The discovery of errors in Manassas Park’s financial records is limiting the City Council’s ability to lower the tax rate, city officials said during a council meeting Tuesday.
“I can’t tell you I have a lot of credit in the finance department’s documentation,” Mayor Frank Jones said during the meeting. “We can’t do a tax cut until we’re certain what revenue we have.”
The city discovered that its financial records are in disarray after the health insurance policies covering city employees were cancelled due to lack of payment. The city was able to get the health coverage reinstated later that day, but an ensuing examination of financial records revealed that the city’s books were in a “deplorable condition,” Jones said.
As a result, there are two new openings in the city’s finance department, and Manassas Park is conducting an in-depth audit of its finances. Also, the council is now more hesitant to lower the city’s real estate tax rate beyond the amounts that have already been proposed, Jones said.
The finance department problems were explained just before a public hearing on the council’s proposal to retroactively lower the city’s real estate tax rate. The council’s plan to reduce the rate from $1.33 per $100 of assessed value to $1.29 for the second half of fiscal 2005, which runs from this past January until June, was met with opposition from some residents who said they expect a more significant tax rate cut to compensate for skyrocketing land values.
“I heard everything you people said tonight, and I buy very little of it,” said Jesse Ludvigsen.
Ludvigsen, who has made two unsuccessful bids for a seat on the City Council, cited double-digit percentage increases in the city’s revenue each year for the past several years.
“I fail to understand why the city can’t live on a smaller tax rate,” he said.
Other residents were equally unhappy with the limited amount of tax relief offered by the reduction.
“A four-cent rate reduction seems like a joke to me,” said Donald Shuemaker, who said the assessed value of his Manassas Park town house increased by 40 percent during the past year. “My tax bill will still increase substantially.”
Aside from the problems in the finance department, the City Council cited improvements to the city’s infrastructure, a small commercial base, the hiring of new personnel and the establishment of a management reserve — a contingency fund in the budget — as other issues affecting the revised fiscal 2005 budget.
Even with the lowered rate, the amended fiscal 2005 budget is $1.3 million more than when it was first adopted last year. Still, Jones said improved management practices have made it more clear where that money is going.
“For the first time in the history of this city, we have real accountability for our spending,” Jones said.
Vice Mayor Kevin Brendel said during the meeting that the problems in the finance department don’t indicate theft or fraud, just shoddy bookkeeping.
“The city’s revenue was coming in, but it wasn’t going to the accounts that it was supposed to,” Brendel said. “The money is here, but not properly recorded.”
The city should have everything straightened out with the finance department within 90 days, Jones said. But the inconsistencies have made the council more reluctant to lower the tax rate for next year below $1.27, the current proposed rate, he said.
However, in the event that the city’s revenue exceeds the amount that it has budgeted to spend, the excess funds will be rolled over into the following year’s budget, which might translate into additional tax relief down the road, Jones said.