Yes that's how the bounty system works, problem is I did kill them all.
Someone (a guard on the wall further into town?) saw you. Maybe you have to be crouched down? Maybe you have to kill everyone in the dining room too? I went kind of murder happy when I did this quest, and killed everyone from the dinner table on, including my helpful cook friend.
Edit: Maro runs away, right away. You have to kill him, too, as he is a witness. You may have to find him later on the docks to do so.