OCEAN CITY — A historical review this week of the town’s room tax over the last decade or so sparked a lively debate about where the revenue should be dedicated.
Budget Director Jennie Knapp on Tuesday provided a comprehensive review of the history of the town’s room tax and where the revenue is distributed through a formula approved by the Mayor and Council by ordinance. In 2007, the town’s room tax rate was increased from 4% to 4.5% by ordinance and 2% of the total room tax revenue was dedicated to advertising and marketing.
In 2020, the Mayor and Council raised the town’s room tax rate from 4.5% to 5% with the same 2% of the total revenue dedicated to advertising and marketing. According to statistics provided by Knapp on Tuesday, in 2007 when the ordinance changed, the total room tax collected at 4% was around $10 million, and the advertising budget was at about $1.7 million based on the 2% formula.
In fiscal year 2021, the statistics show the advertising budget as a percentage of the room tax has gone from 17% to around 40%. Knapp reported there was a funding gap between property tax and room tax revenue allocated to the general fund in the last decade. Knapp said more and more offseason special events required more police and fire crews, public works, trash collection and beach and Boardwalk cleaning, for example.
As the Mayor and Council considers another increase in the town’s room tax rate, it was suggested the formula that dedicates a certain percentage to advertising be reviewed. By way of background, the town cannot increase the room tax rate. The Worcester County Commissioners must first approve a rate increase, which is then forwarded to the General Assembly. The latter is largely a formality because it’s essentially a local issue.
Its offseason so its Gehrig “time” again.
“Why do we even have an ordinance if we clearly violate it? I think we should remove the $400,000. That auditor needs to review you guys and reports to us. Things are happening we don’t know about.”
Happy Holidays!