Proposed Manassas budget increases tax bills, funding for schools

Homeowners in Manassas should expect their average tax bills to go up next year under a proposed city budget.

Under a plan from City Manager Patrick Pate, the total average tax bill increase is $164. Townhome owners’ property tax bills would average $2,780, condo owners would pay an average bill of $2,342, and single family home owners would pay an average bill of $4,493.

Residents Monday night will have the chance to come speak out about the city’s proposed $214 million budget. Expenditures on city services, to exclude school funding, are about 6% lower in the next year’s proposed budget than they were a year ago.  The city proposes to give more money to schools than it did a year ago, transferring 58% of the budget — $52.3 million – directly to the schools.

The tax rate would remain the same as last year at $1.368 for every $100 of assessed property value. The rate includes the city’s $0.178 fire and rescue tax levy. The average tax bill would increase 4% under the guidelines of the city’s five year plan.

Taxes going up

Residential assessments increased nearly 5%, and commercial assessments went up just over 3%. These are the few signs of good economic life in the city as other taxes like sales tax, meals tax, and taxes on cigarettes, vehicles, and cable TV and telephone services are flat or declining.

Overall, the city will increase taxes by 4% as part of a memorandum of understanding with thc city School Board that guarantees more funding for city schools.

Manassas Councilman Ian Lovejoy issued a statement explaining the MOU:

The Capital Improvement Plan Memorandum of Understanding (CIP-MOU) is another huge driver in city budget matters.  A new actor on the stage, the MOU articulates present and future funding levels for the city and the schools.  Its purpose, as the name implies, is to set revenue expectations for both the city and the school system as they pertain to Capital Improvement projects.  Some of these revenues are slated to finance the new Baldwin Elementary and other CIP needs.

What is unique about this agreement (and as far as I can tell we are the only locality in Virginia with one like it) is that it sets an expectation of real-estate tax increases for the foreseeable future.  Unlike the Joint Budget Resolution, which sets funding expectations year-to-year, the MOU actually hard wires in the assumption of an average 4% real-estate tax increase each year for the next two decades (regardless of increase or decrease in home value etc).  Note: many have pointed out, rightfully so, that the MOU is not a legally binding agreement and could, in theory be changed if circumstances warranted it.  This is true, though momentum is rather strong behind MOU.  For those in the community seeking a flat tax bill or even tax relief, that is now a philosophical non-starter in our city.

Pros of having a CIP MOU

Creates some assurance of future funds for capital projects

Ensures those funds are spent on capital improvement as opposed to operations

Cons of having a CIP MOU

We now effectively have a multi-decadel agreement dictating revenue levels

The annual tax bill increase will exceed inflation for the foreseeable future

So why does all this matter?  The growing concern is that before council makes a single decision about taxes and spending (its primary responsibility), our budget forecast is already set (4% increase a year due to the MOU) and then those funds are automatically appropriated via the Joint Budget Resolution.  The council is very slowly being taken over by an Excel Spreadsheet. 

What’s driving up the budget?

As Lovejoy and others have pointed out, the MOU calling for an automatic 4% tax increase provides the school system with some regular idea of how much money it will get in the coming year. The catch: the school system must the portion of increased funds on capital improvement projects like building new school buildings and not on debt.

According to City Manager Pate’s proposed budget, one of the major budget drivers in this year’s proposed budget is the $2.2 million Baldwin Elementary School replacement project, as well as $2 million in general debt that must be paid. Other budget drivers include $1.3 million to replace city vehicles, $1.1 million in storm water management funds.

Priorities 

In addition to more money for schools, Pate’s budget proposal states it is funding “strategic priorities” set out by the City Council that aim to make Manassas a better place to live, work, and play. They include making it easier for developers to build new construction, as well as redevelop old areas of the city, marketing the city to attract new visitors and businesses in an effort to change perceptions about the city.

City leaders also want to see enhancements in Historic Downtown to someday include a city library, and maintaining the level of satisfaction city residents say they have with their fire and rescue department.

The public hearing begins at 7:30 p.m. Monday, April 27 at City Hall. It’s a chance for residents to speak, so we don’t plan on hearing much if anything said by City Council members.