Fairfax board to approve meals tax, real estate rate cut with FY 2026 budget

A lower real estate tax rate, smaller transfer than school leaders sought and imposition of a meals tax are all part of Fairfax County’s $5.7 billion fiscal year 2026 budget slated for formal adoption next week.

“Our residents are worried” as they “prepare for the impact” of the Trump administration’s downsizing of the federal government and its related economic fallout, Board of Supervisors Chairman Jeff McKay said at a budget markup session today (Tuesday).

McKay said the budget package, approved for final markup on a 9-1 vote, represents the culmination of a “public, open, transparent process” that compares to chaos across the Potomac River.

“This budget can best be described as responsive and prudent,” he said. “This is about bringing together what I consider to be various different viewpoints on the budget and bringing it to the center, where I think most residents are.”

The board voted to lower the county’s real estate tax rate to $1.1225 per $100 of assessed value, a quarter-cent decrease from the current rate of $1.125 per $100. County Executive Bryan Hill had recommended increasing the rate to $1.14 per $100 in a budget proposal that didn’t take into account the potential introduction of a new meals tax.

Even with the reduced rate, a typical Fairfax homeowner will see their annual tax bill for 2025 rise $499 due to higher home assessments. The increase would’ve been $638 under Hill’s initial budget proposal, unveiled in February.

To make up the revenue, supervisors will enact a 4% meals tax starting in January 2026. The new tax on food and drinks served by restaurants is expected to bring in $67.9 million over the last six months of the fiscal year, which starts on July 1, minus a small rebate to retailers and $2.8 million in administrative costs.

The board also agreed to increase the transient occupancy or hotel tax from the current 4% to 6%. Half the additional funding will be put into reserves and used for future tourism-related efforts.

The proposal also defers, for a year, moving forward on plans for redevelopment of the Judicial Center redevelopment project.

Supervisors agreed to put about $12.6 million in excess funds from the third quarter of fiscal year 2025 into a new reserve fund that could be accessed more quickly than existing reserves, which have limitations placed on their use.

“The county must remain nimble,” said McKay, who noted that the D.C. government had lost a coveted Triple-A bond rating in April, and Northern Virginia jurisdictions are at risk of seeing cuts, as well.

Schools get less than sought

Under the newly marked-up budget, Fairfax County Public Schools will receive $2.93 billion from the county government’s General Fund, up $119 million from the current fiscal year but lower than the $248 million increase requested by Superintendent Michelle Reid.

The increase, unchanged from Hill’s recommendation, may force school leaders to pull back on salary increases promised to employees, including those in new collective bargaining agreements.

Mount Vernon District Supervisor Dan Storck, who previously served on the school board, said the county government could hardly ask its own employees to take more modest pay increases while giving FCPS employees 7% raises — double that of most years.

“We just can’t,” Storck said, saying it will be up to the superintendent and school board to figure out how to balance their budget based on the county funding they receive.

“I don’t envy them, but that’s their job, not my job,” he said.

Braddock District Supervisor James Walkinshaw said the blame for the situation rested with FCPS leaders for making unrealistic promises in collective bargaining contracts ratified last year.

“It is extraordinarily frustrating to me,” Walkinshaw said of the school district administration’s actions. “There’s a lot of work to be done on that process.”

Bierman echoed his frustration, criticizing Reid, some unnamed school board members and others for “rhetoric” that was “completely unhelpful.”

“We should be working together to try to come up with creative solutions within the constraints of our fiscal reality,” Bierman said.

Following a stabbing at West Potomac High School, several school board members had urged the Board of Supervisors to provide more funding for school resources officers and other safety measures, suggesting that meals tax revenue should be directed to FCPS.

McKay voiced frustration with school leaders, but echoed Bierman’s sentiments about collaborating going forward.

“I hope we can turn down the temperature,” he said. “We support everything the schools do.”

State law permits localities to agree to collective bargaining agreements with its employees, but also makes any agreement “subject to appropriation.” In other words, if the funds aren’t available, the agreements can be revamped.

The fiscal year 2026 budget includes full funding for pay promised to police and fire department workers under three-year contracts with the county’s public-safety unions.

Restoring proposed cuts

Providence District Supervisor Palchik said the budget package is the result of “some really honest and tough conversations.”

Supervisors were listening to the community, she said, and will restore funding to some programs after the public weighed in.

Partly using one-time third-quarter review money, the budget markup added funding back to a number of programs that Hill had proposed for cuts, including:

• $3.93 million to keep in place middle school after-school programs for the coming fiscal year, coupled with a directive that county and FCPS staff collaborate on a plan to recoup some future expenses through fees
• $840,000 to maintain crossing guards at high schools for another year. Discussions are already underway on the possibility of privatization or a community safety officer program.
• $2.65 million to restore ambulance service cuts, with additional support for volunteer fire departments and the Community Emergency Response Team (CERT) program
• Restoring funding to the Fairfax-Falls Church Community Services Board, as well as programs for seniors and victims of domestic violence
• $380,000 to support trail and ground maintenance at Fairfax County Park Authority facilities
• $220,000 for maintenance at other recreational facilities

Mason District Supervisor Andres Jimenez said some of the proposed cuts would’ve had major impacts on public safety and quality of life.

Democrats support package, Republican opposes it

Outside of the body’s lone Republican — Springfield District’s Pat Herrity — there was general support for the package.

“This is the best outcome based on the circumstances we have,” Franconia District Supervisor Rodney Lusk said, adding that the county has “to prepeare for what we know is going to be a worsening economic condition.”

Herrity, who had circulated an alternate spending proposal to his colleagues prior to the vote, said there were some portions of the budget proposal before the body that had merit.

“I am happy to see we won’t be cutting critical services,” he said.

Though he called the decision to increase the county’s reserves “refreshing,” Herrity argued that the county could adopt a budget with no increase in the real estate tax rate and no imposition of a meals tax if leaders were willing to judiciously trim services and programs.

Democrats countered that a meals tax is a key tool to maintain core services while lowering real-estate tax rates.

“The most conservative areas of the state have the highest meals taxes,” McKay said. “They knew the value of diversifying revenue.”

“It’s not an easy moment, but I’m happy that we finally have the opportunity to diversify our taxes,” Palchik said.

A proposal by Herrity to convene an outside group of experts to look at budget matters and advise supervisors died for lack of a second.

‘The best we can do’

Hunter Mill District Supervisor Walter Alcorn said that while the budget “takes a step forward” on issues like affordable housing, other priorities will get less.

“This is the best we can do as a board this year,” he said.

Bierman said the end result represented “a responsible budget” but admitted not everyone will come away pleased.

“For almost every cut, there’s a constituency. For almost every change, there’s a constituency,” he said.

“We are in a situation where we can’t do everything,” added Sully Supervisor Kathy Smith.

As part of the series of actions taken at today’s meeting, supervisors also voted 9-1 to approve budget guidance as the process to develop at fiscal year 2027 budget begins.

The resolution calls for better collaboration between county and school leaders, and better work by FCPS leaders in dealing with their unionized employees.

Collective bargaining agreements “must be rooted in reason,” the budget guidance noted, adding that it currently is “virtually impossible” to know today what FY 2027 budget environment will look like.

“We will need to focus on limiting expenditure growth,” notes the guidance.

The guidance also suggests creating an incentive program for county employees to provide cost-saving suggestions. Rewards could be financial in nature, or take the form of benefits, such as additional leave.

Herrity, who voted against the fiscal year 2027 guidance as a whole, said he supported that piece of it.

“If we can get that to work, it makes a lot of sense,” he said.