Manassas's Budget Is Bleak, Now And Beyond
5-Year Sketch Shows Immediate Shortfall

By Jennifer Buske
Washington Post Staff Writer
Sunday, November 9, 2008

The Manassas City Council adopted its fiscal 2010 five-year budget forecast last week and, like localities across the state, the city is strapped for cash.

City revenue is projected to drop about $3.4 million by the end of fiscal 2009, forcing city officials to cut from the current budget to avoid a deficit when heading into fiscal 2010, Manassas Budget Director Pat Weiler said.

The shortfall comes mainly from a decline in revenue from the meals, sales and business personal property taxes the city collects from businesses, she said.

"We have some tremendous challenges ahead when looking at the 2010 budget, and we continue to have challenges with the 2009 budget," Manassas Mayor Harry J. "Hal" Parrish II (R) said. "It is going to be a tough year."

The projected revenue shortfall for fiscal 2009 was presented Oct. 27 to the council as part of the five-year budget forecast. A planning tool for officials drafting the fiscal 2010 budget, the document lays out the city's projected revenue and expenditures beginning with the current year and ending in fiscal 2014.

Manassas City Manager Lawrence D. Hughes said he has begun to address the looming deficit. The city is under a hiring freeze, has reduced the travel and conference budget and has asked department heads to come up with budget reductions of 5 to 15 percent.

Hughes said there will "likely" be layoffs as he continues to address this year's and next year's budget.

The attrition rate in the city has dropped to about 5 percent, which is not high enough to save on personnel expenses through attrition alone, he said.

Under the adopted forecast, the city projects that fiscal 2010 revenue will be about $106.6 million, down 0.7 percent from the fiscal 2009 revenue projection adopted by the council in April.

Council members have asked city officials to balance the budget without raising residential property tax bills next year and by keeping as much money as possible in the city's rainy day fund.

By the end of fiscal 2009, the city is projected to have about $13.2 million in that fund, down from the $13.8 million it had when the budget was adopted in April.

The other crucial factor, city officials said, is to keep funding for the schools constant. In fiscal 2009, the city gave the schools roughly $51.7 million.

"We have to keep the tax bills the same and not spend money in the rainy day fund," Manassas Vice Mayor Andrew L. Harrover (R) said. "We need to do that and deal with the fallout after that."

Weiler said the average tax bill this year was $3,358. Property assessments are expected to drop 18 percent next year in the residential sector and 5 percent on the commercial side, Weiler said, noting that the prediction changes daily.

If the council wants to set a tax rate that will keep residential bills stagnant, commercial property owners will see tax bills go up next year.

Weiler said one of the big uncertainties with next year's budget is determining how much funding the city will get from the state. The state contributed about 8 percent to the general fund in fiscal 2009.

"On Dec. 17 the governor will announce additional budget reductions in the state, and we have no idea what those will be," Hughes said. "We probably won't even know then because it still goes to the General Assembly. . . . We are in a very uncertain mode. We know there will be less funding coming in, but we don't know where or how much."

With the five-year budget forecast adopted, Hughes and the finance staff will spend the next several months determining how to balance the fiscal 2010 budget under the council's guidelines. The final budget will go before the council next year and is scheduled to be adopted in April. Tax bills with the new tax rate will be mailed in May and due in early June.