Tax increase

Ocean City resident Vincent Gisriel makes his case against the hotel tax rate increase at the Worcester County commissioner meeting this Tuesday.

Worcester commissioners agree unanimously to raise rate to 5 percent in 2020

(Aug. 23, 2019) Ocean City government can expect a sizable increase in revenue in 2020, as the Worcester County Commissioners unanimously voted to increase the hotel tax rate from 4.5 to 5 percent after the public hearing on Tuesday. The tax increase will start Jan. 1, 2020.

The last increase on the hotel tax was from 4 to 4.5 percent in 2008. Though the name in the measure states “hotel,” it includes all rental properties such as condominiums.

Ocean City Mayor Rick Meehan asked for the hotel tax increase earlier this year, with the city budget office estimating that the half-percent tax boost would produce an additional $700,000 during the last half of this fiscal year, and $1.7 million for the 2020-21 fiscal year.

The commissioners voted in May to proceed with the discussion of increasing rate and to pursue the unanimous commissioner consent required by state law.

Meehan, the council and the tourism industry contended from the outset that the increase was necessary to cover the rising costs of special events, advertising and marketing – particularly digital and sports marketing, the latter of which included consideration of a new sports complex.

“It’s not just putting a full page ad in the Baltimore Sun anymore,” Meehan said. “It’s being on the internet. We’ve rebuilt our website twice. It’s digital marketing. It’s social media.”

In various meetings, Meehan has pointed out that even with an increase, Worcester County will still have the lowest hotel tax in the area. Annapolis is at six percent and Baltimore is eight percent. Rehoboth recently increased from eight to 11 percent, though it should be noted that Rehoboth does not have sales tax, therefore making the total room tax within a half percent of Worcester County.

“We need to remain competitive,” Meehan said.

Susan Jones, executive director of the Ocean City Hotel Motel Restaurant Association, told the commissioners there are 1,000 new hotel rooms in Ocean City.

“We have to work together collectively to figure out how to fill those rooms,” Jones said. “We can’t bring you the room tax revenue unless we do advertise.”

However, not all agreed an increase would benefit the resort or the county. According to Ocean City resident Vincent Gisriel, the last time the tax was increased a half percent, two percent of the hotel tax revenue was set aside for Ocean City advertising. He said the resort advertising budget hit $6.9 million in 2018 and wondered how much more could be needed.

“We may have reached a point of diminishing returns,” Gisriel said.

Ocean City resident Tony Christ suggested that the county will receive a revenue increase from the 1,000 new hotel rooms regardless of a room tax increase. He said that the previous tax increases have harmed Ocean City tourism.

“It’s caused Ocean City to lose its most valuable asset, which was the blue-collared worker and their families,” Christ said. “They’re gone. 

After the public comments, Commissioner Joseph Mitrecic pointed out that Ocean City has the most hotel rooms in the county. He moved to pass the tax increase.

“I don’t the propose the county tell Ocean City how to spend their money because I’m sure we wouldn’t like Ocean City to tell us how to spend ours,” Mitrecic said.

Commissioner Jim Bunting seconded the motion.

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