The possible pitfalls of raising Ocean City’s room tax to 5 percent aren’t strictly about the money, but also involve some political considerations that depend on how it might be explained to the resort’s tourism industry.
There’s no argument that city government continues to suffer from decreased property tax revenues, which have yet to recover from the 2008-09 real estate blowout, which led to a $1.6 billion loss in the assessed value of resort properties values two years later.
As it also happened, the real estate collapse seemed to catch city government off guard, considering that it didn’t really scale back spending until after the recession was in full swing.
Those circumstances left municipal government dealing with some big operational expenses, less money to cover them, a no-tax-increase philosophy and, ultimately, no choice but to draw on its cash reserves to pay the bills for a time.
Now comes the possibility of taking in more money by raising the room tax, while placating the lodging industry, which got the city to boost the tax back in 2008 so a percentage of it could be used to bring people to Ocean City.
Since then, some of that money has been used to make visitors happy after they have arrived, and then there have been discussions about what constitutes advertising versus marketing. None of this was part of the original plan.
Meanwhile, justifications using tax rates employed by other beach resorts are beside the point, since that assumes that room rates are the same everywhere and that Ocean City visitors are the same as Rehoboth Beach or Virginia Beach visitors. They’re not.
What’s important is that the City Council not fiddle with the original room tax deal and continue to provide the same level of support for out-of-area advertising that it promised to do in 2008.
Whatever else it might do with the room tax is really between the city and those who will be adding it to their bills.