Fairfax County’s FY 2026 budget forecast, presented Tuesday, Nov. 26, during a joint budget policy committee meeting with the Board of Supervisors and School Board, underscores significant financial challenges for the upcoming fiscal year.
Members of both boards emphasized that the forecast is a projection, based on preliminary information, and not a budget proposal. Fairfax County Executive Bryan Hill will present the FY 2026 Advertised Budget to the Board of Supervisors on Tuesday, Feb. 18, 2025.
Residential property values are projected to rise by 4.78%, contributing to modest revenue growth. However, ongoing declines in nonresidential values and rising employee compensation costs are driving a combined projected shortfall of $292.7 million for the county and schools.
The county’s forecasted expenditure increases focus solely on essential costs, including collective bargaining agreements, debt service and maintaining existing programs and facilities. Excluded from the forecast are additional investments in affordable housing, Metro contributions or program expansions. The Fairfax County Public Schools (FCPS) forecast reflects the first year of costs associated with a recently negotiated collective bargaining agreement, which include a 7% compensation increase for staff.
Key Revenue and Real Estate Trends
General Fund revenue is forecast to grow by 1.8% at current tax rates, a $127.9 million increase that is insufficient to close the projected gap. Nonresidential property values are expected to fall by 1.3%, marking two consecutive years of declines driven by high office vacancies and rising operational costs. Residential property values are projected to rise by 4.78%, fueled by steady demand despite elevated mortgage rates.
County Budget Projections Prioritize Critical Expenditures
The FY 2026 county budget projections reflect a bare-bones approach, focusing on critical expenditures. Planned increases include those to cover collective bargaining agreements, a 2% cost-of-living adjustment and performance/longevity increases for non-represented employees and maintaining existing programs and facilities.
Budget Reductions Under Review
The county is exploring potential reductions to address the projected shortfall. Early estimates suggest that $33 million in cuts—the equivalent of one penny on the real estate tax rate—could be realized. However, these reductions are expected to be more challenging than in FY 2025, which focused primarily on cost savings and efficiencies. Service and program reductions may be unavoidable this year.
Schools Budget Reflects New Collective Bargaining Agreements
For the first time, the FCPS budget incorporates funding requirements from a newly established collective bargaining agreement that provides a 7% salary increase for staff as well as increased funding for transportation, food service and healthcare costs.
The county and FCPS continue to urge the state to increase funding to address the $568.7 million shortfall identified in the Joint Legislative Audit and Review Commission (JLARC) study. The study highlighted significant underfunding of schools by the Commonwealth, which remains a critical challenge as the county seeks to meet the growing needs of its student population.
FY 2026 Budget Timeline
- Jan. 23, 2025: FCPS Superintendent presents the FY 2026 Proposed Budget.
- Feb. 18, 2025: County Executive releases the FY 2026 Advertised Budget.
- April 22-24, 2025: Public hearings on the FY 2026 budget.
- May 13, 2025: Board of Supervisors adopts the FY 2026 budget.
- July 1, 2025: FY 2026 fiscal year begins.
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