Updating 2007 ordinance language will require public hearing prior to enactment
(March 15, 2019) The Ocean City Council reconvened talks over increasing room-tax rates from 4.5 percent to 5 percent, with a proposed new start date of Jan. 1, 2020, but voted in favor of delaying a decision with fiscal year 2020 budget discussions looming.
City Manager Doug Miller said the topic was last broached during a council work session in late January, at which point it was requested that Mayor Rick Meehan send a letter to the Worcester County Commissioners, who ultimately must approve the proposed countywide room tax increase. That letter was sent on March 1, but no reply has been received yet.
Miller noted the prior discussion involved implementing the proposed tax increase either to coincide with the start of fiscal 2020 this July 1, or halfway through the budget year on January 1, 2020.
Budget Manager Jennie Knapp estimated implementing higher room tax rates in January would yield about $5.8 million for advertising, $1.2 million for marketing and $608,000 for visitor-related expenses.
Miller said in the interim an increased focus has been placed on youth sports marketing.
“We are keenly focused on creating a sports complex on the island or in north Worcester County,” he said.
Knapp said the extra revenue would be required to offset increased costs related to maintaining the beach and Boardwalk, as well as higher costs from special events during the shoulder season.
Miller noted that maintaining a clean and safe town continues to be a top priority.
“Some of that room tax money should go back into the general fund for these purposes,” he said.
Knapp also said the potential $600,000 in extra revenue should be dedicated for tourism related expenses, while noting the room tax boost would be required to balance the upcoming fiscal 2020 budget.
Councilman John Gehrig said the increased funding should be used for economic development.
“If we only raise room tax, if we don’t use this opportunity to reinvest in the community, I think it’s a lost opportunity,” he said.
Miller noted the sports complex proposal was a new concept that deserves more attention.
“We have to define our niche and find out how we’ll get there,” he said.
Councilwoman Mary Knight said the room tax increase is not necessarily being done to spend more money, but regardless of the direction more concrete plans should be developed prior to enacting the rate change.
Meehan said he would be meeting with the Worcester County Commissioners next Wednesday and will inquire about their support of the room tax increase.
The council voted 5-2, with Gehrig and Councilman Matt James opposed, to further consider a room tax increase effective Jan. 1, which will require two readings and a public hearing to alter the current ordinance language.