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Ocean City

City may see cut in state tourism, marketing funds

(Jan. 23, 2015) Maryland’s ongoing fiscal turmoil will likely have an effect on state tourism funding to local agencies, including Ocean City, resort leaders heard last week.

Governor-elect Larry Hogan will likely be asking Maryland’s government offices to absorb the state’s projected $400 million revenue shortfall for fiscal year 2015 by further cutting expenditures, Maryland Tourism Commission Chair Greg Shockley said.

Shockley, owner of Shenanigan’s and the Shoreham Hotel, told the Ocean City Tourism Commission that the Maryland Office of Tourism was anticipating having to cut aid to state-subsidized destination marketing organizations (DMOs), of which Ocean City is a major benefactor.

“They haven’t finalized the amount yet,” Shockley said after the meeting. “Right now, they’re looking at just under $200,000 in cuts to DMOs. Ocean City and Baltimore City get the most, so they would probably see the largest cuts.”

Under current Gov. Martin O’Malley’s budget, Ocean City was slated to receive $362,603 in state tourism grants, a number that was already down considerably from the roughly $450,000 the city has been given in years past.

“Hogan has a very different view of how the state should spend money,” Shockley said. “The whole budget is going to be under pressure.”

As they have before, city officials — and tourism leaders across the state — will likely argue that tourism is a particularly worthwhile public investment, given the immediacy of return. Their argument is that money invested in spring marketing creates increased visitorship, and thus increased tax revenues to public coffers, in the summer months immediately following.

“You don’t cut spending that creates immediate revenues back,” said Mayor Rick Meehan. “That’s one of the hardest messages to get across.”

Tourism industry sales increased 3.2 percent in 2013 over 2012, according to an Oxford report commissioned by the Maryland Department of Business and Economic Development, released last month.

Visitors in Maryland spent about $15.4 billion in 2013, creating $2.1 billion in state and local tax revenue, the report found.

Ocean City saw $1.37 billion in tourism sales in 2013, up seven percent from 2012.

For the resort, the most critical income stream is the 4.5 percent room tax collected by the state on the city’s behalf. Part of this revenue is unrestricted, while a certain amount must be dedicated to the city’s advertising and marketing.

Room tax returns for the 2013-2014 fiscal year totaled $13.37 million, and current room tax revenue is trending up 3.25 percent through this past November, Meehan said.

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