"There's a huge revenue stream flowing into Cape May," Dennis Crowley, chairman of the Municipal Taxation, Revenue Advisory Committee (MTRAC), said. "We need to stand on the side of the stream and pluck a salmon for the City of Cape May." The salmon he said represents the 1% increase in occupancy tax his committee would recommend to Cape May City Council.
In pandemic tainted 2020 through October, the city of Cape May collected $1,494,400.23 in its share (2%) of the Sales and Occupancy tax. Translating into $74, 720,000.00 dollars of revenue spent by people visiting Cape May.
The 2% occupancy tax the city receives is in addition to the 5% the State of New Jersey collects and the 6.625% sales and use tax also charged. The total taxes collected on room rates equals 13.625%
"Most hotels don't itemize the breakdown," Crowley told MTRAC at its last meeting. "People won't notice a 1% increase," he added.
MTRAC in a recent meeting suggested increasing by 1% the City's authorization to have hotels and motels collect additional tax. The 1% is estimated to bring at a minimum an additional $800,000.00 in revenue to the City's general fund.
In a March 16th meeting of the City Council, Cape May introduced a $21.7 million budget with a zero-tax increase. The 5-0 vote to introduce the budget was what Mayor Zack Mullock referred to as "what good government looks like."
The budget includes increases in salaries and additional new-hire positions within the City government. Mayor Mullock went on to thank all those involved “for working together to get our tax rate back in check and bring in a zero percent tax increase. It was important to me that this budget not only ‘cut out the fat,’ but also provide for capital expenditures that are desperately needed.”
MTRAC a committee created under the new administration is charged with investigating sources of revenue for the City of Cape May. According to the description on the City's website MTRAC: "To investigate alternative sources of revenue, and to consider new and innovative ways to finance the provision of municipal services, to improve infrastructure, to plan for capital improvements, to maintain a stable tax and ratable base, and to maintain the City's property taxes at the minimum level necessary to provide those necessary services."
Councilwoman Stacey Sheehan is the liaison to the City Council. Chairperson Dennis Crowley is also a member of the Taxpayers Association of Cape May. At their two most recent meetings the committee discussed raising occupancy tax, increasing beach tag fees, and the creation of a $100 transferable commercial beach tag.
During a February City Council meeting, another member of the Taxpayers Association, Jules Rausch, during public comment, first proposed the idea of an increase in occupancy tax. It was at that meeting that Councilman Meier lashed out at the idea.
Tourism taxes were created by Governor James McGreevey in 2003. Originally intended as a vehicle to fund cultural agencies and the arts, that hasn’t been the case in the past few years. Much of the collected tax finds its way into the general fund.
Recently, a New Jersey Senate committee advanced legislation to allocate all hotel and motel occupancy fees revenue to arts, heritage, and tourism programs in New Jersey.
“Cape May County sends almost a half-billion dollars in tourism tax to Trenton and only about $1 million comes back in return,” Senator Mike Testa said. “It is time to pass legislation so we can invest in our tourism economy to bolster our community.”
Last Thursday, the state Senate Government, Wagering, Tourism & Historic Preservation Committee voted on Senate bill S-2986 moving legislation along to keep collected taxes going to the arts.
“The hotel-motel occupancy fee has been around for nearly 20 years, but that dedicated revenue has not always been plowed back into the arts, historic preservation, or tourism as it should have been,” state Sen. Vin Gopal, D-Monmouth, said in a news release. “We need to solidify support for these institutions that are so much a part of our state’s identity.
Gopal and Testa both refer to the 5% tourism tax collected by the State of New Jersey. The current 2% collected by the City of Cape May since 2003 is only collected on hotel, motel, and bed and breakfast rentals.
MTRAC said it was investigating whether the city could collect its share of the 2% occupancy tax on AIR B&Bs and whole-house rentals.
If accepted MTRAC recommendations would have to be proposed as an ordinance to be presented in Council and ultimately transmitted to Trenton, New Jersey for approval. If approved the tax
could then be collected within 90 days of approval.
It is unclear how long the process would take.