Anne Arundel County considers new hotel tax allocation for Annapolis art programs

On March 28, 2025, the Maryland Legislature introduced Senate Bill 979, a legislative proposal aimed at revising the framework for hotel rental taxes and sales taxes in Anne Arundel County, particularly affecting the City of Annapolis. This bill seeks to clarify the responsibilities of accommodations providers regarding hotel rental taxes and to establish a more equitable distribution of tax revenues generated within the city.

The primary focus of Senate Bill 979 is to hold accommodations providers accountable for hotel rental taxes on bookings not facilitated by intermediaries. This provision aims to ensure that all rental transactions contribute fairly to local tax revenues, addressing concerns that some providers may evade tax obligations through third-party platforms. The bill also allows counties to impose a hotel rental tax rate that can be lower within municipalities than outside, potentially incentivizing tourism and local business growth.

A significant aspect of the bill is its revenue allocation strategy. It mandates that any revenues collected from sales or use taxes on fuel, utilities, and space rentals in Annapolis be shared equally between the city and Anne Arundel County. Additionally, it stipulates that a portion of hotel tax revenues generated in Annapolis be directed to support local arts initiatives, including the Annapolis Art in Public Places Commission and the Arts Council of Anne Arundel County.

The introduction of Senate Bill 979 has sparked discussions among lawmakers and stakeholders. Proponents argue that the bill will enhance local funding for arts and culture while ensuring fair tax practices among accommodations providers. However, some critics express concerns about the potential burden on small businesses and the implications of increased taxation on tourism.

The economic implications of this bill could be significant. By ensuring that accommodations providers contribute to local taxes, the bill aims to bolster funding for community projects and services, which could enhance the overall quality of life in Annapolis. Furthermore, the targeted support for the arts may attract more visitors, fostering a vibrant cultural scene that benefits local businesses.

As Senate Bill 979 progresses through the legislative process, its outcomes will be closely monitored. The bill's potential to reshape the tax landscape in Anne Arundel County and its implications for local businesses and community funding will be pivotal in determining its success and acceptance among constituents.