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Millsboro council rejects proposed 3% lodging tax after hours-long debate
Summary
After extended debate over enforcement, purpose and potential impact on visitors, Millsboro council voted 4–3 on July 7 to reject a proposed ordinance that would have added a 3% lodging (hotel) tax defined under state law.
MILLSBORO, Del. — The Millsboro Town Council voted down a proposed ordinance to impose a 3% lodging tax on July 7 after a prolonged and often partisan debate about the town’s fiscal needs and the ordinance’s scope.
Supporters said the tax would create a steady, locally controlled revenue stream to build reserves for street repairs, an asset management program and other infrastructure needs. Opponents countered that council had not quantified the town’s needs and warned the tax could be difficult to enforce and harm local occupancy rates.
The ordinance would have adopted state lodging definitions that include hotels, motels and certain “tourist homes” (properties with at least five permanent bedrooms and no cooking facilities). Proponents said the language aligns Millsboro with neighboring jurisdictions that already levy similar taxes; opponents said the definition could sweep in unfamiliar rental arrangements and would require additional enforcement resources.
Councilwoman Mary Dilva, who voted for the measure, said the town needs a way to build reserves for asset replacement and storm‑day funds. “I see this as a mechanism to accomplish that,” she said. Those in favor projected roughly $120,000 in annual revenue based on earlier budget discussions.
Opponents voiced skepticism about both the timing and the allocation of proceeds. One council member said the town had not produced a definitive asset‑management price tag and urged the council to identify exact needs before levying a new tax. Another argued that taxing travelers could make local lodging less competitive.
After debate the roll‑call vote was 3–4: yes — Dilva, Kimberly Khan and Councilman O’Neal; no — Mayor Bob McKe, Councilmen Presley, Mason and Davis. The motion failed.
Council members on both sides suggested the issue could be revisited next budget cycle, once staff and the asset management committee provide clearer estimates of required funding and possible earmarks for any lodging tax revenues.
