OC Keeping Eye On Room Tax Rate

OCEAN CITY — Legislation that could enable the town of Ocean City to raise its room tax if desired still needs approval from three other Eastern Shore counties before heading to Annapolis, resort officials learned this week.

After raising the room tax in Ocean City in 2019 from 4.5% to 5%, resort officials are looking into possibly raising the rate again, or at least the ability to raise the room tax rate. Gaining the ability to raise the room tax rate is a complicated process made muddier when a glitch was discovered in advance of this year’s General Assembly session.

In order to have the ability to raise the room tax rate, Ocean City obtained consent from Worcester County. While it is largely a local Ocean City issue, the ability to raise room tax rates would apply throughout the county, so any legislation aimed at that purpose must first go through the Worcester County Commissioners.

With the commissioners on board, town officials had a draft bill ready to submit to its representatives in Annapolis for General Assembly approval. However, it was learned at the 11th hour because Worcester is one of four “code” counties on the Eastern Shore, which also includes Kent, Caroline and Queen Anne’s, officials in those counties would have to consent to Ocean City’s submission of the draft legislation.

It’s important to point out the draft legislation proposed by the town would only provide Ocean City with the ability to raise the room tax. If the bill was passed by the General Assembly, the Mayor and Council would take up the debate on whether to raise the room tax rate and by how much, or if at all. Cursory discussion has included an increase by one percentage point, or from the current 5% to 6%.

While Worcester County officials continued to seek consent from the other three code counties on the Eastern Shore late last year, the county did not get the consent before the General Assembly session started and the legislation was not introduced this year. On Monday, Council Secretary Tony DeLuca questioned where town and county officials were in the process.

“Is there an update on the timing and the next step for the room tax increase request?” he said. “I know we need to hear from those three counties before it can go to Annapolis.”

Mayor Rick Meehan said he continues to work with county officials, including Ocean City’s representative in Snow Hill Joe Mitrecic, to reach out to their counterparts in the other three code counties to get consent for the introduction of the draft legislation. He said the timing of the requests is somewhat tricky because some of the officials in the other three counties are up for re-election this fall.

“I’ve talked to County Commissioner Joe Mitrecic about this,” he said. “What Joe and I have agreed to do is to reach out to the other counties. He wants to wait until after the election so it doesn’t become an election issue. The other counties could be afraid it could become an election issue even though it doesn’t really affect them if they don’t choose to exercise the option, so that’s the plan for right now.”

DeLuca said if all of the hoops are jumped through and the necessary approvals are acquired, there could be an opportunity to have a room tax increase in place by 2024.

“If it all flows well and the council ultimately decides to vote on an increase, it could be place for January 2024,” he said.

City Manager Terry McGean said there were still a lot of hurdles to cross for that to happen.

“A lot of things have to happen,” he said. “Assuming the other counties approved and it moved to the General Assembly this year, it could pass and have an effective date of July 1 next year, but the council would still have to go through its process. This is just trying to get enabling legislation through.”

DeLuca said he was not talking specifically about raising the room tax, simply the ability to do so.

“We have already requested from Worcester County just for the ability to raise the room tax,” he said. “I’m not talking about a specific increase in the room tax at this point. I’m just playing what if.”

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.