FY 2024 Budget Forecast Presented to Supervisors, School Board

Published on
11/22/2022
Fairfax County Government Center

 

As Fairfax County looks ahead to the Fiscal Year 2024 Budget, the rapidly changing real estate market, inflation and interest rates, and a tight labor market are among the factors impacting growth, as the county’s economy continues to recover from pandemic-related disruptions.

The Fiscal Year 2024 Budget Forecast was presented by Fairfax County Government and Fairfax County Public Schools (FCPS) representatives on Tuesday, Nov. 22, to a joint meeting of the Board of Supervisors and School Board. Staff told the assembly that uncertainty in the economic outlook prompted a conservative approach on revenue forecasting for FY 2024.

With a projected county revenue increase of $266.4 million ($139 million for schools and $127.4 million for the county’s General Fund) and a projected schools revenue increase of $56.3 million, the county is looking at a shortfall of just over $81 million and a $43.8 million shortfall for schools based on projected expenditure increases for FY 2024. These projections assume no change from the current $1.11 real estate tax rate.

Expenditures Over FY 2023

Ongoing recruitment and retention challenges are anticipated to necessitate a continued focus on salary investments. Employee pay and benefits comprise the largest share of projected expenditures noted in the forecast, at $158.8 million on the county side and $113.5 million on the schools side. The estimate includes the county’s 5.444% calculated market rate adjustment, performance/merit/longevity increases and benefits. For FCPS the total includes estimated funding for step increases, a market scale adjustment and benefits. 

Additional county adjustments include funding for debt service requirements; new facilities like the South County Police Station and Animal Shelter and the Patrick Henry Shelter; and increases to account for inflationary pressures and contract adjustments among other items.

FCPS adjustments include additional funding for enrollment and contractual increases; technology infrastructure; additional contract days for certain staff categories; and other projects and initiatives.

Real Estate Projections

The forecast projects a residential equalization rate of 5.16% in 2024. Through October average home sale prices are up 7.4% but the market has been decelerating in response to higher mortgage rates, with prices expected to flatten in 2023.

Both the nonresidential and new construction categories are expected to increase by less than 1%, with nonresidential values projected to grow by only .61% and new construction by just .49% in FY 2024. Both of these projections are down significantly from FY 2023 actual numbers, with growth in the nonresidential category at 2.27% and new construction at .85%.

Real estate tax accounts for 67% of total General Fund revenue, the largest county revenue source.

Other Tax Revenue

Business, Professional & Occupational License (BPOL) and Personal Property tax revenue are projected to be flat in FY 2024. Sales and Transient Occupancy tax revenue are expected to grow in FY 2024, but Transient Occupancy Taxes will likely remain below 2019 levels.

What is the Budget Forecast?

Each November, Fairfax County and FCPS announce their budget forecast to residents, county agencies, the business community and elected officials. The forecast includes expected tax revenues and significant funding needs for the upcoming fiscal year budget. By state law, the county must have a balanced budget.

More than half of the county’s General Fund budget is disbursed to FCPS. County government and FCPS continue to work together to make the most efficient use of tax dollars while maintaining a high level of services.

Timeline

Fairfax County Public Schools will release their proposed FY 2024 Budget on Jan. 12, 2023, with the county’s FY 2024 Advertised Budget Plan presented on Feb. 21, 2023. Public hearings on the budget take place in mid-April, with adoption set for May. Details are available online.

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