Accommodations tax becomes hot-button issue

District 3 Councilman Mark Schaeffer is on a mission to rescind the Sussex County accommodations tax on hotels, motels and tourist homes in unincorporated areas.

The tax, which was passed in November 2019 and enacted Jan. 1, 2020, has been placed on council's Tuesday, Nov. 9 agenda at Schaeffer's request.

During the Oct. 26 council meeting, Schaeffer said he was reading the quarterly budget report when he noticed the 3 percent tax on rooms was being collected. He said he was shocked when he discovered the line item of nearly $500,000.

Schaeffer said he was not aware the tax had been reinstated since it was suspended due to the COVID-19 pandemic.

“This was done in the darkness of night, that’s my perception. It was never mentioned to me,” he said. “There should have been a vote to reinstate this tax.”

Rieley: Councilman is mistaken

District 5 Councilman John Rieley said Schaeffer is mistaken. Rieley said the original motion to suspend the tax in April 2020 included a provision that it would be reinstated when the state of emergency was lifted, which was July 13, 2021. Schaeffer was not in office when that original action was taken.

Then, because no one was sure when the mandates would end, it was brought back to council May 25, 2021 to see if there was interest in reinstating it before the state of emergency was lifted, Rieley said.

At that meeting, Schaeffer made a motion to defer any action on reinstating the tax at that point, which passed 4-1. He said he would have preferred to make a motion to rescind the tax but he did not have three votes to pass it.

“His understanding of this is incorrect and he's spreading a false narrative,” Rieley said. “The whole integrity of the council has been impugned. It was all done publicly. Nothing was done in the dark of the night. It's all been very transparent that the tax would be reinstated when the state of emergency was lifted.”

On June 21, the county finance department issued letters to hotel and motel owners informing them the tax would resume July 13 and be collected by the state.

The minutes of the April 25, 2020 meeting read:

“A motion was made by Mr. Burton, seconded by Mr. Rieley, that the Sussex County Council approves the following initiatives related to the COVID-19 pandemic, effective March 13, 2020, the effective date of Governor Carney's declaration of state of emergency, until such time as the declaration is limited [lifted]: The suspension of the collection of the accommodations tax for hotels, motels and tourist homes in the unincorporated areas of the county beginning with all collections that would have been due on April 15.”

Schaeffer: Rescind the tax

“We’ll see what happens. I think the tax should be rescinded. It’s not the time to tax small business people, especially when county revenue is 51 percent over budget,” Schaeffer said.

“If he wants to overturn the tax, he can make that motion at the Nov. 9 meeting,” Rieley said.

Schaeffer said the tax money could be spent by tourists to support small businesses such as restaurants.

“This needs to be corrected, and people who paid the tax need to be refunded,” he said.

Schaeffer said he re-read the May 25 motion and said there is no mention of reinstating the tax. “It was crystal clear to defer it,” he said.

He disputes those who say it was automatically reinstated when the state of emergency was lifted.

See the minutes and audio:

https://sussexcountyde.gov/sites/default/files/packets/Public.Packet.042820.pdf

https://sussexcountyde.gov/sites/default/files/audio/County%20Council%20April%2028%2C%202020.mp3