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County Comment: Hotel/Motel Tax Fund Distribution

County Comment
Hotel/Motel Tax Fund Distribution
by Norman Bassett, Public Information Officer
Washington County, Maryland

In its regular meeting on July 15th, the Washington County Board of County Commissioners approved distributing $821,500 in Hotel-Motel revenue by a method that would allow each municipality in the County a base amount of $15,000, with additional funding based on population.
State law provides that half of the tax funds collected through the Hotel/Motel tax be utilized by the Convention and Visitors Bureau to promote and enhance the tourism industry in the County, with the other half used for economic projects. In the budget process for fiscal year 2009, the Commissioners made a determination that a portion of collected hotel/motel tax would be directly distributed to municipalities either by population or by areas in which the tax was collected.
The Mayors of the various municipalities, as a component of the Maryland Municipal League, recommended that the distribution be population-based. County staff recommended quarterly distributions of those funds, with annual reporting similar to Excise Tax reporting to insure proper expenditure of funds.
Four distribution scenarios were proposed. One method would be to divide the total funds by actual population, with Clear Spring at the low end of the scale and Hagerstown at the top. That method provided little funding for projects in communities with lower population. In other methods, base amounts for each municipality of $10,000 or $15,000 were proposed. Under those plans, the 9 municipalities would receive the base amount, and the remainder of funds would be divided based on population. The unincorporated portion of Washington County would receive funds, based on its population.
Under the plan approved by the Commissioners, providing a base amount of $15,000, ranked in terms of population, the City of Hagerstown would receive $139,940; Boonsboro would receive $24,533; Smithsburg would receive $22,317; Williamsport would receive $21,388; Hancock would receive $20,883; Funkstown would receive $18,373; Sharpsburg would receive $17,330; Keedysville would receive $16,662; and Clear Spring would receive $16,532. If distributed by area collected, the towns of Boonsboro, Funkstown, Smithsburg, Keedysville and Clear Spring would not have received funding, due to no lodging facilities being located in those municipalities. The Commissioners felt that events and attractions in those communities generate visitors and therefore revenue in hotels and motels nearby.
The base-amount approach was seen as more equitable for smaller communities. Sharpsburg, for example, has one bed and breakfast facility, yet Antietam Battlefield draws thousands of visitors to Washington County each year. By the "Area Collected" scenario, Sharpsburg's portion of the funds would have been only $2,500.
A reporting form was also provided for Commissioners' review, to be used by municipalities to show how the funding is expended each year. Commissioner Jim Kercheval suggested a more in-depth form be developed.

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