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Commercial tax assessments may drop 15 percent in Manteca
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Commercial property values may take a 15 percent hit this year in Manteca but the impact on the general fund will be minimal.

That’s because almost all of the new major commercial properties from the Stadium Retail Center and Spreckels Park to numerous business parks built in the past 10 years are within the Manteca Redevelopment Agency boundaries.

The decline in RDA property tax isn’t expected to create a problem in terms of handling debt repayment due to the conservative cushion the city has put in place.

Revenue is expected to stabilize over the next 12 months for the general fund that supports day-to-day municipal services such as police, fire, streets, and parks. Sales tax is expected to remain flat.

City Manager Steve Pinkerton also noted the San Joaquin County Assessor’s office has indicated residential property taxes are expected to remain flat with no further declines. There will be no increases in property that hasn’t changed hands either as there hasn’t been value inflation that would have triggered the 2 percent annual cap for assessment increases allowed under Proposition 13.

Property tax accounts for 38 percent of Manteca’s general fund revenues followed by sales tax at 29 percent. Even if there are more revenue declines, Manteca faces financial challenges for the fiscal year starting July 21, 2011.

That’ because just over $3 million of the deficit for the upcoming fiscal year starting Thursday is being covered by reserves.

Manteca will have a projected $9.9 million in general fund reserves left on June 30, 2011. That includes $4.3 million in an excise tax collected on new construction for the purpose of over sizing sewer and water lines for the future. That account has at $6 million today. The budget plan for next fiscal year starting July 1 being pondered by the City Council on Tuesday is balanced by transferring $2 million into the general fund to help cover part of the shortfall. The city carries a $1,918,000 reserve for emergencies and will have another $3.7 million for capital outlay and debt service reserves on June 30, 2011 if projections pan out.

The city may be forced to keep cutting into dwindling reserves that aren’t restricted until the economy rebounds sufficiently enough to avoid further cutbacks.

“Curing the next 12 months, staff will monitor current economic conditions and proposed actions by the state to balance its own projected $19.1 million deficit and any impact on the city’s finances,” City Manager Steve Pinkerton noted in his budget message. “Strategies will continue to be developed to further reduce the general fund shortfall and to ensure our financial stability in all funds.”

The council will consider adopting the 2010-11 fiscal year budget during Tuesday’s 7 p.m. meeting at the Civic Center, 1001 W. Center St.