Manassas council agrees to advertise FY2026 rates for computer and data-center taxes; utility increase deferred for more analysis

The Manassas City Council directed staff to advertise maximum FY2026 tax rates of $2.15 for computer personal property and $3.60 for a separate data-center tax, and asked staff to return with more analysis on thresholds, commercial-industrial (C&I) tax eligibility and utility-rate impacts.

At a budget work session, a staff presenter said they needed “head nods” on the numbers so the city can place the legal advertisement for public hearings. Councilmembers agreed to advertise the two maximum rates while reserving the right to reduce them between advertisement and final adoption. Council also asked staff to prepare additional detail on possible thresholds to protect small businesses and on a C&I tax option that could be used to fund new roadway and related capacity projects.

Why it matters: The advertised rates set the ceiling that can be adopted at a later public hearing; advertising does not commit the council to a final rate. The data-center tax discussion follows changes in state policy that permit a separate, higher rate for data centers than for ordinary personal property, which some neighboring jurisdictions have already implemented. The utility-rate discussion, by contrast, remains unresolved and will return to the council with utility staff for a more detailed financial and capital-expenditure briefing.

Council direction and choices

Councilmembers coalesced behind advertising the computer personal-property rate at $2.15 and a separate data-center rate at $3.60. Several councilmembers said they preferred to hold the computer tax at the current level to avoid placing additional burden on small businesses, and to rely on the separate data-center rate to capture revenue from large facilities. One councilmember said a jurisdictional peer — Prince William County — is expected to adopt a $4.15 data-center rate next year, a figure referenced during the discussion as context for the council’s choice to advertise $3.60 for now.

Council asked staff to research and present options for a threshold (a minimum assessed-value exemption) that would exempt very small businesses from higher computer taxes, and to provide a ranked list of taxpayers by liability so the council could see who would be affected.

Commercial–industrial (C&I) tax and NVTA matching

Staff briefed the council on a separate commercial–industrial tax option used in parts of Northern Virginia. The C&I levy is narrowly tailored by statute to fund capacity projects (for example, new roads or new bus lines) and could be used as a local match to Northern Virginia Transportation Authority (NVTA) funds. Staff said the statutory maximum is 12.5 cents (per $100 of assessed value), which the city estimates could generate roughly $2 million to $2.5 million depending on assessed values of commercial and industrial property in the city. Council asked staff to review statute eligibility and identify specific projects that could realistically use such revenues before moving forward.

Utility rates: more information requested

Council spent substantial time discussing proposed utility-rate increases. Staff and the consultant presented a multi-year plan to raise electric, water and wastewater user rates to address rising operating and capital costs and to preserve the city’s enterprise fund health. Staff recommended advertising the consultant’s recommended increases (the presentation referenced an 8.5% figure for some enterprises), but the council declined to finalize that choice at the work session and asked for a dedicated meeting with utility staff on the upcoming Monday to drill into capital vs. operating components, timing, and the impact of reducing increases to lower levels such as 5%.

Staff cautioned that smaller increases (for example, a 5% scenario) were unlikely to fully cover operations and could require continued use of fund balance; councilmembers asked staff to show what would need to be delayed or eliminated at various rate levels and to estimate how long it would take to reach the city’s target fund balance under different pacing scenarios (five-year vs. ten-year stretches were discussed).

Bond rating and fiscal surveillance

Staff reminded the council the city’s bond rating was recently upgraded and that rating agencies will periodically review localities’ finances. Staff said the city would be under routine surveillance in the coming months and that large draws on reserves would attract extra scrutiny; no immediate threat was reported, but staff emphasized that rate and fund-balance decisions affect borrowing costs.

Other budgeting direction

Council authorized staff to prepare an ordinance to increase elderly and disabled real-estate tax relief to $60,000 in assessed-value exemption; staff will return the ordinance for consideration (the change would not apply to the current tax year but would require an ordinance process). Council scheduled a focused work session on utilities for the coming Monday and left an additional budget work session on the calendar as a contingency.

Quotes and attribution

A staff member laying out the advertisement timeline said, “We’re trying to finalize things up. Get some direction … so we can place the ad,” and asked whether staff was “safe” to advertise the proposed rates. Councilmember Ellis and other councilmembers expressed support for advertising $2.15 for computer personal property and $3.60 for a separate data-center rate while requesting further threshold analysis to protect small businesses.

What’s next

Staff must prepare the legal advertisement by April 11 and return detailed utility and threshold analyses at scheduled work sessions before the council takes final action. Public hearings will follow advertising, and the council retains the ability to adopt lower rates at the adoption meeting.

Ending

The council’s choices at the work session set the ceiling for public notice and focused staff’s next tasks: threshold analysis for personal-property classifications, a statutory review of the C&I tax, a proposed ordinance for expanded elderly/disabled tax relief, and a detailed utility-rate briefing to inform the council’s final FY2026 decisions.