Pinch a penny, or keep a program: The choice may be that simple for Manassas residents as the city's fiscal 2008 budget unfolds.

"It is a debate fundamentally, in my view, of how much of a city do we want to be," said City Council member Andrew L. Harrover (R).

The city's proposed budget includes a 2-cent increase in the real estate tax rate, to 83.5 cents per $100 of assessed property value. The budget also calls for a 3-cent public safety levy to be added this year to pay for public safety capital improvements, including a new firing range for police, City Manager Lawrence D. Hughes said.

The average residential tax bill is expected to increase by nearly $23 this year to $3,829, including the public safety fee.

"Without a tax rate change, we are looking at a reduction in government and schools [services]," Vice Mayor Harry J. "Hal" Parrish II (R) said.

Residential real estate assessments being mailed this week show an average 5.3 percent drop from last year's all-time highs and a rise in commercial assessments of about 9.5 percent, Commissioner of Revenue John P. Grzejka said.

This is the first year the city has seen a reversal in the five-year trend of steadily climbing residential real estate values, he said. But this "is not a big swing" toward commercial properties picking up the city's tab, Grzejka said. Commercial property taxes account for slightly more than 25 percent of the city's real estate tax revenue.

Property taxes contribute almost 60 percent of the revenue in the city's $106 million general fund this year, Hughes said. Without including the 3-cent levy and more than $6 million from the school's debt service, the budget is 3 percent higher than last year's, he said.

The Manassas City public school system receives more than 45 percent of the general fund, the largest portion. Debt service for school construction is transferred from the schools to the city each year.

City employees will see a 2 percent cost-of-living raise and could receive another 2 percent raise in merit-based pay.

Some services would be cut in the proposed budget. The city's summer camp program was downsized to four locations from five, and the Department of Recreation and Parks would cut back on family bus tours to save money, recreation coordinator Preston Peper said.

An education program at the Manassas Museum was cut, along with the commitment to use surplus funding for community improvement projects. All surplus funding will be used to offset the use of the city's emergency fund, Hughes said.

The City Council will hold several work sessions and two public hearings before voting on the proposed budget in early May.