SNOW HILL – County officials agreed to move forward with increasing the room tax rate at the request of the Town of Ocean City.
On Tuesday, the Worcester County Commissioners voted unanimously to proceed with plans to increase the room tax from 4.5 percent to 5 percent. The jump comes at the request of Ocean City leaders.
“What we would like to do is raise the room tax to be used for tourism related issues only, for destination marketing, for economic development, for special events, and to offset the costs of operating and having those special events on a year-round basis in Ocean City,” Mayor Rick Meehan told the commissioners Tuesday.
Meehan said the room tax hadn’t been raised in a decade but that it needed to be increased now to provide more money for marketing as well as to go toward the increased costs that came as a result of tourism. According to Meehan, Ocean City has seen more than $700,000 in increased expenses related to tourism. Police, EMS and public works costs have gone up.
“All of those costs are directly associated with tourism,” Meehan said. “They’re directly associated with what we’re doing to advertise and to promote and for economic benefit.”
Meehan said Ocean City wanted the increase to go into effect Jan. 1, 2020.
“Moving forward it will allow us to cover those costs, to increase our marketing, to increase what we do, special events, and also begin to set aside some funding to be directed toward sports marketing and hopefully a sports complex,” he said. “That’s a conversation for another day but we certainly support that in Worcester County and would like to partner with the county commissioners in such a complex if possible, to benefit all of the businesses in Ocean City, West Ocean City and Worcester County. If you ever want to have discussions we’d be happy to partner with the county. We’ve partnered in many things in the past and we think that’s maybe something we should all look at together.”
Commissioner Joe Mitrecic made a motion to move forward with the room tax increase.
“This is a pass on to the consumer,” he said. “It really doesn’t affect our constituency so much unless they stay in a hotel room.”
Commissioner Josh Nordstrom asked what impact the proposed increase would have on the county’s finances. Chief Administrative Officer Harold Higgins said he had not done the projections.
“It’s nice to know what the numbers are before we vote on something like this,” Nordstrom said.
Commissioner Chip Bertino asked if Ocean City was still seeking an increase in its tourism funding if the commissioners approved the room tax increase.
“Yes,” Meehan replied. “We believe that’s coming from those that are benefitting in West Ocean City from the advertising and marketing that we do. It’s the Town of Ocean City that has the onus to do that.”
Bertino also questioned the impact the increase would have on the rest of the county, as a change in room tax would apply to Snow Hill and Poco-moke as well.
“There have been some bed and breakfasts as well as some entities within West Ocean City that have weighed in with me and are concerned that you are going to or would consider raising from 4.5 to 5 percent,” Higgins said.
Assistant Chief Administrative Officer Kelly Shannahan told the commissioners that if they agreed to move forward with the room tax adjustment Tuesday, the next step would be amending county code.
“At that time, there would be a public hearing so all of the municipalities and others that would be affected would be able to comment,” he said.
Meehan stressed that the local room tax rate was significantly lower than rates in similar areas.
“We don’t arbitrability come in and say ‘hey let’s raise the room tax’ unless we have a budgetary concern or a concern about our economy,” he said. “The last time we raised this, 10 years ago, that was when the economy was falling and everybody was tanking. That’s a time when people stopped advertising and cut back on advertising. That’s not what we did. We raised the room tax and we increased our advertising. Doubled then tripled it. You know what happened? We held our numbers. Our numbers didn’t fall.”
The commissioners voted unanimously to move forward with adjusting the room tax rate.
Boiled down to its simplest terms, raising the room tax now from 4.5 percent to 5 percent would allow the town to continue to dedicate a portion to advertising and marketing while providing revenue to fund the services to the growing number of visitors those efforts generate. Added to the mix is an apparent desire to rebrand the town somewhat with an increased effort to tap into the rapidly growing youth sports market.
Increasing the room tax by half a percentage point would result in an anticipated increase in the town’s advertising budget by about $5.8 million along with another $1.2 million in the marketing budget. Complicating the issue even further is an expected fiscal year 2020 budget revenue shortfall of around $500,000, which could be offset by revenue generated by the increased room tax.
