After some disagreement over when the ordinance came into effect, Dewey Beach commissioners voted 3-2 on March 2 to impose a 1.5% lodging tax on hotels, motels and tourist residences from July 1.
Commissioner David Jasinski said passing the tax was the right thing to do, but making it effective on April 1 would be too early as establishments are not yet able to operate at full capacity. He suggested that the tax be implemented no earlier than July 1 and no later than January 1, 2022.
Commissioner Gary Persinger said he supported the Jan. 1 effective date and suggested the city follow the state’s practice of exempting permanent residents from a hotel or motel. He questioned whether the party responsible for paying the tax should be noted as the operator, and not the owner, of the rental property.
The use of the term person is meant to be broad, said city lawyer Fred Townsend, and would apply to the operator, manager or agent as well as the owner, and that language in the order should allow the city to sue homeowners for unpaid taxes. . He said he would add an exception to the ordinance that would exclude permanent residents from paying the tax.
Commissioner Bill Stevens has said he supports the implementation of the tax on April 1. The tax would not hurt hotels, he said; it targets tourists who use city services and leave. He recommended that tax revenues be paid into the general fund rather than a restricted fund.
âWe live in a seaside resort,â Stevens said. âThere are no resort fees, there are no labels, there are no funds that help the city run day-to-day operations. If you have a $ 300 hotel room and apply 1.5% tax, my little calculator says it’s [the tax] $ 4.50, and you can’t buy beer in this town for $ 4.50.
Mayor Dale Cooke said everyone originally expected the tax to begin on April 1, the city’s fiscal year start. He said January 2022 is too far away.
âI don’t see the logic of how this could hurt hotels,â Cooke said. âThey don’t pay the fees themselves; they cross it.
Other cities have a lodging tax double that proposed by commissioners, Cooke said, and if he thought the tax would hurt hotels, he wouldn’t vote for it. The city receives 3% income from each private house that is rented out, but at the moment it does not receive anything from hotels, he said.
City Manager Bill Zolper said Rehoboth’s lodging tax is 3%, Bethany’s 3.25% and Dewey’s tax is zero. A 1.5% accommodation tax will not hurt businesses, he said.
“Right now they don’t pay anything for the city, but they get the police, lifeguards and whatever comes into the city, the trash that gets picked up,” Zolper said. “You get a good deal at 1.5 [percent] when you get to a city at $ 4.50 a night.
The city needs the income, Zolper said, and he doesn’t want to depend on the military for a new police car, referring to the city’s participation in the surplus military equipment program. Five years later, he said, he would like to consider a new town hall and a new police station, and the income would come in handy.
Jasinski proposed to make the ordinance effective July 1; Persinger agreed, but said he didn’t agree with the date. He asked if Jasinski would amend the motion to put tax revenue in a capital improvement fund, which he said the city does not have and is critically needed.
Cooke said he would prefer that the income not be allocated to a particular fund, but if it does then putting it in investment and infrastructure funds would be a good idea due to the drainage issues. from the city.
Stevens suggested that the revenues go into the general fund and that commissioners should ask the budget and finance committee to develop a long-term capital improvement plan.
Jasinski said he would not change the motion because the commissioners had so many different opinions. The motion was carried 3-2, with Cooke, Jasinski and Stevens voting for, and Persinger and Commissioner Paul Bauer voting against.
Persinger said he believes January 1, 2022 should be the earliest effective date and that the revenue should fund capital improvements. Bauer said he preferred an effective August 1 date because it would give hotels more time to bounce back.