Cautious Budget Outlook for Upcoming Fiscal Year 2019

Magnifying glass and calculator on budget graph.

Our county government is undergoing several economic success initiatives to grow and diversify our economy. Home sales, jobs and other key economic indicators are improving. However, both the county’s and public schools’ budgets are being impacted by concerns about state revenue and uncertainty about federal tax reform and fiscal policies.

A cautious fiscal year (FY) 2019 budget forecast was presented by county and Fairfax County Public Schools (FCPS) representatives on Tuesday, Nov. 28, to a joint meeting of the Board of Supervisors and School Board. Each November, the county and FCPS announce their budget forecast to residents, county agencies, the business community and elected officials, which include expected tax revenues and significant funding needs for the upcoming fiscal year budget. By state law, the county must have a balanced budget.

Joint meeting of the Board of Supervisors and School Board on Nov. 28.

Joint meeting of the Board of Supervisors and School Board on Nov. 28.

Bottom Line Forecast for FY 2019

Based on data available to date, county revenue growth is projected at 2.6 percent, which generates $124 million in additional revenue for FY 2019 (begins July 1, 2018). After reserves, this leaves $121 million to cover:

  • $113 million in county funding priorities, and
  • $127 million in FCPS disbursement requirements (funding needs), offset by $20 million in projected increases in FCPS revenue noted below.

As a result, a budgetary shortfall is forecast for FY 2019 which must be addressed before the budget is adopted in May.

 

County Budget Revenue Forecast

Real estate tax revenue accounts for approximately 65 percent of the county’s general fund budget. Budget impacts from real estate tax include:

Residential Real Estate: Home prices in the county are projected to increase 1.9 percent in FY 2019.

  • Home prices are up 3.4 percent through October.

Commercial Real Estate: Commercial (nonresidential) property values are projected to increase 3.20 percent in FY 2019.

  • Office vacancy rates remain at historically elevated levels, but are on a downward trend. As of mid-year 2017, the direct office vacancy rate is 15.4 percent, the lowest since 2014.

 

FCPS Budget Revenue Forecast

FCPS receives more than 71 percent of its funding from the county government. In FY 2018 that amount is 52.8 percent of the county’s general fund budget, or close to $2.2 billion. In addition, FCPS receives state and federal funding.

The FY 2019 forecast for non-county revenue (after a beginning balance decrease of $9.4 million), includes:

  • State Revenue: $22.6 million, a 5.1 percent increase over current FY 2018 revenue.
  • State Sales Tax: $3.9 million
  • Federal Aid: $1.6 million (federal budget impacts are still unknown)
  • Fairfax City and other Revenue: $1.6 million

 

FY 2019 Budget Forecast Presentation

Download Budget Forecast Presentation

How Our Budget is Built

FY 2019 Budget Timeline:

FY19 Budget Timeline

Watch to learn more about our county’s budget process:

 

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