By Glenn Rolfe

GEORGETOWN — Sussex County’s lodging tax, suspended during the COVID-19 state of emergency and reinstated in July, has triggered debate among council members.

At council’s Oct. 26 meeting, first-term District 3 Councilman Mark Schaeffer alleged that the tax was reinstated in the “darkness of night.”

“That is my perception. Again, I’ll stand corrected if I am wrong. But my perception is that this tax was put back in place in the darkness of night, and it was never mentioned to me,” he said. “I’ll wait for the documents. If I am incorrect, I’ll stand corrected, and I appreciate your time.”

Councilman Doug Hudson took exception to Councilman Schaeffer’s remarks.

“Mark, I don’t think you should say we did that in the darkness. That is wrong to say. You should not accuse me of doing that,” Councilman Hudson said, adding that he initially did not recall how the tax was restarted.

He explained that after speaking with Sussex County Finance Director Gina Jennings and council Vice President John Rieley prior to last week’s meeting, he recalled “that it was automatically put back in place.”

On April 28, 2020, council voted to suspend the collection of the lodging tax until the state of emergency declared by Gov. John Carney the prior month was lifted. The tax was reinstated in July 2021, however, which was more than a month after a May 25 council meeting at which Councilman Schaeffer motioned to defer action on a proposal to reinstate the fee before the state of emergency was officially lifted.

Gov. Carney ended the state of emergency order July 13 of this year.

“Mark had brought up the minutes from May 25, where it was brought up before the council of possible action or what we wanted to do,” Councilwoman Cindy Green said Wednesday. “We voted 4-1 to defer — meaning the tax. We deferred the tax, action on the tax.”

More discussion on Tuesday agenda

At Councilman Schaeffer’s request, the accommodations tax is back on council’s Tuesday agenda.

“I am going to ask the question: Why wasn’t the council informed of the fact the tax was going to be reimposed?” said Councilman Schaeffer on Wednesday. “We’ll discuss it, and I think we’ll get it resolved. Any type of action deserves and should have an affirmative vote of full council, and it should be done in public, not in private.”

Councilman Rieley said Councilman Schaeffer, a November 2020 election winner who joined the body in January 2021, is mistaken.

“Mark said a lot of things the last couple weeks that have really been objectionable,” he said Wednesday. “I guess we’re going to have the debate Tuesday.”

Councilwoman Green said she expected discussion about the tax.

“I assumed it was deferred (in May), and we would bring it up at a better time, maybe after the state of emergency. There is no automatic button. Somebody still put it into play. There was no transparency. That is what Mark said,” she said.

“It was implemented six weeks later or whatever the timing was. We were surprised to know that, in the first quarter, we had in fact collected almost a half-million dollars in that tax.”

Fee took effect January 2020

Unanimously approved by Delaware’s General Assembly as House Bill 228, Sussex County’s lodging tax was signed into law by Gov. Carney on July 17, 2019, and approved by County Council in November of that year. It went into effect Jan. 1, 2020, authorizing the county to impose a local accommodations tax of up to 3% of rent on rooms in a hotel, motel or tourist home in unincorporated areas of the county.

As specified in the bill, funds collected may only be used in Sussex County for the capital and operating costs of beach nourishment, waterway dredging, economic development, tourism programs, recreational activities and water-quality and flood-control projects.

Prior to the tax, “we heard complaints from the public that people go into a town and have to pay a lodging tax. The county didn’t have one. They thought that was unfair,” said County Council President Michael Vincent. “Second thing was (that) this lodging tax only goes for certain things — dredging, beach replenishment. It has got to be spent on things that those people come here and use.”

Councilman Rieley explained why county leaders back the fee.

“The logic for supporting the tax is that it is being assessed against visitors. People come here, and they use the amenities in the area. The local taxpayers have to pay for the maintenance of those amenities — dredging, beach replenishment, economic development and so forth,” he said.

“The logic is, if (tourists) are coming here and using the amenities, they should help pay for it. So the 3% tax is helping to share that cost with people that are actually coming here and using it.”

He added that municipalities such as Lewes, Rehoboth Beach and Bethany Beach already have their own hotel taxes.

“Our ordinance doesn’t affect theirs. We don’t assess the tax on the properties inside the town. It’s only the ones in the county,” Councilman Rieley said. “So this was an equalization where we are leveling the playing field between properties in town and properties out of town.”

Council’s April 28, 2020, meeting minutes on the tax-suspension motion — made by then-Councilman Irwin “I.G.” Burton and seconded by Councilman Hudson — states “that the Sussex County Council affirms the following initiatives related to the COVID-19 pandemic effective March 13, 2020, the effective date of Gov. Carney’s declaration of a state of emergency that were already approved until such time as the declaration is lifted: (1) the suspension of the collection of the Accommodations Tax for hotels, motels, and tourist homes in the unincorporated portions of the County that would be due on April 15.”

With the lifting of the state of emergency, lodging tax collections resumed in July.

But Councilman Schaeffer said, “I believe that that requires a vote of council to reinstitute the lodging tax.”

Councilman Rieley insisted that there was no secrecy, adding that the county “sent out letters to all the hotel owners that would be affected by the tax, just as a heads-up, that it is going to be starting again. They shouldn’t have been caught off guard.”

Request to reinstate made in May

Back at the May 25 council meeting, County Administrator Todd Lawson addressed a request to consider reinstating the lodging tax ahead of the lifting of the state of emergency.

“On March 13, 2020, the county suspended the accommodations tax collection due to the effects of the COVID-19 pandemic, and corresponding declaration of the state of emergency by Gov. Carney. At that time, the council voted to suspend the accommodations tax until the governor’s declaration was lifted,” Mr. Lawson said at that meeting.

“As restrictions are currently being modified and lifted, the council could consider reinstating the tax collection, since it’s unclear when the governor will end his state of emergency declaration.”

He continued, “To be clear, the motion that took place back in March (2020), we simply stated we would suspend until the emergency declaration had also been lifted. It’s unknown or unclear when the governor may actually lift the state of emergency. So if you choose to take action today, we could reinstate the collection of that tax.”

Councilman Schaeffer responded by motioning to defer voting on the tax. That motion passed 4-1, with Councilman Vincent dissenting.

“There was no formal action, no debate, no vote and public discussion regarding reinstating that tax. My motion is crystal clear in the minutes. So there is absolutely no question that council voted not to reinstate the tax, and (the tax) reappeared (about) a month later.”

Councilman Schaeffer said his reasoning for deferring should have been clear.

“We can play games with semantics and intent, but my motion was crystal clear, and my intent was to not reimpose that tax,” he said.

Councilwoman Green agreed.

“We can debate the split hairs. The conversation was the tax. It was deferred in my opinion. I voted to defer. And I also wasn’t given the opportunity to vote against it.”

At last week’s council meeting, Councilman Schaeffer said, “I can tell you, quite frankly, everyone in Sussex County knows what a big issue I made of that tax. … The point I am making is everybody was abundantly clear on what an important issue this was to me personally. And I feel that this was done in the darkness of night.”

Councilwoman Green, also newly elected, added that the lodging tax was a big issue during the 2020 campaign.

“It was something that Mark ran on,” she said. “We are the new members, and we had to answer that question during our campaigns; the lodging tax part was part (of that).”

Councilman Rieley said this unwarranted suspicion by Councilman Schaeffer sends a disturbing message.

“The thing that troubles me the most about it is it undermines the public’s confidence in the integrity of the council, the fact (that) there is this suspicion that things are being done … in the dark of night, as Mark would say. Which is not the case,” he said.

“The thing is that things are going so well in the county right now. I mean, it doesn’t get much better than this. Fiscally, we are strong by virtually every measure. … Why are we pulling trouble through the fence? I don’t get it.”