Underperforming Real Estate Market, Funding Pressures Create Challenging Budget Picture

Employee Compensation

The largest funding category after schools is county compensation, with a $148.1 million proposed increase over FY 2024. That amount includes funding for merit, longevity and a partial Market Rate Adjustment (MRA) of 2%. The MRA for FY 2025 is calculated at 4.1% and would require an additional penny on the tax rate to fully fund.

The FY 2025 Budget is the first to include compensation increases for public safety employees as determined by the collective bargaining process. County staff negotiated with the Southern States Police Benevolent Association (SSPBA) and International Association of Firefighters (IAFF) on behalf of the county’s law enforcement officers, and fire, EMS and public safety communicators, respectively, to arrive at new agreements. 

The budget also includes significant expenditures for employee benefits, particularly for the county’s defined-benefit retirement plans, with over $31 million in required increases for the police, uniformed and general county employee plans. Two of the three systems experienced returns well below the 6.75% assumed rate of return this past year. 

Transportation

Metro’s budget challenges are a major factor in the county’s FY 2025 Budget proposal, with a net increase of $37 million included. The county’s obligation may be impacted based on the final numbers for Metro’s budget and state support.

The county is also waiting for additional information regarding the outcome of negotiations between the contracted Fairfax County Connector operators and one of its employee unions. The budget includes a modest contract rate increase, but the full fiscal impact is pending completion of negotiations.

Other Spending Offset by Reductions, Fee Increases

All other county increases – including investments in Board of Supervisors priorities like environmental and energy initiatives, parks, early childhood education, positions to support elections and new facilities, inflationary and contract rate adjustments as well as information technology infrastructure – are offset by over $36 million in identified savings and reductions. These reductions are the result of an extensive agency exercise including the elimination of 84 positions, and just under $3 million attributable primarily to targeted fee adjustments. 

Among increases offset by the reductions and fee increases are:

• Almost $7 million for investments in environmental and energy initiatives, particularly in the Fairfax County Park Authority (FCPA) and other support for Parks.
• Funding and positions to create and preserve affordable housing and baseline hypothermia program funding.
• Funding to preserve 72 early childhood slots originally funded from a federal Community Funding Project.
• The second of a two-year phase-in of funding for a behavioral health system navigation program.
• Equity program support.
• Approximately $1.7 million generated from redirected and increased Athletic Services Fees, for the county’s athletic program including field and indoor facility maintenance, and youth sports scholarships.

Next Steps

The BOS and School Board will meet on Tuesday, Feb. 27 to discuss the budget and tax rate before the BOS advertises a tax rate on March 5. Public hearings will be held from April 16-18 before mark-up on April 30 and adoption of the FY 2025 Budget on Tuesday, May 7. Stay tuned for how to learn more and share your input including virtually, at the public hearings and at district budget town halls.