Like most of Northern Virginia, Manassas Park saw another large increase in real estate value during 2004. The city also has one of the highest real estate tax rates in the region, and deciding whether or not to lower that rate promises to be a big issue in the coming year.
“The tax is one of the priorities that we are going to discuss,” said City Councilman Michael Bunner.
Though the official numbers aren’t available yet, the real estate value in Manassas Park probably increased by a minimum of 15 percent in the past year, according to Manassas Park Tax Assessor Jim Fitzgerald.
Manassas Park taxes its residents at $1.33 per $100 of assessed property value. In comparison, Prince William County taxes its residents at $1.07 per $100, and Manassas requires $1.15 per $100.
For someone living in a $300,000 home in Manassas Park, the current rate would require $3,990 in taxes. The same home in Prince William County would create a tax burden of $3,210 and a homeowner with an identical house in Manassas would have to pay $3,450. If that house in Manassas Park was assessed at $300,0000 last year, the owner could be looking at a new value of at least $345,000. The tax due on that home, if the rate remains unchanged, would be $4,588.50.
One of the reasons for the disparity is that the cost for services like trash pickup are all rolled into the real estate tax in Manassas Park, while other local governments levy separate taxes to cover these services, according to Manassas Park Vice Mayor Kevin Brendel.
“You have to remember that the county breaks out real estate tax opposed to other services,” Brendel said. “It’s hard to do an apples to apples comparison.”
Last year, Manassas Park did a study to see how its overall tax rates compared with other local governments. The report found that, though the city had by far the highest real estate tax, overall revenue per capita was comparable with other local governments.
Bunner said that before the Council can consider lowering the tax, they have to take a hard look at the budget requirements for the next year, such as completing the new fire station and hiring additional police officers.
“We need to sit down and look at the unfunded priorities, and set a goal for next year, as well as a five year goal, and see what it ends up coming up as,” Bunner said. “Absolutely we need to make sure that we choose a responsible rate. We also need to look at the things that city needs to operate and function.”
For someone living in a $200,000 home in Manassas Park, the current rate would require $2,660 in taxes. If the house was assessed at $200,0000 last year, the owner could be looking at a new value of at least $230,000. The tax due on that home at the current rate will be $3,059.
As the value of real estate has skyrocketed in Northern Virginia, local residents have paid more and more in property taxes.
Local governments in Prince William County, Manassas, Fauquier County, Fairfax and Fairfax County have lowered their real estate tax rates over the past year to partially combat the rising tax figures that accompany rising real estate value.
Manassas Park’s rate has remained steady at $1.33 because it is a primary source of income for the city, while the other local governments that have lowered their real estate tax rates have separate taxes for services.
“Our real estate tax is everything rolled into one,” Bunner said. “It’s a one-stop shop.”
Plus, while deciding whether or not to lower the rate last year, Bunner said, the Council had to keep in mind that the school system needed money for high dollar construction projects such as the new intermediate school and renovations to existing schools.
Even if all the real estate tax rates in the region are lowered, residents will still be shelling out more dollars this year than last because of swelling real estate values.
Manassas Commissioner of Revenue John Grzjeka said that even though Manassas has lowered its tax rate to compensate for rising real estate values, market forces continue to drive tax bills higher.
“The logic is, as property values go up, tax rates come down,” Grzjeka said. “Tax rate reductions help, but even with those considered, it looks like taxpayers will still be paying more.”
For example, during the past four years residential properties in Manassas have increased in value by 62 percent, Grzjeka said. The total tax reduction over that period in real estate has been 7 percent.
“The tax rate reductions are not offsetting the increase in property values,” Grzjeka said. “There will be more out-of-pocket expenses for tax payers.”
The real estate tax rate for the coming year will be decided in the spring, well before the beginning of the fiscal year on July 1.