Harford County passes new formula for spending revenue from hotel tax

The Harford County Council passed a new formula Tuesday night for distributing tax revenue from hotel rooms.

County Executive Bob Cassilly said he expects the debate over how local residents will benefit from the tourism industry will continue.

“We’ve not lost sight of the importance of tourism in Harford County and the millions of millions of dollars it means to our businesses here. There is no doubt in my mind a version of this bill will come back very shortly,” Cassilly said.

Under the previous law from 2015, council districts without a municipality did not directly receive revenue from a 6% tax on hotel room rates. Meanwhile, the county code required half of the hotel tax revenue collected within a district with a municipality to be spent within the same district. The remaining tax revenues are distributed by the county administration in consultation with the tourism board.

Now 25% of tax revenue collected from hotels in unincorporated areas of the county will be spent within the district where the tax was collected.

Currently, there are approximately 40 hotels in the county, including 17 in the city of Aberdeen, four in the city of Havre de Grace and none are within the city of Bel Air’s municipal boundaries, according to a fiscal analysis of the bill.

“Bel Air doesn’t have any hotels, but Bel Air has the arts festival that brings 20 to 30,000 people,” Councilor Tony Giangiordano, who represents District C around Bel Air, said. “Harford Mutual has no place for people to stay in Bel Air. They’re staying in hotels in Aberdeen, and they’re driving into Bel Air.”

In fiscal year 2023, the county collected over $3.5 million in hotel occupancy taxes, and nearly $1.7 million was collected in the city of Aberdeen, which received $849,987 from half its hotel tax revenue.

Under the new law, unincorporated District A in southern Harford County, which includes Joppatowne and Edgewood, would net an extra $170,000.

The bill passed 5-1 with Cassilly, joining Councilors Giangiordano, Aaron Penman, Jessica Boyle-Tsottles and Jacob Bennet in voting in favor while Councilor James Reilly voted against and Councilor Dion Guthrie abstained.

“[Guthrie] is collecting the tax from the destinations in all the rest in our district,” said Reilly, who represents District D, which collected $661 in hotel occupancy taxes in fiscal year 2023. “I think it should all go to Visit Harford.”

Guthrie, who represents District A, originally proposed a bill that would have given districts without cities 50% of their tax revenue. The council voted 4-3 on Jan. 3 to amend that rate down to 25%. Guthrie, Boyle-Tsottles and Penman opposed the amendments.

“There was this need to cut that in half, which I thought was ridiculous. People at our meeting Monday night, they wanted to bring a class-action suit against this council and the county if, in fact, the bill were to pass because they feel that they are being discriminated against,” Guthrie said. “It doesn’t look like my bill at all anymore.”

Guthrie added that his district has nine hotels.

Additionally, the bill specifies that hotel occupancy tax revenue may not be used for capital projects or debt service and will take effect in 60 days.