Potential Room Tax Hike Discussion Planned In Ocean City

OCEAN CITY – Ocean City elected officials renewed the debate this week about a potential room tax hike with a sense of urgency giving the legislative framework for accomplishing the change.

During the council comment section on Monday’s virtual meeting, Council Secretary Tony DeLuca renewed his push for further discussion on a proposed increase in the resort’s room tax. DeLuca, who has been advocating a hike in the room tax to offset some of the budget shortfalls associated with the ongoing pandemic, pushed for a work session discussion on a proposed room tax hike as soon as next week.

After an often-fierce debate, the council in 2019 approved an increase in the resort’s room tax from 4.5% to 5%. Prior to that, the town’s room tax had last been increased for 4% to 4.5% in 2007. Even with the increase approved in 2019, Ocean City’s room tax is still considerably lower than the rate in many of the neighboring resort areas, which has led to DeLuca’s push to nudge it higher.

The last time around, while most on the then-council agreed a modest increase was needed, the debate centered largely on how best to spend the increased revenue. When the room tax was increased in 2007, a formula was developed wherein 2% of the revenue derived was dedicated to advertising and marketing the resort and that formula did not change with the last increase in 2019.

This time around, there appears to be a will among the council to nudge the room tax higher, but the decision essentially falls to Worcester County and, ultimately, the state legislature. Councilman Frank Knight agreed with DeLuca if the council desires to nudge the room tax rate higher, time is of the essence to get that process rolling.

“In order to consider raising the room tax, we need legislative approval,” he said. “We need to do that immediately because they start meeting next week.”

Mayor Rick Meehan reminded his colleagues the county would have to sign off on any proposed legislation to increase the room tax in Ocean City. In recent efforts, gaining the support of the Worcester County Commissioners has not been an issue, but, again, there is a process to follow.

“The first thing we have to do is go to the county,” he said. “The county would have to provide permission to seek the legislative change.”

DeLuca urged Council President Matt James and City Manager Doug Miller to get a discussion on a proposed room tax increase on next week’s work session agenda. DeLuca also pushed for further discussion of the proposed new economic development director position and the new organizational chart outlining the pecking order in the town’s hierarchy, although the two issues are mutually exclusive.

“We can start by discussing this next week to see if there is a will to do it or not,” he said. “That’s the first step and there is some urgency to do this.”

Knight reiterated the importance of getting the ball rolling with the General Assembly session opening next week.

“We need to get this going immediately if we want to get something in this legislative session,” he said.

While it appears he supports the concept of nudging the room tax higher, Councilman John Gehrig said it isn’t as easy as simply asking the county and then the state legislature. Gehrig said there are a lot of moving parts to increasing the room tax with the spring and summer seasons approaching.

“There are a lot of concerns and issues,” he said. “We’re into this year and bookings are being made. We need to check with our hospitality partners on this.”

About The Author: Shawn Soper

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Shawn Soper has been with The Dispatch since 2000. He began as a staff writer covering various local government beats and general stories. His current positions include managing editor and sports editor. Growing up in Baltimore before moving to Ocean City full time three decades ago, Soper graduated from Loch Raven High School in 1981 and from Towson University in 1985 with degrees in mass communications with a journalism concentration and history.