In Prince William, economy sees slow gains

PRINCE WILLIAM COUNTY, Va. -- The upside of the faltering housing market is that buyers can now afford to buy. The downside? County revenues decrease.

A revenues adjustment based on Prince William supervisors’ latest vote to approve a $1.236 tax rate for advertisement — up from the $1.22 that had been discussed — projects fiscal 2011 real estate tax collections at about $470 million, according to Chris Martino, finance director.

“That’s a slight decrease from the current year,” Martino said, “and that reflects the depreciating values.”

Still, falling prices mean buyers are back in the market to buy, and bank sales and short sales are on a decided decline. In January 2009, 84 percent of housing sales were driven by banks, according to Martino.

By December, that figure fell to 40 percent, he said.

“If there is any silver lining, it’s that the housing market has become more affordable,” county executive Melissa Peacor said. “The other thing we’re hearing about housing is that banks are not so quick to do the short sales because they expect the market to improve.”

More clues Prince William is emerging from the downward market trends: Military families are reportedly finding it easier to relocate to the county.

“A lot are moving to the county,” said Chairman Corey Stewart, R-At-Large, passing along observations from one school principal. “They’re able to afford it for the first time.”

Lower prices could drive volume sales in the county, and ultimately boost county revenues collections — but that basic market principle won’t help with the upcoming fiscal year, and supervisors are trying to recoup revenues in the least painful way for strapped homeowners. One important first step, they decided last week with a unanimous vote, was to set the rate for advertisement at $1.236. That would allow them the option of adopting this higher rate in April; state law won’t allow county boards to approve a tax rate that’s higher than what’s advertised.

Tuesday, Supervisor Frank Principi, D-Woodbridge, expressed dissatisfaction with this $1.236 level, however, and criticized the board’s boast of one the lowest tax rate in the region. Too low a rate means the county government and schools are forced to cut staff and compromise services, he said.

“Personally … having the lowest tax rate in the region by 30 percent is not a badge of honor,” Principi said. “I think we’re shortchanging our citizens.”

Stewart said most of the school’s financial woes are due to drastic cuts at the state level, not local. He also contested Principi’s characterization of the county as a sub-par provider of service.

“I don’t think cuts necessarily mean a decrease in the quality of service,” but rather that the county government has become “more efficient,” he said. “I would call it an elite county government.”

Later in the presentation, Stewart also broached the idea of the board exercising enough fiscal restraint so that they might adopt a rate even lower than the $1.236 rate and add in some capital improvement projects.

The final rate won’t be set until April, and between now and then, figures are in a state of flux.

“I think the major point here is that it’s so volatile,” Peacor said, in reference to revenue projections and budget planning. “Coming out of a recession, it’s just so volatile.”

For instance, some homeowners will see reassessments indicating drops in the double-digits. Others, however, could see increased valuations of 30 percent or more, Martino said, explaining that such dramatic variances are uncommon.

Staff writer Cheryl Chumley can be reached at 703-670-1907.