Halfway through the 2021 fiscal year, Manassas officials are projecting a significant increase in revenue over the prior year, surpassing projections from the city’s current budget.
The city government closed the second quarter of the 2021 fiscal year at the end of December with strong revenue recovery. At that point, 54% of the revenue budgeted in the general fund had been received. That’s prompting city staff to project a surplus of about $2 million over the $135.6 million amended budget by June.
According to the quarterly report presented to City Council at the end of January, revenue has been buoyed in particular by an increase in property and sales tax collections, the latter of which is likely the result of a rise in online shopping. Business license tax revenues are also projected to surge due to one-time licenses obtained by contractors involved in the Micron plant expansion.
Both have been enough to offset what the city is projecting will be a $660,000 shortfall in meals tax revenues, as well as a smaller decline in cigarette tax revenue. Year over year, the projected revenue would represent a roughly $7 million increase from the previous fiscal year.
But new Mayor Michelle Davis-Younger, who was sworn in last month, cautioned against being too optimistic about the tax numbers, indicating that the city had significant demand for services due to the pandemic’s health and economic toll.
“Of course it’s good news, especially in this climate. But we still have services to provide and citizens to take care of,” Davis-Younger told InsideNoVa. “So when you talk about a surplus, we never want to give the impression that we have lots and lots of money just sitting around. … You’ve got to stay medium, because anything can happen.”
City Manager Patrick Pate is expected to unveil his proposed budget early next month for fiscal year 2022, which begins July 1. Council will adopt advertised tax rates – which it ultimately couldn’t exceed – later that month.
The city’s economic development authority is also optimistic about ground-level data from the downtown area. Last week, the authority released its year-end downtown market report. In 2020, the commercial vacancy rate spiked mid-year but finished at 5%, just 1.7 percentage points higher than the end of 2019. With landlords likely expecting a strong return for commercial demand downtown, the market rent per square foot is only 0.2% lower than it was at the end of 2019.
“Both [office and retail rates] are within what is considered a stable or healthy range,” the authority said in its report. “Some of this, we hope, is a testament to the city’s partnership with its businesses to offer relief and resources to weather the pandemic.”
While labor experts have warned that the national unemployment rate doesn’t fully represent the number of previously employed people currently out of the workforce – particularly in the services sector, the city’s unemployment rate has fallen sharply from its April high of 10.9%. In November, the rate was down to 4.6%, though still higher than the pre-pandemic rate of 2.5% in February 2020.
“The message here in Manassas and, quite frankly, all around us is that, yes, our folks got clobbered, they got hurt. But we’re not dealing with the kind of problems that other places are dealing with,” said Patrick Small, the city’s economic development director. “People are hurting, but they’re not being driven out of business, they’re not closing up shop. … We got clobbered, businesses adjusted, people adapted, and now, at least from a market perspective, we’re starting to see a return to normalcy.”
The city’s hospitality industry continues to feel substantial effects from the pandemic. Meals tax revenue, a barometer for the health of the city’s restaurants, had its worst month of the fiscal year when compared to the prior year in December, falling 7% below the same month in 2019, likely resulting from cold weather that limited outdoor dining. In August, meals revenue was only 2% off the 2019 numbers. Tax numbers for January are not available.