FY 2025 Budget Forecast Presented to Supervisors, School Board

Published on
11/29/2023
FY 2025 Budget Forecast

 

A relatively flat real estate market, global impacts on the local economy and pending collective bargaining agreements are all factors impacting Fairfax County’s economic outlook, as the county looks ahead to the Fiscal Year 2025 Budget and a significant projected deficit.

The Fiscal Year 2025 Budget Forecast was presented by Fairfax County Government and Fairfax County Public Schools (FCPS) representatives on Tuesday, Nov. 28, to a joint meeting of the Board of Supervisors and School Board. The forecast is a tool that presents estimated information based on past, current and projected financial conditions. It is not a budget proposal. The county is required by law to adopt a balanced budget.

Fairfax County Chief Financial Officer Christina Jackson told the assembly that the forecast focuses on the largest budget requirements for the coming fiscal year, including collective bargaining agreements, continued investments in employee salaries and benefits, and Metro, but that other important priorities are not included in the forecast. 

County revenue growth is projected at 1.9% in FY 2025 (down from 3.6% projected for the close of FY 2024) resulting in an additional $152.3 million in revenue over FY 2024. Schools revenue is anticipated to increase by $66.1 million in FY 2025. This increase is not enough to offset the increase in required expenditures, resulting in a projected shortfall of $284.5 million. 

Expenditures Over FY 2024

Projected funding needs over FY 2024 include:

  • An additional $180.5 million for county employee pay and benefits and $166.1 million for schools.
  • $17.4 million for county debt service and capital requirements, $10.9 million for schools. 
  • An additional $16 million in funding for Metro. 

A total of $132 million in additional adjustments is included in the FY 2025 projections — $29.4 million for the county and $102.6 million for schools. The FCPS total includes multi-year investments, growing enrollment and student needs, contractual increases, the full-year impact of a 2% compensation adjustment (effective Jan. 1, 2024), and other costs. 

Employee Salary and Benefits

On the county side, salary and benefits includes a $37.5 million increase for the police bargaining unit and $23.7 million for the fire and emergency services bargaining unit, along with $48.4 million for a projected market rate adjustment for non-represented employees and $17.9 million for performance and longevity increases. The $180.5 million total also includes merit and longevity increases for non-represented uniformed public safety employees, a market study placeholder and retirement rate adjustments.

On the schools side, the $166.1 million in salary and benefits adjustments includes $172.7 million for a 6% compensation increase for all employees and $19.1 million for benefits, offset by $25.7 million in savings from position turnover.

Metro

A deficit of approximately $750 million is projected by Metro for FY 2025 — the result of ridership loss during the pandemic, the spenddown of one-time stimulus funds and the region’s shift to telework. The county is anticipating a $16 to $55 million addition to the operating subsidy from the county’s General Fund to help Metro address this shortfall. The Metro General Manager’s FY 2025 budget will be released in December.

Potential Savings

County agencies were asked to identify reduction options totaling 7% of their budgets in anticipation of this shortfall. Those reductions are under review. The county’s Department of Management and Budget estimates that at least $20 million in savings could be realized from this effort. That estimate is factored into the shortfall projection. User fees are also being reviewed for potential adjustments. 

Real Estate Projections

The forecast projects a residential equalization rate of 2.07% in FY 2025. Through October of this year average home sale prices are up 3.3%. The market continues to decelerate in response to mortgage rates, which reached 8% in October. The number of home sales in the county is down 23% through October, compared to the same time period last year.

Nonresidential real estate values are projected to decrease 1.6% in FY 2025, with office elevator properties projected to experience the steepest decline, between 7.5 and 9% due to continued pressure on the market from telework, and vacancy rates up 1.2% year over year.

Real estate tax revenue accounts for 66% of total General Fund revenue, the largest county revenue source.

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 2025 Budget on Jan. 25, 2024, with the county’s FY 2025 Advertised Budget Plan presented on Feb. 20, 2024. Public hearings on the budget take place in mid-April, with adoption set for May.

 

Stay Connected

newscenter logo - three circles - red, blue and graySIGN UP FOR DAILY EMAIL HEADLINES

 

 

Latest Official Tweets

Recent Articles

  You may have heard the phrase "zero waste," but what does it mean for Fairfax County? 
  A solar eclipse will occur across the United States on Monday, April 8, and will be viewable, depending on weather, in Fairfax County during these times:
Fairfax Virtual Assistant