OCEAN CITY – Efforts to get the enabling legislation passed that would allow Ocean City to increase the room tax rate are once again underway.
On Wednesday, the Senate’s Budget and Taxation Committee held a hearing for SB 95, sponsored by Sen. Mary Beth Carozza, which would increase the maximum hotel rental tax rate cap from 5% to 6%. A hearing for the cross-filed HB 186, sponsored by Del. Wayne Hartman, is set for Feb. 1.
“I don’t anticipate any problems but there are always new players,” Hartman said. “You can’t take anything for granted.”
In 2022, county officials worked with state representatives on enabling legislation to allow the county to increase its room tax cap from 5% to 6%. They discovered, however, that because Worcester is a code home rule county, approval was needed from all of the code counties. Though all four code counties supported the legislation last year, it failed to pass in the Senate.
During Wednesday’s hearing on SB 95, Carozza reiterated the fact that all of the code counties support the legislation. She also detailed the reasons Ocean City needed the ability to increase the room tax.
She said Myrtle Beach had a $50 million tourism budget while Virginia Beach had a $30 million tourism budget and the Outer Banks had a $16 million tourism budget.
“Ocean City’s tourism budget is only at $13 million. On average each dollar invested in tourism marketing generates $31 in visitor spending,” she said. “Our shore tourism is an economic driver for the state. The hotel rental tax is a dedicated source of funding for tourism and tourism related activities and the Eastern Shore code counties believe making this minimal increase in enabling legislation would be mutually beneficial.”
When asked if she’d spoken to the senator who opposed the legislation last year, Carozza said she had.
“My understanding is all those issues have been worked through,” she said.
Worcester County Commissioner Joe Mitrecic and Ocean City Mayor Rick Meehan spoke in support SB 95. Mitrecic said if the rate was raised to 6% it would still be far below the rates in other resort areas. He pointed out the rate was 11% in Rehoboth.
“The latest numbers show 43.5 million people visited Maryland in 2022 generating $19.4 billion in spending,” he said.
Mitrecic said resort officials could use room tax revenue to reach beyond current markets and also to cover rising costs related to tourism, such as EMS expenses and infrastructure improvements.
Meehan offered similar testimony.
“It also allows us to subsidize some of those costs that are related to tourism in our general fund budget,” he said.
According to Meehan, 43% of the resort’s general fund budget goes to public safety. In 2025, he said the town was hiring 10 more police officers that would cost $100,000 each.
“People come to Ocean City because it’s safe and it’s clean and it’s fun and it’s exciting,” he said. “What we need to do with our room tax dollars is continue to make sure that it is safe, it is clean and it is exciting. That’s for everyone that visits Ocean City.”
Bruce Bereano, Ocean City’s lobbyist, added that even with an increase Ocean City’s room tax rate wouldn’t be unreasonable compared to others in Maryland.
“We’re well below some western shore counties,” he said.
The room tax legislation is set to be heard by the House Ways and Means Committee Feb. 1. If the enabling legislation passes at the state level, a unanimous vote of the county commissioners would be required to actually increase the room tax rate in Worcester County.
