New Castle County Executive Matt Meyer’s case for the lodging tax

New Castle County Executive
Matt Meyer

A little over 16 months ago, I was sworn into office as your county executive. We inherited a government that for each of the prior four years spent more than it received as revenue. Our cash reserves were dwindling fast, and over 88 percent of expenses were locked into long-term contracts.

We immediately got to work cutting the fat out of county government. Over the past year, we have reduced our annual expenditures by over $6.3 million, by scrutinizing all hiring and every expenditure of your hard-earned tax dollars. My proposed Fiscal Year 2019 budget includes an additional $4.7 million in expenditure reductions. We also have identified inequities in our tax system.

Hotel tax addresses an inequity in our county tax system

One of the most glaring inequities is the hotel tax. There is a statewide 8 percent percent tax on hotels and motels. Over a decade ago, the state legislature gave the city of Wilmington the authority to raise the tax on hotels in the city up to an additional 3 percent. As a result, visitors who stay in Wilmington hotels pay a higher tax than visitors who stay at hotels in New Castle County outside of the city.

House Bill 377 enables New Castle County to do the same thing Wilmington has been able to do for over ten years: raise the existing hotel tax by up to 3 percent. That means up to $3 of additional charge to a visitor
on a $100 hotel room.

Visitors use services that residents pay for

This is not just a matter of leveling tax rates across the county. Hotel visitors actually use county government-provided services at a much higher rate than most county residents do. For example, we have received 4,656 calls from hotel visitors to our 911 center since January 2016. There is a cost to each of these calls, a cost to our police, fire, paramedic and 911 services. It is important that you as residents do not unfairly bear the brunt of paying for such calls.

In fact, other cities and counties in the region do a much better job of making sure their residents do not pay the cost of visitors’ emergency services. Almost all neighboring jurisdictions such as Cecil County, Chester County, Delaware County, Harford County, Cherry Hill, and Philadelphia levy higher taxes on hotel guests. If you stay at a hotel in Philadelphia, your hotel tax and sales tax will add up to more than double the taxes you would pay staying at a hotel in New Castle County.

Opponents of this bill are voicing concerns about the impact that a higher hotel tax could have on business. The hotel and lodging industry association and their paid lobbyists are raising alarm, indicating this will devastate the hotel industry. On the contrary, the higher hotel tax rate has had no noticeable impact on hotel occupancy rates in Wilmington. In fact, all indications are the hotel market in Wilmington is booming and growing. A downtown Marriott Hotel opened six weeks ago, and three more hotels are planned in Wilmington.

Moreover, studies have indicated that increases in hotel taxes have no negative impact on the hotel business. The National Tax Journal studied hotel taxes and concluded hotel taxes have a negligible impact on real
hotel revenues.

Acting responsibly to balance the county’s budget

Your county government’s expenses have exceeded revenues for years. I committed to balancing the budget this year so that we can sustain critical local government services for years to come, services that protect public safety, maintain our quality of life and support increases in your home property value. Balancing our budget is an opportunity to scrutinize and identify government waste that can be eliminated and to ensure that local taxes are charged fairly.

House Bill 377, enabling the counties to raise a hotel tax in the same manner as the city of Wilmington, is fair and will enable us to deliver more efficient critical services to you.

Share This Post

6 Comments - Write a Comment

  1. Sadly our New Castle County Executive is targeting the hotel industry to pay for the sins of past administrations in our county, why just the lodging industry? We pay all of our taxes to the State and County (school districts) and expect services, we employ thousands of county residents, we buy goods and services in the county, we support county events and chambers, and we provide employment opportunities to people with disabilities. The 38% increase if the hotel lodging tax WILL IMPACT BUSINESS, that is fact, and will impact hotels competitiveness and ability to create and sustain jobs for our county! By the way, the tax is Wilmington is not joke, one hotel, the Sheraton Suites is in bankruptcy, so don’t tell us the tax does not hurt, and only one hotel has opened in 15 years, that is an impact! We have offered these and other facts to the County Executive but he chooses to attack us with tax. How about sharing some for tourism, NOPE
    Thanks Bill Sullivan – Delaware Hotel and Lodging Association Board !

    Reply
  2. It appears this County Executive only understands raising taxes; property taxes, hotel taxes rather than
    tackling the systemic problem of run-a-way government cost. He failed to mentioned how much the visitors he is targeting contribute to our area business’s. Also no mention of the jobs created by the Hotel industry!
    A sad commentary on how to govern.

    Reply
  3. I don’t find the comparison to Philadelphia’s tax structure worthy. The comparable places to look at are Cecil, Chester, Delaware and Salem counties. If we have a slightly lower tax, that may be what is helping our hotels stay afloat. To pick on tourists, who already ask about our lodging tax, “I thought Delaware was the tax-free stats”, especially with a rise of 38%, will, regardless of Mr. Meyer’s belief, cause some tourists to go over the state line and spend their lodging, restaurant, gasoline, other retail and toll money to nearby neighboring states. To keep the tourists in Delaware, yet raise additional money, broaden the base of the tax and level the playing field by including other rentals, like Airbnb, or any type of lodging rental that is short term. Investment into tourism would also sell more rooms, hence, more tax dollars. Lastly, with regard to Mr. Meyer’s emergency services statistics, I wonder how many of those calls were for Delaware residents that happen to live in motels? Regardless, raising the tax rate is not the answer, broadening the base will.

    Reply
  4. I don’t find the comparison to Philadelphia’s tax structure worthy. Comparable places to look at are Cecil, Chester, Delaware, and Salem counties of surrounding states. If we have a slightly lower tax rate, that may be what is helping our hotels stay afloat. If we have an edge, erasing that may have the opposite effect of what was intended. To pick on tourists, who already ask about our lodging tax, “I thought that Delaware was a tax-free state”, especially with a rise of 38%, will, regardless of Mr. Meyer’s belief, cause some tourists to go over the state line and spend their lodging, restaurant, retail, gasoline and toll dollars in our neighboring states. Keep the tourists in Delaware and keep the tax the same, but if more money is really needed, broaden the base of the tax and level the playing field, by including other rental, like Airbnb, or any short term lodging rental. Investment into marketing for tourism has also proved to increase the number of rooms rented. This will also increase the amount of tax dollars, without increasing the rate.

    Reply
  5. So the Country Executive is going after new tax revenue he feels isn’t going to impact his voters. He is sadly mistaken. Tourism is the 3rd largest employment sector in the State of Delaware. It has long been shown that a 38% hike in hotel tax has a direct correlation to a decline in business levels. This will quickly equate to lost jobs.

    It’s laughable the County Executive indicates the tax imposed in Wilmington (that was supposed to sunset after two years) had “no noticeable effect on occupancy rates”. Ask the previous ownership of the Sheraton Suites Wilmington who recently defaulted on their mortgage and the hotel is now under bank receivership.

    This legislation is a lazy approach to avoid making the right decisions by digging deeper and fixing the inefficiencies in our County Government.

    Reply
  6. i am a consultant to the hotel industry that has a focus on tax advisory. His arguments are sad…

    Hotel tax addresses an inequity in our county tax system – two wrongs dont make a right

    Visitors use services that residents pay for – more like visitors pay for services that residents use – are you kidding me??? the property tax revenue generated by hotel guests go to improve roads, schools, fire districts, etc., not too mention that sales and use taxes.

    Reply

Post Comment