Ocean City’s continual discussion of a possible room tax increase is interesting. Most of the talk this week at the committee level centered on what the city would do with this new revenue – estimated at $1.7 million in the first year if the room tax is increased from 4.5% to 5% – if the county and city both approve increasing the room tax.
It’s been 12 years since the room tax was last increased. I think the timing is right to go ahead and increase the local room tax rate, which is the second lowest in the state currently.
While it’s certainly not a given the County Commissioners will approve the room tax increase if the Ocean City Mayor and Council does agree to it as expected, the most riveting part of the discussion is how should the new revenue be spent. The idea at this point seems to be for the city to keep some of the money and funnel it toward paying for the increased services and expenses associated with off-season special events. The county is going to have a problem with that, and I’m looking forward to diving into that deeper when the city explains in detail how much more money is being spent in the off-season months now than was a decade or so ago. Certainly, there are costs with hosting special events, but I’m not buying the need for much of this new revenue being retained by the city to pay for services associated with growing crowds in the spring and fall.
While that remains unknown, I am fully in support of the city earmarking some of these new dollars, if the room tax increase is approved, on new marketing strategies. Ocean City Councilman John Gehrig is right when he says Ocean City needs to become fully engaged in the youth sports industry.
“Raise the room tax because it worked last time and dedicate some of the funds to sports marketing … It’s our natural target market. It’s bigger than the NFL and maybe all pro sports combined,” he said. “… It just can’t all go into tourism. We don’t need more radio ads and banner ads. We need to invest in this youth sports market because we’re made for it.”
It should not take having children playing youth sports currently to understand the value of this burgeoning industry. It’s big business and I see it each fall and spring when I travel to the Lancaster, Pa. area for youth soccer tournaments. Hotels fill up months in advance, restaurants see booming sales and nightly waits and kids activity centers bring on extra staff to meet the demand during these weekends. Without these tourneys, none of that would be happening.
On a micro level, I will be spending some of my weekend watching my son compete in the first-ever Ocean City Futsal Classic at Northside Park. There will be teams from around the shore participating. There will be economic impacts on businesses as a result. Since it’s a new tourney, it will not be a major financial boost. However, these teams and their players and parents would not be in Ocean City in mid-January if it weren’t for this tournament. They will have breaks in between games and will be looking to eat and play. The annual indoor soccer tournaments held in February and March in Ocean City do draw teams from outside the area for overnight stays. They buy local hotel rooms and eat out for most meals.
Ocean City businesses understand what these events bring to town. These teams come whether it’s rainy or sunny. They spend money. Unfortunately, most of the county commissioners simply don’t get it yet. They are being foolish and myopic when they say government should not be in a private sector industry matter. I’m all about small government, but standing behind this traditionally conservative ideal is wrong in this case. We need to think economic development.
Ocean City and county officials should look at increasing the room tax rate as an investment. The city may prove the case some of the funds should be used to offset services provided as a result of increased special events. That’s fine, but it should not be more than half of the new revenue. The remaining $850,000, half of the estimated new revenue that would come with a room tax increase, should be focused on becoming more of a player in the youth sports industry.