There's good news and bad news in the residential tax bills that will be sent to real estate owners in Roanoke today.

The good news is that, on average, values increased a scant seven-tenths of 1 percent, which means homeowners' tax bills won't automatically jump higher during these dicey economic times.

The bad news comes for the city government, which is facing a projected $3.6 million revenue shortfall for fiscal 2009-10. With inflation and new "priority expenses" such as building maintenance, street paving and increases in medical insurance rates factored in, the Roanoke City Council could begin next month's process of building its FY '10 budget more than $6.2 million in the red.

It's not just Roanoke facing slowed growth. Roanoke County's average home value recently rose 2.7 percent -- the lowest increase in recent memory -- and Salem's is projected to rise only 1.3 percent.

Roanoke officials have relied on the city's steadily rising real estate assessments to provide new revenue without increasing the real estate tax rate.

With flat reassessments, however, the city council will be forced to cut spending or raise taxes.

Neither option is appealing from a political standpoint. But Councilman Court Rosen said he sees in the conundrum an opportunity.

"We as a council can search deeply in our budget and determine some things that may be necessary," Rosen said. "If we use this to our advantage to cut out waste, that's a good thing for the taxpayers. So even when the economy does turn around, there will be less need to look at raising taxes down the road."

Rosen said he will not support a tax increase.

"While the city is struggling from a revenue perspective, so are average residents," Rosen said. "They're struggling with job losses and businesses having trouble remaining viable, and they're struggling with mortgages and bills."

Vice Mayor Sherman Lea said the situation will force the council to make "some tough choices and decisions on where we're going."

"I guess that's a part of what we do in serving on council," Lea said.

City officials suggested a number of potential cuts to the council last month, ranging from delaying planned capital projects to reneging on a prior council's commitment to provide $500,000 above the funding formula for schools. Council members declined at that time to lean toward any one path to a balanced budget.

Since the early 1990s, Roanoke's real estate reassessments grew at a steady rate between about 2 percent and 3 percent each year. About five years ago, however, that growth picked up dramatically. In 2006, it peaked with a 7.9 percent increase in reassessments.

That growth provided the city government with a steady flow of new revenue it could use without raising taxes.

The collapse of the housing bubble didn't affect Roanoke as drastically as other some municipalities; instead of decreasing, assessments have merely slowed.

Ann Shawver, the city's director of finance, said that's a good thing.

"Chances are your home is the most valuable thing you have. If you think about it, you probably don't want your home values to go down," Shawver said. "That would be an erosion of the value of something that belongs to you.

"It's possible they'll drop going forward. But for any person who owns a home, other than the fact it's a nuisance to pay taxes, it's important that the value holds up."