Could Worcester County, Maryland raise its hotel room tax rate above 3% on its own using code home rule powers, or did it need state law authority?

Plain-English summary

Worcester County's attorney asked the Attorney General whether the county commissioners could raise the county's hotel room tax rate, and if so, whether the county could keep all of the extra revenue, including money collected from hotels inside the county's municipalities.

The Attorney General found that two separate statutes authorized Worcester County to levy a hotel tax up to 3%: a local law specific to the county's resort area, and a general Maryland law (Article 24) that applied to code home rule counties statewide. Only the general statewide law let a code county raise the rate above 3%, up to 5%, and only with the unanimous consent of the county commissioners. The opinion concluded Worcester County could not use its own code home rule authority under the Maryland Constitution's Code Home Rule Article to amend its local hotel tax law and raise the rate itself, because the Maryland Constitution reserves the power to authorize new or increased local taxes to the General Assembly, acting through a general law applicable to code counties as a class. As for revenue collected within municipalities, both the local law and the general state law required that money to be paid over to the respective municipal corporation rather than kept by the county.

Currency note

This opinion was issued in 1992. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Could Worcester County raise its hotel room tax rate above 3% according to this opinion? Yes, but only under the general state law for code counties (Article 24), which let the county commissioners raise the rate from 3% up to 5% with unanimous consent. The county's own local hotel tax law still capped the rate at 3%.

Could Worcester County use its own code home rule powers to change the hotel tax rate itself? No. The opinion concluded the county could not use its code home rule authority under Article XI-F of the Maryland Constitution to amend the local law and raise the rate, because the Constitution reserves authority over new or increased local taxes to the General Assembly acting by general law covering code counties as a class.

What happened to hotel tax revenue collected from hotels located inside a town or city within Worcester County? According to the opinion, both applicable statutes required that hotel tax proceeds collected within a municipality be paid over to that municipal corporation rather than retained by the county.

Background and statutory framework

Two statutes authorized Worcester County to levy a hotel tax: a local law specific to the county's resort area (Worcester County Code, T & R §1-601), and a general Maryland law applicable to several counties, including code home rule counties (Article 24, §§9-301 through 9-326). Both capped the rate at 3%, but only the general state law let a code county raise the rate to 5% with the county commissioners' unanimous consent. Both statutes also required proceeds collected within municipalities to be paid to the respective municipal corporation. The opinion traced the local law's history from its 1971 enactment (as former Article 81, §411D) through its 1988 recodification into Worcester County's public local laws, alongside the enactment of the general code-county provisions (former Article 81, §411H, recodified as Article 24, §§9-301 through 9-326). Although a Revisor's Note in 1988 suggested combining the two statutes, the General Assembly instead retained both, which the opinion read as confirming that Worcester County still had concurrent authority to levy the tax under either one.

The opinion then addressed whether Worcester County could instead amend its own local tax law using the powers granted to code home rule counties under Article XI-F of the Maryland Constitution to enact, amend, or repeal public local laws. It found that question governed by a specific constitutional limitation, Article XI-F, §9, which bars a code county from levying any tax not already in effect or authorized at the time the county adopted code home rule, unless the General Assembly enacts a general law applying alike to all code counties. Reading that provision alongside the parallel tax-levy limitation on municipal home rule counties, which the Court of Appeals has construed broadly to cover regulatory as well as revenue-raising levies, the opinion concluded the entire subject of code-county tax levies and rates is reserved to the General Assembly. Because the local law setting Worcester County's rate at 3% predated any later state authorization to exceed that rate, the county could not use its own home rule powers to raise the rate; only the General Assembly's separate general law authorizing all code counties to go up to 5% could do so.

Citations and references

Statutes:

• Worcester County Code, Taxation and Revenue (T & R) §1-601, the county's local hotel tax law
• Article 24, §§9-301 through 9-326 of the Maryland Code, the general code-county hotel tax law, including §9-304(b)(1), §9-304(c), and §9-318(a)(2)
• Chapter 68 of the Laws of Maryland 1971 and former Article 81, §411D, the original local law
• Former Article 81, §411H, the original general code-county provision
• Chapter 2, Laws of Maryland 1988 (Sections 4 and 9), and Chapters 580 and 592 of the Laws of Maryland 1991, recodification and amendment history
• Article XI-F, §§1, 3, and 9 of the Maryland Constitution, the Code County Home Rule Article and its tax-levy limitation
• Article XI-E, §5 of the Maryland Constitution, the parallel Municipal Home Rule Article limitation
• Article 25B, §2, defining the single class of code counties

Cases:

• Campbell v. Mayor and Aldermen of the City of Annapolis, 289 Md. 300, 308, 424 A.2d 738 (1981), Maryland Court of Appeals
• Montgomery County Board of Realtors v. Montgomery County, 287 Md. 101, 106-07, 411 A.2d 97 (1980), Maryland Court of Appeals

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1992/Volume77_1992.pdf (this opinion appears at printed page 37 of the bound annual volume; Maryland's site does not publish a standalone PDF of this opinion)

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

Counties - Code Home Rule Counties - Taxation - Increase in Rate of Worcester County Hotel Room Tax

August 21, 1992

Edward H. Hammond, Esquire
County Attorney for Worcester County

You have requested our opinion whether the Worcester County Commissioners may increase the rate of the county hotel room tax. If the rate may be increased, you have asked whether the county may retain all of the additional revenue.

For the reasons stated below, we conclude that the commissioners may increase the rate from the current 3% to up to 5% with unanimous consent. Under the applicable law, the proceeds collected within municipalities are to be paid to the respective municipal corporations.

I

Current Taxing Authority

At the present time, two separate statutes authorize the levy of this hotel tax. One of these statutes applies only to the resort area of Worcester County and is found in the local code. Worcester County Code, Taxation and Revenue ("T & R") §1-601. The other applies to various counties, including code home rule counties, and is found in Article 24, §§9-301 through 9-326 of the Maryland Code.

Both statutes authorize Worcester County to levy a hotel tax of up to 3%. T & R §1-601(a) and Article 24, §9-304(b)(1). However, the public general law authorizes a code county to increase the rate up to 5% "with the unanimous consent of the county commissioners for the county." Article 24, §9-304(c). Both statutes also provide for the distribution of proceeds collected within municipalities to the respective municipal corporation. T & R §1-601(f)(ii) and Article 24, §9-318(a)(2).

The law that applies to Worcester County only was initially enacted as Chapter 68 of the Laws of Maryland 1971 and was formerly codified as Article 81, §411D of the Maryland Code. Similarly, an authorization for three code counties, including Worcester County, to levy a hotel tax was formerly codified as Article 81, §411H. In the enactment of the Tax- General Article of the Maryland Code, the General Assembly transferred the law for Worcester County to the public local laws for Worcester County. Chapter 2, Laws of Maryland 1988, Section 9. In the same enactment, various provisions of law, including §411H, were revised and enacted as Article 24, §§9-301 through 9-326. Chapter 2, Laws of Maryland 1988, Section 4, at 658-72. See also Chapters 580 and 592 of the Laws of Maryland 1991.

The Revisor's Note to the 1988 enactment pointed out that two separate statutes authorized Worcester County to levy a hotel tax and suggested that the General Assembly might wish to combine them. See Chapter 2, Laws of Maryland 1988, at 632. Because the General Assembly did not adopt the Revisor's suggestion but instead dealt with both statutes in the same enactment, the clear implication is that there remains concurrent authority to levy the hotel tax in Worcester County.

II

Amendment of Local Law

Although the local law for Worcester County limits the tax to not more than 3%, the law for all the code counties explicitly allows the rate to be raised up to 5% by unanimous consent of the commissioners. As a code county, Worcester County could avail itself of this authority.

It has been suggested, however, that the county itself might also amend the local law in an exercise of the powers conferred by the Code County Home Rule Article, Article XI-F of the Maryland Constitution. In relevant part, this article authorizes any county that has adopted code home rule to enact, amend, or repeal its public local laws. Article XI-F, §§1 and 3. A public local law "means a law applicable to the incorporation, organization or government of a code county and contained in the county's code of public local laws." §1.

Although the hotel room tax authorization for Worcester County is now part of its code of public local laws, the question remains whether a tax authorization is a law relating to the "incorporation, organization or government" of a code county. This office has suggested that the scope of this lawmaking power is to be broadly construed, but the matter has not been definitely resolved by the courts. See generally 62 Opinions of the Attorney General 275 (1977). Moreover, the levying of taxes is subject to a special constitutional limitation:

A code county shall not levy any type of tax, license fee, franchise tax, or fee which was not in effect or authorized in the code county at the time it came under the provision of this Article, until an express authorization of the General Assembly has been enacted for this purpose by a general law which in its terms and effect applies alike to all code counties in one or more of the classes provided for in Section 5 of this Article.

Article XI-F, §9.

As this office has noted, the provisions of the Code Home Rule Article are generally modeled on the Municipal Home Rule Article, Article XI-E. See 62 Opinions of the Attorney General 215 (1977). This parallelism is especially true of the tax levy limitation in §9 of the Code Home Rule Article, which is very similar to the limitation in §5 of the Municipal Home Rule Article. In interpreting §5, the Court of Appeals has said that it applies not only to revenue-raising levies but to regulatory levies as well. Campbell v. Mayor and Aldermen of the City of Annapolis, 289 Md. 300, 308, 424 A.2d 738 (1981). Such a broad interpretation of this limitation suggests that the entire subject of the levying of taxes and fees by code counties has been reserved to the General Assembly. This understanding is consistent with the practice of other counties, including the charter home rule counties. See Montgomery County Board of Realtors v. Montgomery County, 287 Md. 101, 106-07, 411 A.2d 97 (1980).

In exercising its reserved power, the General Assembly could simply authorize the code counties to levy a particular type of tax but leave the rate and other terms to the counties. However, it is clearly within the reserved powers of the General Assembly in this matter to specify the rate and other terms. Moreover, where a local law authorizes a county that subsequently adopts code home rule to levy tax at a specified rate, the county may not use its code home rule powers to raise the rate or otherwise alter the terms of this law, for such an action would be inconsistent with the reserved powers of the General Assembly. Of course, other than by repealing such a local law, the General Assembly may exercise its reserved powers in matters of taxation for code counties only by general law.

III

Conclusion

In summary, it is our opinion that Worcester County may not exercise its code home rule powers to amend the local law that authorizes the county to levy a hotel tax of up to 3%. However, under a general law for all code counties, the commissioners could, by unanimous consent, increase the rate of the hotel tax from 3% up to 5%.

J. Joseph Curran, Jr.
Attorney General

Richard E. Israel
Assistant Attorney General

Jack Schwartz
Chief Counsel
Opinions and Advice

1
Worcester County became a code county in 1976.

2
There is but one class for code counties. Article 25B, §2.

3
The General Assembly's Committee on Local Legislation, which proposed the Code Home Rule Article, did not focus specifically on this issue in its report. After pointing out that code counties would have the power to enact, amend, or repeal laws in their local codes, the report simply noted that certain local powers were reserved to the General Assembly, including the authority to cap the tax rate and the amount of debt. See Legislative Council of Maryland, Report to the General Assembly of Maryland of 1965 at 362.