OCEAN CITY – Ocean City’s electorate will have the opportunity to vote on an ordinance passed late last year that will scale up the percentage of room tax revenue dedicated to marketing after the town’s elections board this week ratified the number of signatures in a petition for referendum.
In December, the Mayor and Council narrowly passed an ordinance altering the formula for how a percentage of room tax generated in the resort is distributed to marketing and advertising. By way of background, Ocean City’s room tax in 2019 was raised from 4.5% to 5% with about 44% percent of the revenue dedicated to marketing and advertising and 56% dedicated to the town’s general fund to help offset the increased cost of tourism, including fire and police services, public works, and salaries and overtime from the growing list of special events, particularly in the offseason.
In December, a divided council approved an ordinance that would gradually scale up the percentage of room tax revenue dedicated to destination marketing, advertising, promotions, sponsorships, special events and the like over the coming years. For example, for fiscal year 2023, 2% of the room tax revenue would be dedicated to destination marketing, with that figure increasing to 2.1% in fiscal year 2024 and 2.2% in fiscal year 2025.
Local resident and former councilman Vince Gisriel from the beginning publicly challenged the ordinance on the grounds the scaled increases in the amount of room tax dedicated under the broad umbrella of marketing and advertising would exponentially grow those budgets at a rate faster than the general fund growth. To that end, in December, Gisriel sent a letter and a draft petition for a referendum on the room tax ordinance to the city solicitor for approval.
The city solicitor approved the draft petition on the room tax ordinance, setting in motion a 40-day window in which Gisriel and the petitioners would need to acquire the requisite number of signatures to bring the question to referendum. The city charter requires signatures representing 40% of those who voted in the last municipal election to put the referendum question on the ballot in the next municipal election.
With 1,528 votes cast in the last municipal election, the target number for a successful petition was 612. At the conclusion of the petition for referendum drive, Gisriel submitted 168 petition pages consisting of 807 signatures, or well beyond the 612 required.
The next step was for the town’s Board of Supervisors of Elections to ratify the signatures contained in the petition pages. The process is now complete, and, on Monday, Board of Supervisors of Elections Chair Mary Adeline Bradford presented to the results to the Mayor and Council.
Of the 807 signatures submitted, 13 were deemed invalid, leaving a total of 794 verified and valid voter signatures on the petition, or still well above the required 612 based on the town’s charter. As a result, the petition for referendum challenging the room tax formula alteration will appear as a ballot question on the Nov. 8 municipal election. As a mere formality, the council voted 5-0 with Councilmen Lloyd Martin and Mark Paddack absent to ratify the petition and include a ballot question at the November election.
Councilman John Gehrig questioned if the ratified petition meant the room tax ordinance the council passed in December was still valid.
“In here is a copy of the petition,” he said. “Does this mean our ordinance is repealed? We have a budget based on that figure.”
City Solicitor Heather Stansbury said the ordinance would remain in place pending the results of the November election.
“It wouldn’t be repealed until after the results of the election in November, if the votes go that way,” she said.
Gehrig said the fiscal year 2023 budget was based largely on aggressive estimates on room tax for the upcoming season.
“We approved a budget based on this,” he said. “I’m just trying to make sure we’re okay on this.”
From the beginning, Gisriel outlined his reasons for seeking a repeal of the room tax ordinance passed by the council in December by petitioning for a referendum vote by the town’s electorate.
“This new ordinance replaces an earlier one passed in 2007, which was flawed from the outset,” he has said. “The old ordinance was supposed to dedicate one-half percent of the room tax to advertising. However, instead it dedicated an amount equal to 2% of gross room revenue to advertising. This resulted in an enormous increase in the amount of money being spent to promote the town.”
According to Gisriel, under the original ordinance passed in fiscal year 2007, the town’s advertising budget was just over $1.76 million. By fiscal year 2021, it had grown to over $7.46 million.
