Delaware Public Media

County lodging tax bill clears first legislative hurdle in Dover

May 9, 2018

A bill allowing counties of a certain size to impose a lodging tax advanced in the state legislature Tuesday.

The bill championed by New Castle County passed the state House with a wide, bipartisan majority, and now heads to the Senate.

The bill lets counties with more than 500,000 inhabitants tax hotel, motel and traditional bed and breakfast stays by up to three percent in unincorporated areas.

A bill allowing incorporated municipalities to levy the same tax remains in committee. On Monday, the city of Newark passed a resolution supporting this bill.

If passed, the bill relating to counties would currently apply only to New Castle County.

That county’s Executive Matt Meyer is a big proponent of the measure. A three percent county lodging tax is a key piece of his budget proposal.

“Without this, we’d have to look at decreasing services or increasing property taxes to pay for the high-level services county residents receive,”said Meyer.

He says that visitors to the county use an outsized proportion of emergency services. He sees a lodging tax as helping visitors pay for their fair share.

Any county lodging tax would need County Council approval should the bill become law, but Meyer is confident he’d get it, since the Council has previously passed a resolution supporting the bill.

Local hotel interests have come out against the bill, saying a hypothetical combined lodging tax of 11% would damage New Castle County hotels’ competitiveness.

Meyer says a county lodging tax, on top of the state’s eight percent tax, would still be competitive regionally.

“We looked at all neighboring jurisdictions, and we have just about the lowest in the area, including Delaware County in Pennsylvania, Harford County, Cecil County in Maryland, Cherry Hill in New Jersey—when you add the lodging tax in addition to any sales tax,” he said.

Meyer’s budget plan had another victory in the general assembly yesterday, when the House passed an amendment allowing counties to cap the first time homebuyer county transfer tax exemption, according to a county spokesperson.