OCEAN CITY – With the clock suddenly ticking on the upcoming General Assembly session, 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.
After raising the room tax in Ocean City in 2019 from 4.5% to 5%, resort officials have been looking into possibly raising the rate again, or at least the ability to raise the rate. Gaining the ability to raise the room tax rate is a complicated process made more difficult after it was learned the town and Worcester County would need the approval of three other “code” counties on the Eastern Shore, including Kent, Caroline and Queen Anne’s.
In order to have the ability to raise the room tax rate, Ocean City needed, and has since 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 proposed enabling legislation aimed at that purpose had to first go through the county commissioners.
Armed with the consent of the Worcester County Commissioners, resort officials last year had draft legislation prepared to submit to its representatives in Annapolis for the 2022 General Assembly session, including state Senator Mary Beth Carozza and Delegate Wayne Hartman. However, it was learned at the 11th hour because Worcester is one of four code counties on the shore, the enabling legislation would have to have the consent of the three other counties.
With the draft enabling legislation for the proposed room tax increase put on the shelf last year, resort officials began working on another attempt for the upcoming General Assembly session. At the close of Monday’s regular meeting, Council Secretary Tony DeLuca asked about the status of the proposed enabling legislation for the upcoming session. He directed his question at Mayor Rick Meehan.
“I’d like to get an update on the progress on our ability to increase the room tax,” he said. “What are the next steps in the process?”
Meehan explained the effort was still underway, but there was a pause of sorts while waiting on how the November statewide elections shook out. He said with the election over, the discussion could begin in earnest again.
“Basically, this conversation just started,” he said. “We were waiting until after the election to really pursue this. We’ve had meetings with our representatives Mary Beth Carozza and Wayne Hartman as well as the county commissioners.”
Meehan said the lynchpin in the effort to get the enabling legislation approved was still the approval of the other code counties.
“We still have to have the approval of the other three counties,” he said. “That’s what we’re working on now.”
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 or not to raise the room tax rate and by how much, or if at all. Cursory discussions have included an increase by one percentage point, or from the current 5% to 6%.
Because of the complexities of the proposed legislation, even if officials were to gain the approval of the other code counties and make it into bill form in time for the upcoming General Assembly session, an actual room tax increase in Ocean City and Worcester County would not likely be in place until 2024. If state lawmakers approved the enabling legislation, it would likely have an effective date of July 1, 2023.
However, resort officials would still have to approve the amount of increase, adding another layer to the approval process. In addition, resort tourism officials throughout the process have expressed a desire not to set the room tax increase in place during the season when the hotels and lodging establishments have set their rates and begin taking reservations. As a result, a January 2024 start date would be more likely if all the remaining hurdles are passed.