Stakeholders: Hotel Tax Rate Increase Will Help Business
Representatives from tourism and economic development sectors favor a bill to raise taxes on hotel room rates. The Delegation wants assurances that the money will go where it's needed.
Johnetta Jordan began her career in the hotel and tourism industry as an entry-level worker.
A single mother with three children, Jordan worked her way up the professional ladder and was able to send her three kids to college – one to the University of Maryland, one to Virginia State and one to George Mason University. She is now general manager of Spring Hill Suites in Columbia.
The opportunities afforded to her in tourism – which she calls the "American Dream industry" – led her to testify this week in favor of an increase in the hotel/motel tax rate.
“We all know that, through the hotel and tourism industry, there’s jobs,” she told the Howard County delegation to the General Assembly at a meeting Monday. "Howard County has to step up to the plate.”
Jordan was one of five people who testified in favor of, HO.CO. 06 (LR0766), a bill that would raise the tax rate on hotel and motel room rates in Howard County from 5 to 7 percent.
According to David Nitkin, director of policy and legislative affairs for the county, the increase would generate about $1.2 million to $1.3 million. That number presumes hotels and motels have business levels more in line with 2009, as opposed to last year, when tax revenues took a dip of a little less than $1 million below the 2009 amount.
The presumed increase in tax revenue would be split equally between Howard County Tourism, the Economic Development Authority and the county’s general fund, Nitkin said.
But language in the bill does not specify that the additional revenue would be equally divided among the three, a point about which Sen. James Robey, D-Ellicott City, expressed concern.
“I just want to make sure that if we’re going to commit to increasing that hotel motel tax, that it goes toward tourism,” he said.
Nitkin said the county was committed to designating monies to economic development and tourism and that, in fact, the tourism office proposed the legislation to County Executive Ken Ulman.
“The cleanest and easiest way to get the law through is just to change the number from five to seven in the existing legislation," Nitkin told Patch. "If there’s a concern that that isn’t fully dedicated, then we’re going to have to work through that.
“It will be dedicated and divided," he added. "That's what we promised, and that’s how we will use the money.”
In testimony, Economic Development Authority CEO Richard Story and Howard County Tourism Executive Director Rachelina Bonacci said the money would allow them to expand their marketing departments and help bring business to the area.
One person out of several who testified expressed concern about the proposed tax increase.
Resident Julian Levy said that as a business traveler he might be put off by a higher tax. He said that if a hotel quotes him a rate of $140 a night and he gets a bill for $180, he tells his company, “They’re ripping you off.
"I think local taxes do become a decision point that may not be seen the first time you make a reservation” but may result in a lack of return business, Levy said.
Levy proposed increasing the rate by 1 percent and splitting the additional tax revenue between Economic Development and Tourism but not designating any of the money go to the general fund. He also suggested adding language that would allow the tax to revert to 5 percent if, down the road, it isn't clear that the tax resulted in additional business.
Levy also questioned the wisdom of funding some other projects proposed at the hearing, saying the first order of business should be to "get our financial house in order."
Sen. Allan Kittleman, R-West Friendship, raised questions as to why money from an increased hotel tax would be going to the general fund.
“All we’re hearing is the need to help tourism and economic development,” he said. He questioned why all of the additional revenue would not be reinvested, then, in those two sectors.
At the other end of the spectrum, Alice Giles of the League of Women Voters suggested the monies all be designated to the general fund, which is where the hotel/motel tax revenues are currently dedicated.
Also discussed at the hearing were the following bills (clicking links will open .PDF files):
- HO.CO. 01 (LR0819) would provide $144,000 for accessibility and efficiency updates at the Arc of Howard County’s Graeloch Home in Laurel. Several residents spoke in favor of this and the following three bills.
- HO.CO. 03 (LR0767) and HO.CO. 02 (LR0765) would each allocate $500,000 for renovations at Blandair and Troy Regional Parks in Columbia and Elkridge.
- HO.CO. 07 (LR0731) would fund a $125,000 grant to the Board of Directors of the Howard County Conservancy, Inc., to be used for improvements to the Mount Pleasant Farm House.
- Village Green Spirits owner Eric Kaufman testified in support of HO.CO. 05 (LR0568), which would allow liquor stores to have liquor tastings in addition to beer and wine tastings.
- Two residents spoke in favor of HO.CO 04 (LR0510), which would allow veterans posts to have up to five slot machines for the use of members only. Proceeds would help fund the posts.
- Two residents spoke in favor of HO. CO. 08 (LR0945), which would allocate $450,000 to renovate the Old Ellicott City Post Office, adding a police substation and police museum, a family restroom and restore an old WPA mural.
Kittleman also noted that, were the legislature to agree not to fund any bonds, he would support the measure.
“Not that I don’t want to give money to these good causes,” he said, “but I think that that would be a good way to protect what’s going on in Maryland and make sure that we don’t spend too much and borrow and get into more debt.
“With that said,” he added, “should the legislature decide not to do that, I certainly would advocate for these bills.”
The Howard County Delegation will return to Ellicott City on Wed., Feb. 23, for a hearing to discuss general concerns of Howard County residents.