Hogan’s Marriott message a mixed one

Supporters of a bill that would have clarified Maryland law as it related to the collection of sales taxes for online hotel bookings say Gov. Larry Hogan is sending mixed messages when it comes to retaining one of the state’s largest employers.

Hogan, before leaving for an economic development trip to Asia, vetoed the bill that would have clarified how the state’s online hotel tax applies to online booking companies, a bill that Marriott International wanted the governor to sign. The Bethesda-based company is searching for a new headquarters.

The governor, just days after issuing the veto, announced on social media that he was supporting Maryland businesses by staying in Marriott hotels while on his 12-day trip to China, South Korea and Japan.

“If you’re sitting in that corporate headquarters in Bethesda you have to be really confused,” said Sen. Richard S. Madaleno Jr., D-Montgomery County and sponsor of the now-vetoed bill. “The governor agreed with all our points but vetoed the bill.”

Madaleno said the potential whiplash effect of the veto coupled with staying in Marriott hotels will leave the hotel company’s officials wondering what kind of support they “are going to have when it comes to making a decision about keeping the headquarters in the state.”

Grover Norquist, president of  Americans for Tax Reform, wrote to Hogan urging a veto and called the legislation a new tax that “would harm Maryland businesses and deter tourists from choosing Maryland as a travel destination.”

The Washington, D.C.-based conservative tax reform advocacy group is known for asking elected officials and candidates to sign pledges to oppose all tax increases.

Spokesmen for Americans for Tax Reform and for Gov. Hogan did not respond to a request for an interview.

Philip Minardi, a spokesman for the Travel Technology Association, said that Hogan”s veto was in response to the call from small businesses in the state who said they would be hurt if the bill became law.

“In the final analysis, Hogan did the right thing by vetoing this dangerous new tax,” Minardi said in an email. “His signature on that veto means Maryland’s 200-plus small business travel agencies and the Maryland residents who use both brick-and-mortar and online travel agents to search, compare and book travel options won’t see increases in taxes, prices or red tape.”

Minardi called statements of support for the bill made by Madaleno and others “red-herring arguments.”

Hogan’s public statements about the bill, however, make no mention of concerns for how the bill would affect Maryland small businesses or his belief that it constituted a new tax.

Hogan, in comments made days after the end of the 2015 legislative session, appeared to be leaning toward the bill when he addressed concerns about whether signing the bill would constitute a violation of his campaign pledge to not institute new taxes. Hogan said he did not believe it was a new tax.

“It doesn’t cost the taxpayers of Maryland anything,” said Hogan during an April meeting with reporters and the Maryland-Delaware-DC Press Association. “The online companies are charging a fee, a tax if you will, and then not remitting that to the state. Consumers are already paying the money and they are skimming it off the top.”

Hogan, in a letter explaining his veto, said the bill impinged on pending litigation involving the Office of the Comptroller and Travelocity.

“The General Assembly should respect the long-standing practice of not passing legislation that would directly affect matters being litigated in a pending court case,” Hogan wrote in his veto letter.

Comptroller Peter V.R. Franchot didn’t feel as strongly about the potential effects of the proposed legislation.

“Comptroller Franchot would have preferred that Governor Hogan sign the online travel legislation into law as a matter of principle,” Michelle Byrnie-Parker, a spokeswoman for Franchot, said in a statement. “That said, the comptroller strongly believes, and has long maintained, that his office already has the legal authority to collect the full sales tax currently owed by online travel companies, based upon what they charge consumers for a hotel room in Maryland. This is why we have pursued litigation to collect what is rightfully owed to the state, and it is why we are confident that our position will be upheld in the courts.”

Exactly how the veto will affect Marriott’s search for a new headquarters is unclear.

Thomas Maloney, director of government affairs for Marriott International, declined to answer questions about the headquarters search, but said the company was disappointed by Hogan’s veto.

“The litigation the Governor referenced in his veto message began in 2012 and continues to languish in court with no foreseeable resolution,” said  Maloney. “When it passed SB 190 with large majorities, the legislature took an important step to update Maryland’s tax code to reflect the modern realities of internet travel booking.  This is something the courts are not equipped to do.

“While we are pleased the Governor chose to stay at our hotels during his Asia trip, we expect to continue our dialogue on this issue upon his return to Maryland,” Maloney said.