Balancing revenue growth, economic uncertainty and county service investments is at the core of the FY 2026 Advertised Budget Plan, presented to the Board of Supervisors by County Executive Bryan Hill on Tuesday. The proposal includes a 1.5-cent increase in the Real Estate Tax rate, targeted expenditure reductions and funding for employee compensation and benefits.
“Even when revenue growth is sluggish, we cannot ignore our community’s desire for high-quality services or our employees’ expectations for fair pay increases,” Hill said. “Responsible budgeting is about balance, and this proposal seeks to strike the right balance in funding necessary expenditure increases, finding sensible reduction opportunities and managing the impact on our residents.”
Economic Challenges and Federal Uncertainty
Hill told the board that regional economic uncertainty, including potential shifts in the federal workforce, could impact Fairfax County. With more than 50,000 federal employees and numerous contractors in the county, changes at the federal level may have significant economic effects. While broader impacts on employment, inflation and consumer confidence remain uncertain, the budget assumes no immediate disruptions but notes the need for continued monitoring.
Revenue Adjustments, Budget Reductions, Tax Increases
Fairfax County must adopt a balanced budget, meaning expenditures cannot exceed available revenue. Rising costs for employee compensation, school funding and inflation-driven expenses necessitate both strategic reductions and additional revenue sources.
The nearly $60 million in reductions proposed this year represents the most significant cost-cutting effort since FY 2010, when over $90 million was cut following the Great Recession. In total, since FY 2024, the county has reduced spending by over $100 million to maintain a balanced budget while addressing growing cost pressures.
The 1.5-cent real estate tax increase, which would bring the rate to $1.14, is projected to generate $50.93 million for essential services. Additionally, a 2 percent increase in the transient occupancy tax is expected to raise $13 million, with half allocated to tourism promotion.
Revenue Diversification
As part of the FY 2026 Advertised Budget Plan, Hill recommended the board consider implementing a Food and Beverage Tax in the county. Should the board proceed with a Food and Beverage Tax, at a 4 percent rate, effective January 2026, the tax would generate $65.1 million. It could be utilized to reduce the Real Estate Tax rate to $1.12 per $100 of assessed value—a 0.5 cent decrease from the FY 2025 rate. Alternatively, a portion of the revenue could be invested in county priorities.
The county executive recommends that the board advertise a public hearing on the Food and Beverage Tax to coincide with the April budget public hearings.
Fairfax County Public Schools Funding
Fairfax County Public Schools (FCPS) has requested a $268.26 million transfer increase for FY 2026 , largely for employee compensation, special education and contract rate adjustments. The Advertised Budget proposes a $125.34 million increase in total Schools funding. Fully funding the FCPS request would require 4.5 additional cents on the Real Estate Tax rate.
The impact on taxpayers, the need for balance with other priorities and the potential for additional state funding were all factors in the proposed transfer amount. Currently, Virginia contributes significantly less funding per student than the national average, according to a Joint Legislative Audit and Review Commission report, which estimates FCPS is underfunded by approximately $3,100 per student, creating a $568 million gap.
Employee Compensation
The budget prioritizes employee compensation, including fully funding collective bargaining agreements, a 2 percent cost-of-living adjustment, and performance-based pay increases.
The budget allocates $123.6 million for employee pay and benefits, including collective bargaining agreements, non-represented pay adjustments and market-driven salary changes to maintain competitiveness. It also funds longevity increases and employer contribution rate increases for pensions, retiree health and other benefits.
Affordable Housing and Capital Projects
The county is investing an additional $8.5 million in affordable housing, representing a quarter-penny on the real estate tax and bringing the total amount dedicated to affordable housing to 1.25 pennies on the Real Estate Tax rate. The Advertised Capital Improvement Plan also included some proposed adjustments to upcoming Bond Referendum. A new renovation project for the Joanne Jorgenson Public Health Laboratory is now recommended for the 2026 Human Services Referendum. A planned $50 million referendum for early childhood is proposed to be split into two tranches, and a project to renovate the Centreville Regional Library is proposed to be deferred.
Public Input and Next Steps
Public participation is essential in shaping the final budget. Residents are encouraged to provide input through public hearings and community discussions before the final budget adoption in May 2025. Budget public hearings are scheduled for Tuesday through Thursday, April 22 to 24, with FY 2026 Budget adoption on Tuesday, May 13.
For more information, visit the Department of Management and Budget online.
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