The Worcester County Commissioners introduced legislation this week to start the process to boost room taxes to 5 percent countywide. 

(April 19, 2019) After voting unanimously last month to consider increasing room tax rates to 5 percent, the Worcester County Commissioners introduced legislation this week to set the wheels in motion, with a subsequent public hearing scheduled in late May.

Ocean City Mayor Rick Meehan pitched the idea of increasing the room tax, which is imposed at the county level, from 4.5 percent to 5 percent during the commissioners meeting on March 19.

Although frequently, if erroneously, called a hotel room tax, the charge is applied to all room rentals, from hotel rooms to condominiums.

Kelly Shanahan, Worcester County’s assistant chief administrative officer, told the commissioners Tuesday that raising room tax rates involves two stages.

“There are several steps involved, the first of which is an amendment to the local law,” he said.

Shanahan said although Maryland law allows counties to raise room tax rates to a maximum of 5 percent without state approval, Worcester would need to revise its own tax code that currently includes a 4.5 percent cap.

Worcester County last increased room tax rates in 2008 when the surcharge went from 4 to 4.5 percent.

The commissioners will hold a public hearing on May 21 to consider the code amendment bill, which Shannah said would become effective in 45-days, or July 5, if adopted at that point.

Shannah said the next step would be to introduce a resolution at the commissioners meeting on July 16 to increase the room tax from 4.5 to 5 percent, with a public hearing to follow on Aug. 20.

 “The town [of Ocean City] has requested that would become effective January 1, 2020,” he said.

Shannah said local municipalities, or other affected parties, would be able to offer input at one, or both, public hearings.

“It would require unanimous adoption by all county commissioners in order to become effective,” he said.

Before attending the March 19 meeting, Meehan also sent a letter to the commissioners requesting the rate change.

During the March 19 meeting, Meehan told the commissioners the Ocean City Council voted in late January to send a letter detailing the request to county officials.

Meehan said the room tax collected is dedicated for destination marketing, with a portion earmarked for the city’s operating budget to reduce residents’ tax burden.

Meehan said with continued marketing efforts spawning larger crowds during both the summer and shoulder seasons, the city has seen costs for police and rescue staffing increase by more than $600,000, largely from increased special events throughout the year.

“All of those costs are directly associated with what we’re doing to advertise and promote,” he said. “What we would like to do is raise the room tax to be used for tourism-related issues only.”

Ocean City Budget Manager Jennie Knapp has estimated that enacting the rate increase in January could net the resort more than $490,000 in additional revenue during fiscal 2020, which ends on June 30.

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