Dewey commissioners debate accommodations tax

Following Sussex County’s decision to impose a 3 percent lodging tax on hotels, motels and tourist homes in unincorporated areas, Dewey commissioners renewed discussion Dec. 7 about imposing a similar tax. 

Dewey already taxes short-term rentals. Mayor TJ Redefer said the town’s hotels and motels have a competitive edge because they are not taxed. 

“We need to correct our code so we have the ability to tax up to 3 percent in accommodation tax on hotels and motels,” Redefer said. “I’m not looking for a 3 percent tax to begin immediately. We can look at revenue streams and make changes if needed.”

Commissioner Gary Persinger agreed the town should be able to impose up to a 3 percent tax. “I would like to have a better sense of how much money would be generated with this. We would have to have a charter change as well.”

Town Counsel Fred Townsend said a prohibition against imposing a town accommodations tax exists in the charter, which requires state action to amend. Townsend said state legislation allowing imposition of the tax may negate the effect of the current charter.

Commissioner Dale Cooke said the town needed to get proposed charter changes to the Legislature for a vote.

“Let’s get it done, and then it’s done, and we don’t need to discuss this anymore,” Cooke said. “I agree we should have the ability, but I don’t think we should have it till we get our finances in order, and I don’t think they’re in order right now.”

Persinger said the state would still need to approve imposing a hotel/motel accommodations tax; Townsend agreed.

“Our all-powers clause is not sufficient to justify imposition of a tax,” Townsend said. “State legislators adopted the law that no municipality may impose a new tax without specific authorization from state legislation. I don’t know if removing a prohibition authorizes a tax.”

Persinger proposed the town look into a referendum, and then state approval for the tax. Redefer said the most important step was to task Townsend and Town Manager Scott Koenig with researching the issue so the town could implement the tax soon.

“We need to figure out what legally needs to be done to make the charter change,” Koenig said.