Report: Businesses Sharing More of the Tax Burden

Residents in Manassas are now sharing more of the tax burden with the business community, according to a report from the Commissioner of the Revenue.

Residential property owners paid nearly 69 percent of the real estate property taxes in 2007 and in fiscal year 2011 paid 58 percent, according to the report.  In 2007, commercial properties paid only 26 percent of the real estate property taxes and are now paying nearly 35 percent.

"There's been a slight shift in the burden of who is paying taxes," John Grzejka, commissioner of the revenue for the City of Manassas, told council members last Monday. "Early in this past decade residential properties were paying a huge amount of real estate taxes in this community and they are now co-sharing more with the commerical properties."

Residential real estate values have increased over the past two years, while the tax rate has dropped for homeowners during the same time.

Each year the council will determine how much residents will pay when they set the tax rate during the budget process, which ends in May. The city council has asked staff to present a budget that doesn't have any tax increase in the average general fund tax bill, but the council has indicated that the fire/rescue levy will increase ½ a cent to fund the fleet plan, Grzejka said.

The city's personal property tax rate of $3.25 remains lower than the rates of both Prince William County ($3.70) and Manassas Park ($3.50).

According to the commissioner's real estate report, foreclosures have dropped by 34 percent—down from 116 to 77 in just 11 months.

Short-sale properties on the market remain steady with 15 to 20 of the 57 homes on the market in December marked as short sales, according to the report. 

Grzejka warns that the real estate market it still fragile with a short supply of houses currently on the market. "We would like to see more activity," he said. 

The city is looking at $19 million in new construction, the report showed. New residential development such as Barrington Park, Lee Square and Villages of Wellington has generated $11 million, while commercial development such as new Walgreen locations,  have contributed $8 million.

The economy has played a role in the decrease of business personal property tax over the past three years—something Grzejka said is due to a lack of investment being made in new equipment.

"The older the equipment, the lower the value assesed," he said. "Business is improving, but no new investment is being made in new equipment."

The report also highlighted tax revenues increased for personal property on vehicles, machinery and tools, business licenses (BPOL), lodging, meals and cigarettes. Grzejka said he expects these tax reveneus to continue to increase in the current fiscal year because of the Sesquicentennial events held over the summer. He also noted tax revenues increased for cigarettes despite a tax rate increase from 50 to 65 percent, and that the machinery and tools tax base held steady because of the chip manufactoring plant Micron.

Despite a 14-percent increase in the business license tax from last year, there's been a big drop in the number of peddlers licenses, from 50 down to 16 in 11 months. This follows a change in the ordiance for issuing peddler permits, which laid out restrictions such as requiring photo ID issued by the city and strict background checks, Grzejka said.

The city has administered a tax relief program over the past decade that has  resulted in more elderly homeowners being able to qualify for relief, the report showed. The number of elderly and disabled taking advantage of the city tax relief program has more than tripled in the last decade. The program is the reason for the tremendous increase in participants, Grzejka said. "We have 330 participants now at a cost of $725,000 in tax revenue."

Grzejka said there is also a disabled veterans tax relief program. Five participants have qualified so far at a cost of $24,000 to the city. 

View the entire commissioner's FY 2011 Comprehensive Report.