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Fairfax County Executive Bryan Hill proposed a 1.5-cent increase in the real estate tax rate as the county confronts modest revenue growth, school funding pressures and uncertainty surrounding the federal workforce.

Hill’s proposed fiscal 2026 budget would set the real estate tax rate at $1.14 per $100 of assessed value. The increase would generate an estimated $50.9 million and leave the average homeowner paying slightly more than $638 extra.

The plan also calls for a 3% tax on prepared food and beverages. If implemented in January 2026, the tax would produce an estimated $48.1 million in net revenue during its first six months. Hill said the money could support county priorities or potentially reduce the need for the proposed real estate tax increase.

Commercial and industrial properties now make up a smaller share of Fairfax County’s total real estate assessment base. That portion fell from 15.58% in fiscal 2025 to 14.80% in fiscal 2026, increasing the county’s reliance on other revenue sources.

Schools fall short of requested funding

Hill proposed nearly equal growth in county spending and the transfer to Fairfax County Public Schools, with both rising just under 4.5%. The plan, however, does not fully fund the superintendent’s requested operating transfer.

The school system sought a $268 million increase, or about 10.4%, slightly below the amount discussed during the county’s November forecast meeting. The request was larger than the previous year’s $254 million request, which had been the biggest dollar increase in county history.

Hill also pointed to a 2023 study by the Joint Legislative Audit and Review Commission that found Virginia was not fully meeting its school-funding obligations. Fairfax County has used additional local money to help cover that gap.

Employee pay preserved amid $60 million in cuts

The proposed budget prioritizes compensation for county workers. It fully funds collective bargaining agreements with IAFF Local 2068, representing Fairfax County professional firefighters, and the Fairfax County Chapter of the Southern States Police Benevolent Association. Non-represented employees would also receive a full compensation package.

At the same time, the budget contains $60 million in reductions and eliminates 208 merit positions. Hill said additional adjustments were necessary to cover inflation, debt service, state and federal mandates, new facilities and information technology needs.

Board of Supervisors Chairman Jeff McKay said every affected merit employee would be offered another opportunity within the county. He said the proposed tax increase would help Fairfax maintain compensation needed to recruit and retain employees.

“The way you treat your employees says a lot about your organization,” McKay said, contrasting the county’s approach with federal workforce actions taking place across the Potomac River.

Moderate revenue projections left little room for major new spending across many other county priorities.

Food, hotel and housing proposals add revenue

Hill also proposed raising the transient occupancy tax on hotel stays from 4% to 6%, a rate he said would align Fairfax with many neighboring jurisdictions. The increase would generate slightly more than $13 million.

Half of that additional hotel-tax revenue must be used for tourism promotion. The county has held that portion in reserve while officials discuss its use, while the remaining half could support the general fund and help balance the budget.

Hill said Virginia gives counties few ways to raise revenue, leaving the real estate tax as Fairfax County’s primary funding source.

The budget would also dedicate another quarter-cent of the real estate tax rate, worth about $8.5 million, to affordable housing. The money would support the county’s goal of adding 10,000 affordable homes by 2034.

Federal upheaval clouds the outlook

Hill described his eighth budget as county executive as one of the most difficult he has prepared—even more challenging than the pandemic years, when federal assistance helped stabilize county finances.

More than 50,000 federal employees live in Fairfax County, while many other residents work for federal contractors. Hill said layoffs and furloughs were already affecting workers, but the wider economic consequences of the administration’s actions, including tariffs, remained unclear.

He said county officials would need to closely track federal developments and revise revenue or spending projections if necessary.

McKay warned that the federal changes could have a significant effect on future county budgets. Hill said the uncertainty made an already difficult balancing act even harder as Fairfax sought to fund schools, preserve employee compensation and limit further pressure on homeowners.