Accounting glitch leads to $70,000 property tax underbilling in Manassas Park

About 450 Manassas Park residents received a Real Estate property tax bill for less than they owed.

Keystone, a firm contracted by the city to handle all of its financial transactions, from taxing, permitting, and utility payments, underbilled the property owners $156 on average, resulting in about $70,000 fewer tax dollars for the city.

Like most localities in Virginia, the city relies on Real Estate property tax bills to fund local government operations. Residents receive bills twice a year, with payments due on December 5 and June 5.

Residents may come to City Hall at 1 Park Center Court to settle up or wait until the next round of Real Estate property tax bills in the spring. City Manager Laszlo Palko said the underbilled amount would appear on the spring bill.

To boot, a delay in mailing Fall 2021 Real Estate property tax bills in November led to city leaders delaying the December 5 payment deadline by two weeks.

About 18,000 people live in Manassas Park, a city with one of Virginia’s highest Real Estate property tax rates. On average, homeowners pay $5,300 in Real Estate property taxes each year.

In 2015, the city contracted with Keystone, purchasing the rights to use its software and paying regular support fees for maintenance and upkeep. Palko took responsibility for the error, calling it an accounting glitch. He adds that the error could have been avoided if the city had hired a dedicated IT manager instead of relying on its existing finance office staff to manage the system.

Palko took the city manager job in 2017,  two years after the city contracted to use the software. When he took the job, Palko learned the system lacked an audit function. Two years later, Palko and staff fixed the error, which led to credit agencies’ ability to evaluate the city’s likeliness to repay debt.

Until recently, the Manassas Park Government drowned in debt after constructing several public works projects in the early 2000s, including the city’s community center and a new police station.

In April, city leaders partnered with McLean-based Real Estate developer Norton Scott, LLC, and broke ground the Village at Manassas Park, at Park Center Court. A “course correction” for the city, the public-private project includes a new City Hall, library, public plaza, retail shops, and 164 homes.

Meanwhile, Palko is working to find a new financial system next year. After the Governing Body approves its purchase, it will take three years to implement a new system.

“What we need right now from our residents is patience,” said Palko. “If we don’t do this, we’re going dealing with these same issues five or 10 years from now.”

Palko hired business auditing and accounting consultant firm BerryDunn to help search for a new system.