Prince William County's revenues from real estate taxes will not increase as much as had been hoped this year because of the poor economy, county officials said last week.

The value of real estate in the county will increase by only 3 1/2 percent this year compared with 10 and 12 percent in previous years, said Ben Kelsey, county supervisor of assessments. He attributed the small increase to a stagnant housing market and a decrease in new construction.

The low assessments mean the county will receive $52 million in property tax revenue this year, only 3 1/2 percent more than last year--an increase too small to keep up with the rate of inflation, said Kelsey.

But Prince William will be able to compensate by drawing money from a special fund and thus be able to keep the county budget at a steady operating level, said county supervisors Chairman Kathleen Seefeldt. She said supervisors might even be able to lower real estate taxes by two or three cents per $100 of property value this year because of that fund.

The fund, started years ago, comprises monies from a litigation settlement, from the sale of school buildings to the City of Manassas, and the interest from bonds. Seefeldt estimated there is $11 million in the fund and said the county has used it as a revenue source for several years.

"We plan to continue using it for a year or two until the tax base supports the budget," she said. "We are hoping that as the economy improves the tax base will stablize."

This fiscal year, the county has a budget of $104 million. Supervisors will release the budget for the coming fiscal year March 1.

Seefeldt said supervisors cut real estate taxes by three cents per $100 of property last year and hope to cut another two or three cents this year. The cut in taxes would not mean a cut in county services, she said.

"I don't see any program expansion," she said, "but no cutbacks either."

Prince William underwent an explosive period of growth in the last decade. That growth more than doubled its population and strained its budget as more services were created to meet the needs of more people.

However, in the past three years the enrollment in county schools has leveled off, said Seefeldt, "which has given us some breathing room."

She said the county is still seeking other sources of revenue and has asked the state legislature for permission to impose a 5-cent county tax on cigarettes. The county also derives revenue from personal property tax, state and federal funds and user fees.