FY2026 Proposed Operating and Capital Budgets

FY2026 Proposed Budget Fund Budgets

Hotel Room Rental Tax

Hotel Room Rental Tax Hotel Rental Tax was implemented in FY05, providing dedicated funding for the Tourism Council. A Memorandum of Understanding (MOU) was established that required the Tourism Council to provide funding to certain tourism related agencies in amounts similar to that previously provided by Frederick County. Bill No. 16-13, which became effective October 29, 2016, increased the hotel tax from 3% to 5%, and a new MOU was signed. After dedicating a County administrative fee, the new MOU sets aside 10% of the revenue stream to fund existing debt service, 12.5% for the Main Streets matching program, 12.5% for the Tourism Reinvestment in Promotion & Product (TRIPP) Program, 12.5% for county promotion via a Destination & Development Fund, and 62.5% for the Tourism Council's marketing & operations budget. Budget Highlights In FY26, Frederick County, continues to levy a 5% Hotel Room Rental Tax on accommodations rented for 90 days or less. This tax applies to establishments with more than 10 sleeping rooms in the main building or more than 20 across auxiliary structures. In FY24, the county experienced strong growth in tourism, with visitor spending reaching a record $539 million, up from $518 million in FY23. This positive trend continued into FY25, contributing to steady increases in hotel tax revenues. The additional revenue has supported county tourism initiatives, economic development, and promotional efforts. Looking ahead to FY26, the continued strength of the hospitality sector, bolstered by state investment—including $7.5 million allocated for a downtown hotel and conference center project—positions the county for further revenue growth, ensuring ongoing support for local projects and services.

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