increased room tax rate would allow the city to get to that level of advertising spending over the next few years. Under the resort’s plan, spending would double in the first year to $3.5 million, and reach $5 million in four years.

The resort recently “passed an ordinance that clearly shows we plan to dedicate general funds and other funds to destination marketing specifically,” Meehan said.

The Ocean City Council passed an ordinance Sept. 4 funneling increased revenue from the room tax to destination marketing and nothing else.

The town formally requested the county look at legislation to change the tax on Sept. 7.

The Ocean City Hotel-Motel-Restaurant Association (OCHMRA) asked the county last week, in an e-mail, to pass the room tax increase, and called for annual review of the resort’s advertising budget to make certain the town is following its own ordinance. If that is the case, the rate should be maintained, said an e-mail from OCHMRA Executive Director Susan Jones, but if it is not, the tax should be set back to the current 4 percent rate.

Representing the Harrison Group, which owns a number of hotels and restaurants in Ocean City, G. Hale Harrison, who also sent an e-mail to the commissioners in support of the higher tax rate last week, agreed with Jones. 

“This will reduce the temptation for future councils to spend money earmarked for advertising elsewhere. It is easy to cut advertising to solve short-term budget issues, but doing so is myopic given advertising’s high return on investment. Past councils have made this mistake,” Harrison wrote.

Jones wrote,  “This ordinance protects the county’s economy at no cost to its residents, as advertising monies are derived from room tax paid by visitors.”

If the county does not make the change, wrote Harrison, “An opportunity to improve the county’s economic prospects at no cost to its taxpayers will have been lost.”

Over 60 percent of Worcester County’s workers are employed in tourism-related businesses, according to Jones.

Meehan emphasized that the county would also benefit from an increased room tax rate, as any change would affect the whole jurisdiction, not just Ocean City.

“The results will affect all of Worcester County positively,” said Meehan. “People don’t differentiate between Ocean City and West Ocean City.”

According to Meehan, the county’s other three mayors support the higher room tax rate.

“We need your unanimous support to move this forward,” he told the commissioners.

“I do feel this is very important for the lifeline of Ocean City and the rest of Worcester County,” said Commissioner Louise Gulyas.