Proposed lodging tax ordinance introduced in Sussex

GEORGETOWN — Legislation that would create a lodging tax, bringing in an estimated $1 million-plus for Sussex County, has been introduced by County Council.

Introduced at the Oct. 22 meeting by Councilman Irwin G. Burton III, the ordinance proposal stems from the General Assembly’s late June passage of House Bill 228. That measure authorizes Sussex County to collect a tax of up to 3 percent of the rent for hotels, motels and tourist homes. It was sponsored by Speaker of the House Pete Schwartzkopf and state Sen. Gerald Hocker, among others.

The legislature also approved a similar bill for Kent County at the same time. Since the start of 2018, legislators have authorized all three counties and nine municipalities to establish lodging taxes of their own.

The state currently has an 8 percent lodging tax.

The nine cities and towns given the authority to do so include Dover, Georgetown, Milford, Rehoboth Beach, Seaford and Millville.

Dover City Council in September approved a 0.5 percent lodging tax on hotels and motels within city boundaries that will become effective in 2020 and increase incrementally to 1.5 percent by 2022.

Georgetown and Rehoboth Beach, among others, have passed 3 percent taxes.

In Sussex, the lodging tax would impact about 40 eligible venues in the unincorporated portion of the county. Tax collections would begin in January. The bill does not affect short-term rentals.

Sussex County Finance Director Gina Jennings predicts the revenue will be around $1.3 million per year.

That money can only be allocated for beach nourishment, waterway dredging, economic development, tourism programs, recreational activities, water quality projects and flood control projects.

According to Sussex County Administrator Todd Lawson, all the money collected from the tax will be “placed in a lockbox here at the county level and will be controlled by Sussex County, and any future expenditure will be decided by this county council during our normal budget consideration.”

Kent County’s measure, as outlined by the General Assembly, would direct the funding to the DE Turf sports complex. Kent County Levy Court is to hold a hearing on its potential tax Nov. 5.

In Sussex, the collection methodology would begin in a voucher form in lieu of pending technology.

The state legislation includes a provision authorizing up to 5 percent of the funds for administration costs.

“We are developing a portal on our website whereby folks will go on and submit their voucher and their payment monthly. I say that because staff has also been in contact in discussions with the state … because they are undergoing an upgrade to their software for the state collection of taxes,” said Mr. Lawson.

“In that first cycle of upgrades the accommodation tax that state collects currently is going to receive a software upgrade. Therefore, it is our hope that the state will couple this lodging tax and the other two counties lodging taxes with that collections process. In the future it will be all done electronically — and not be a voucher.”

Drafted by the county’s legal staff, the ordinance proposal will come before a public hearing, possibly in November.

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