$8 million budget shortfall projected in Manassas Park

Manassas Park is looking at a budget shortfall of more than $8 million in the next fiscal year because the city’s tax base is expected to decline by at least 32 percent.

City Assessor Richard L. Sanderson delivered the bad news to City Council on Tuesday night.

Sanderson previously told the council that real estate values were down 22 percent, but home sales through Sept. 30 reflect the steeper decline.

And, for a local government that relies on property taxes, lower values means less revenue.

Indeed, Sanderson said he never expected to be staring at a decrease in the 30 percent range.

“I’ve never seen double-digit declines in real-estate, and I’ve been doing this since 1974,” Sanderson told council members.

A big part of the problem in Manassas Park — as in other parts of the country — is mortgage foreclosure.

Foreclosure affected 82 percent to 85 percent of homes that sold in the city last year between Jan. 1 and Sept. 30, Sanderson said. In that period, 285 of the 666 sales involved bank-owned properties.

Sales of this type used to be so rare that they weren’t even factored into the assessment process, Sanderson said.

But the transactions may continue. Between 200 and 300 of Manassas Park’s 3,800 homes are for sale now.

“It’s definitely a buyer’s market,” Sanderson said.

On the other hand, he said, values of commercial properties look to stay flat in the next year or decrease by only 5 to 10 percent.

The drop in real estate sale prices brings the total taxable value of property in the city from $1.6 billion to just shy of a billion dollars, Director of Finance Gary Fields told council members.

So in trying to formulate a budget, Fields is projecting an even worse figure than Sanderson presented: He expects the city to collect 38 percent less tax revenue than it has this fiscal year.

At the current real estate tax rate of $1.24 per $100 of assessed value, the city would be bringing in $8.2 million less in the next fiscal year than it has this year, Fields said.

That means $4.2 million less for city schools, and $4 million less for city government.

“There’s no way the city can provide the same level of services for that amount,” Fields said.

And that’s figuring on a budget that includes no pay increases for employees, continues a hiring freeze and other spending-reduction measures, and includes no increases in budgets of individual city departments.

Because the assessed value of their homes will most likely decrease, property owners would see a decrease in their tax bills if nothing changed in next year’s budget.

Put another way: To bring in the same amount of revenue next year, council members would have to increase the tax rate to $2 per $100 of valuation.

“Not that that’s what we’re contemplating at all,” Mayor Frank Jones quickly added Tuesday after asking Fields for the figure.

The council took no action on the matter. Jones said he just wanted to make sure all of his colleagues learned the severity of the situation before they dove into the nitty-gritty of budgeting.

That prompted responses that ranged from the optimistic to the melancholy.

“Plan for the worst, hope for the best,” was Councilman Peter Farrell’s take.

That was followed by Vice Mayor Bryan E. Polk’s reference to another sad time in American history:

“Other than that, Mrs. Lincoln, how was the play?”

Staff writer Jonathan Hunley can be reached at 703-369-5738.