The museum could work without the local tax money, but it would make it more difficult to get the needed bond financing, said coalition spokesman Dennis E. Frye.
Potential investors need to see that debt payments are below a certain percentage of total expenses, the report says.
The funding request sets up a possible showdown between the museum and a proposed $12 million to $15 million minor league baseball stadium.
Stadium supporters plan to present the city and county with a funding plan, including a formal request for hotel tax money, during a joint meeting Tuesday.
Hagerstown Mayor Robert E. Bruchey II said he would like to see both projects happen.
"They're both important projects and they both deserve the same amount of scrutiny and our full attention," he said.
The Washington County Commissioners ultimately will decide how to spend an estimated $300,000 a year for tourism projects that will be generated by a hotel tax increase.
The tax will go from 3 percent to 6 percent on July 1. In addition to raising money for tourism, the increase will help offset $250,000 a year in water and sewer debt reduction.
The coalition is requesting a commitment of $130,000 in 2003, with annual increases of 3.5 percent a year, the report says.
The request is based on 330,000 visitors the first year, 2003, increasing to 400,000 visitors in 2011. Each would pay an admission fee of $12 for adults, $11 for senior citizens and $9 for children.
The report does not include the cost of buying the 3.5 acre site at the corner of Antietam and Potomac streets and demolishing the buildings. That cost would be borne by the city or an independent agency.
Hagerstown has not made a commitment to take on that expense.
Most County Commissioners said a funding commitment to the museum is premature.
"They've got a lot of legwork to do," said Commissioner John L. Schnebly, referring to a need for private and public fund-raising efforts as well as being granted an affiliation with the Smithsonian Institution.
The coalition is seeking $450,000 from the state to jump-start the plan. Hagerstown is investigating whether a city business loan fund could be used for that purpose.
Elected officials said they are impressed with the business plan, paid for mostly through a city-county grant, even though they were not expecting to be asked for more tax money.
"I'm fairly impressed with that they've presented so far," said Commissioner William J. Wivell.
Commissioner Paul L. Swartz said he has no problem with hotel tax money going to the museum, but also wants some of those funds to go to the stadium.