Fairfax County leaders have a nearly $300 million budget gap to fill between now and the time the fiscal 2026 budget is adopted in springtime.
“We have a lot of work to do,” County Executive Bryan Hill said last Tuesday (Nov. 26) at an occasionally testy joint meeting between the county’s Board of Supervisors and School Board.
After a tough fiscal year 2025 budget process that resulted in a 3-cent hike in the real estate tax rate, Fairfax County is once again facing a budget year that will see projected expenses outpacing anticipated revenues.
Under state law, the county is required to ultimately adopt a balanced budget. County leaders say it may be a challenging process, but they will get there.
While acknowledging that “some worrisome numbers” were presented, Board of Supervisors Chairman Jeff McKay urged everyone to take a breath.
“This is a snapshot in time,” he said of the Nov. 26 presentation. “We have a lot of months ahead.”
The current $292.7 million gap between projected revenues and expenses in the fiscal year 2026 budget forecast is not that much different from the same point a year ago, when county officials were projecting a $284.5 million shortfall as they kicked off the fiscal 2025 budget process.
Ultimately, the board approved a $5.45 billion budget made possible by a 3-cent increase that bumped the county’s real estate tax rate up to $1.25 per $100 assessed value and cuts to proposed pay raises for county and school personnel, among other adjustments to bring revenue and expenses in line.
Homeowners Will Pay More in New Year
Counting the tax rate increase and higher assessments, a typical Fairfax homeowner this year is paying $450 more in real estate taxes than in 2023. Even absent another rate increase for calendar year 2025, the average tax bill will go up another $402, county staff said.
That concerns McKay, who said county leaders needed to be cognizant of the tax burden’s impact on the ability of people to live in Fairfax.
While residential assessments are expected to rise 4.78%, the commercial sector’s decline is likely to continue, with larger office buildings projected to see a 9% drop in valuation.
“Our hope is that these numbers improve” before assessments are released in early 2025, Christina Jackson, the county government’s chief financial officer, said.
Property taxes remain the county’s primary source of revenue. For fiscal year 2026, which will begin July 1, 2025, staff project a 1.8% rise in general fund revenues. That would be the smallest increase by percentage since fiscal year 2021 around the onset of the COVID-19 pandemic.
In comparison, the county saw a 2.9% increase in fiscal 2025 without the tax rate increase or a 4.7% increase with the higher tax rate taken into account.
There are still plenty of variables, as the numbers presented didn’t incorporate any additional funding to address broader affordable housing initiatives or potential higher costs to support Metro. Local leaders also will be watching the incoming Trump administration for policy changes that could impact local revenue streams.
County agencies, including the Fairfax County Park Authority, have been directed to start compiling lists of potential budget cuts, but to date, they’ve only identified $33 million in reductions.
“We have a lot of work to do,” Hill said, noting he has a brisk 83 days after the Nov. 26 meeting until he presents his fiscal year 2026 budget proposal on Feb. 18.
Union Deal for Educators Draws Supervisors’ Ire
One new twist facing the county in the upcoming budget cycle will be the need to meet obligations under collective bargaining agreements, including with Fairfax County Public Schools employees who officially unionized this summer.
Following the county’s approval of contracts for police and fire workers last year, the Alliance of Fairfax Education Unions (FEU) representing FCPS workers announced on Oct. 31 that they had reached a tentative agreement with the school system that includes a proposed 7% raise — much to the chagrin of county supervisors, who suggested the figure had little relationship to the government’s current financial picture.
FCPS teachers approved the agreement last week, the Fairfax Machine reported.
McKay called the situation “frustrating,” and Dranesville District Supervisor Jimmy Bierman (D-Dranesville) unleashed an incredulous verbal onslaught directed at FCPS officials.
“A $300 million shortfall isn’t just going to take care of itself,” he said. “We’ve got a massive gulf. The numbers here are not good.”
Without independent taxing authority, FCPS relies on the county government for about 80% of its roughly $3.7 billion in annual funding. Tensions between the two elected governing bodies have surfaced in recent years, after some supervisors have felt they aren’t getting sufficient cooperation from the school leaders.
Superintendent Michelle Reid said the school system is looking at efficiencies “to align our work to our resources,” and School Board Chair Karl Frisch, who represents Providence District, said measures were in place to avoid a repeat of last spring’s contentious budget season.
“We are listening to [the] concerns raised,” Frisch said.
However, he pushed back on criticism of the negotiated 7% raise for educators, stating that “nobody is saying their request is unreasonable.”
The Virginia General Assembly narrowly adopted a bill in 2020 that allowed localities to recognize and bargain with unions for public employees for the first time in three decades.
Under their resolutions allowing collective bargaining, the Fairfax County government and FCPS noted that any agreements are “subject to appropriation. So, if there ends up not being enough money in the budget to fund 7% pay raises, they will not materialize.
State law also still prohibits public-sector employees from striking, taking away one tool unions have to press their case.
No Help from a Meals Tax — For Now
Supervisors and Hill apparently hoped last week’s 90-minute joint meeting would wrap without any mention of the potential imposition of new taxes, including the already controversial possibility of a meals tax, to help bring in more revenue.
Though the topic wasn’t broached during the staff presentation, Mason District School Board Representative Ricardy Anderson eventually brought it up during a back-and-forth during the meeting’s final phase.
“We are working that,” Hill responded somewhat tersely. “As soon as I have that information, it will be presented.”
The General Assembly removed a longstanding requirement in 2020 that localities hold a referendum before imposing a tax on food and beverages of up to 6% on top of state and local sales taxes. Twice, in 1992 and 2016, Fairfax County voters have rejected the proposal.
McKay noted that even if a meals tax is adopted as part of the current budget process, its implementation would be delayed until at least early 2026, so it would do “absolutely nothing” to help county finances in the short term.
He also stated that any revenue from a meals tax would come “nowhere close” to addressing budget challenges. An increased transient occupancy tax on hotel stays and new taxes on event admissions or estates have also been floated as possible revenue options.
Criticism Leveled at State Leaders
While the meeting had its share of sparring, county government and school officials found broad alignment on one point: the state government isn’t doing enough to support local operations on many issues, particularly related to education.
It’s a perennial lament of leaders across Virginia’s 133 cities and counties, whose powers, including taxing authority, are limited to those delegated from Richmond due to the Commonwealth’s “Dillon Rule” status.
McKay said getting appropriate levels of education funding from the state would go a long way to easing the tax burden on county homeowners. Local leaders may get some of what they seek, as General Assembly early next year is expected to divide up a healthy budget surplus.
Gov. Glenn Youngkin announced a general revenue surplus of $1.2 billion in August to finish fiscal year 2024, which ended on June 30.
With the legislature in Democratic control and the executive branch controlled by Republicans — plus, a statewide election looming next November — finding agreement on where to allocate funding could take months, adding another level of uncertainty to Fairfax’s budget process.
The Board of Supervisors and school board plan to meet again in a joint budget session on Feb. 25 after Hill and Reid present their budget proposals. At that point, updated property assessments will be out, the General Assembly session is expected to be over, the Trump administration will presumably have settled in, so there may be more clarity on overall economic conditions.
