The bad news: Manteca’s property tax receipts are expected to drop another 5 percent in 2012.

The good news: Manteca - thanks to municipal employee contract concessions - has reduced expenses by $4.2 million through 2015 to put the city on the path toward financial stability.

The 5 percent drop in property tax projected by San Joaquin County Assessor Kenneth Blakemore was contained in the first budget message Karen McLaughlin issued since becoming city manager in September. It was part of the belated 2011-12 general fund budget that was released Tuesday. The delay was the result of the need to secure employee concessions or else the city would not have been able to meet all of its obligations hence making putting together a budget impossible. Salaries and benefits account for about 80 percent of the general fund. The general fund is what finances day-to-day services such as police, fire, parks, streets, and such.

The general fund budget for the fiscal year ending June 30 is $27,074,746. The city will have fund balances on that date of $9,152,130 involving general fund accounts. The biggest chunk - $5,030,296 is essentially an excise tax on growth that was collected for the expressed purpose of improving infrastructure. There is $2,863,002 set aside for emergencies and unanticipated capital outlay as well as a $1,209,162 reserve for operations.

This budget also reflects new economic realities. In past years, there were often $4 million-plus more in property taxes than sales taxes collected to run the city. Not anymore. Sales taxes now consist of 33 percent of the general fund revenue compared to 34 percent from property taxes.

That is the direct result of a fifth of Manteca’s existing housing stock - 4,730 single family homes - being sold at prices significantly lower than they were valued at when they originally were put on the tax rolls.

The impact is reflected by comparing 2006 and 2011. There were 627 existing homes that sold in 2006 at a median price of $413,000 and a combined value of $258,951,000. In 2011 there were 1,173 existing homes that closed escrow at a median price of $179,950 and a total value of $210,553,500. Almost twice the number of homes sold in 2011 and the value still came in at $48 million below the transactions in 2006.

Keeping property taxes from dropping even further is the fact Manteca developers have built and sold more than 300 homes in each of the past four years. It is almost three times what the next nearest city - Stockton - has managed to build. Manteca again led the Northern San Joaquin Valley with 360 new housing permits issued in 2011.

Meanwhile McLaughlin credits Costco, Bass Pro Shops, Best Buy, JM Equipment Cop., and JC Penney that opened up over the past four years for allowing Manteca to keep sales tax receipts up.

Property tax receipts are projected to drop to $8,730,000 this fiscal year. That’s $470,000 less than a year ago.

But in terms of providing municipal services it is $2.4 million less this year than in 2009. Meanwhile, Manteca added almost 4,000 residents that require police, fire and other services.

The City Council is meeting Monday at 2 p.m. at the Civic Center for a budget workshop. The council is scheduled to consider adopting the spending plan at the Tuesday, March 6, meeting.