Manassas hikes tax rates, fully funds capital improvements

In a second-floor conference room inside city hall, away from the TV cameras and lights of the council chambers, Manassas leaders passed a tax increase for the coming year’s budget.

Starting July 1, residents will pay $198 more per year on their property tax bills, bringing the average residential city tax bill to $3,929. It’s about a 5% increase over the previous year’s budget.

The move, opposed by Councilmen Marc Aveni and Ian Lovejoy, continues a five-year trend of residential property tax increases in the city. Commercial property taxes will also increase about 3%, also continue a five-year upward trend.

Personal property taxes, commonly dubbed the car tax, levied on vehicles, boats, and trailers also increased from $3.20 to $3.60 per $100 of assessed value. The increased car tax is set to generate more than $950,000 more for the city, half of which will be allocated to the capital improvement budget and the other half to general government spending.

The business personal property tax rate decreased 10 cents to $3.60 per $100 of assessed value.

A fully-funded CIP

The new budget comes with an agreement to fully fund a capital improvement plan that includes a new $24 million, 63,500-square foot police station and 911 call center to be built on the city’s southside on now city-owned property at the Grant Avenue Shopping Center.

A second major project on the city’s list is a $7.6 million effort to remake Grant Avenue, between Lee Avenue in Downtown and Wellington Road on the south side, where the new police station will be located, into a boulevard. The plan calls for converting the road into a tree-lined space complete with a bike path, and potentially reducing the number of lanes from four to two, with dedicated turn lanes into properties along the stretch of road.

The city will begin borrowing money in 2019 for the projects that have estimated completion dates of 2021 and 2022, respectively.

“Embarrassing” $850,000 overtax to be repaid with end-of-year funds

The city council also voted not to use increased tax revenues to refund about $850,000 the city illegally collected from business owners, as it had been positioned to do. A state law passed last year deemed the city’s business tax rate too high, and now the city’s commissioner of the revenue is working to determine an individual refund amount for every business in the city.

The monies will be refunded instead with a portion of $2.3 million of additional revenues collected in fiscal 2017. These new monies, discovered Friday night and brought to the council’s attention on Monday, are tax revenues that are higher than what the city expected to collect.

“We’re certainly well above prior year collections,” Manassas City Manager Patrick Pate told the city council.

Much of the higher-than-anticipated revenues come from sales and meals taxes. The city will most likely continue to see increases in these types of tax revenues the coming years, according to Pate.

Councilwoman Pamela Sebesky demanded to know why city staff only notified council members of the higher projections just before the final vote on the city’s upcoming budget and not closer to the beginning of the budget process in early spring.

“As council members are we supposed to go back and look to find this money?” asked Sebesky. “You had this information on Friday, and then you wait until Monday before the council meeting to tell us?”

“We were not this far in the fiscal year at that time [start of the budget process]. We thought we would see surpluses for the year, and we’re further along now, and we feel confident that we will see these revenues come in this fiscal year,” Pate replied.

Mayor Hal Parrish II called the situation of overtaxing businesses “embarrassing.” 

“I fully expect to meet with other politicians in the region and to be asked the question ‘what happened,” said Parrish.

With end-of-year funds — not new taxes –now being used to redund overtaxed business owners, Councilman Ian Lovejoy said the council should not have raised the car tax as high as $3.60 per $100 of assessed value. 

“The fact that the the council tonight just left that money in there and made a nearly $500,000 decision on the fly just shows me where this council wants to go, and it’s frustrating,” said Lovejoy.

Councilman Aveni proposed a lower tax increase that was seconded only by Lovejoy, which would have increased the average real estate tax bill by 4%. The plan did not fund any of the projects in the five-year capital improvement plan during the first year.

However, Aveni said funding for the police station should be prioritized over all other projects in the CIP.  

Of the projects in the plan, the new police station is the most important to the city, added Aveni.  

“We’ll, that’s the rub. We’re saying it’s a priority but [with Aveni’s motion] we’re not finding money to pay for it,” said Councilman Mark Wolfe.So, 

The library system bill was higher than the city anticipated 

Councilman Ken Elston was the motioned official who motioned for the approved tax rate Wednesday night, and he argued that the city needs to raise taxes now to pay for an inevitable increase in shared services — the library, sheriff’s and commonwealth’s attorney offices, the health department, and others Manassas shares the cost with its neighbor Prince William County.

“If we see these things coming, it’s irresponsible for us not to address it when we see an increase in shared services,” said Elston. “[By raising taxes now] we won’t have to raise taxe again on our citizens so soon.”

“So, we’re raising taxes to not have to raise taxes,” Aveni replied.

Elston’s fear is rooted in a higher than anticipated bill the city received from the Prince William County Public Libary System charging the city $140,000 more than it had anticipated paying for library services in the fiscal year 2017. Last year, the library system issued the city a $200,000 credit after an audit found the city had paid more than its fair share of library services in 2016.

“If that credit hadn’t had been there, we would have had to pay $340,000 more than what we thought,” said Pate.