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Fairfax City residents could face sharply higher property-tax bills and a bigger tax on restaurant meals under the proposed fiscal 2026 budget unveiled Feb. 25.

Acting City Manager Bryan Foster recommended raising the residential real estate tax rate by 9.5 cents, from $1.03 to $1.125 per $100 of assessed value. He also proposed increasing the meals tax from 4 percent to 6 percent.

For the owner of an average city home valued at $694,503, the combined effect of the higher rate and an average 7 percent assessment increase would add $1,126 to the annual real estate tax bill.

Proposed 6 percent increases in both stormwater and wastewater charges would add an estimated $9.70 and $42.12 a year, respectively. The additional revenue would support regulatory requirements, operations and infrastructure improvements.

Foster said Fairfax would retain one of the region’s lower residential property-tax rates even after the increase. The projected rate is $1.21 in Falls Church and $1.47 in Herndon. Fairfax currently has the third-lowest rate among neighboring jurisdictions and would rank fourth-lowest under the proposal.

Schools and construction drive spending

Real estate taxes generate 48 percent of the city’s General Fund revenue. The proposed budget would use that revenue and other funding to advance 130 projects in Fairfax’s Capital Improvement Program.

The plan would appropriate $105.1 million for capital work in FY 2026 and forecasts $618.3 million in projects from FY 2026 through FY 2030.

Proposed investments include $10.3 million for recreation, $30.6 million for transportation, $11.8 million for wastewater and $24.5 million for general government projects. Among the largest individual allocations are $18 million toward replacing Fire Station 3 on University Drive and $14.3 million for improvements along the Jermantown Road corridor.

Only about half of the capital program would be funded with city money, according to Foster, with state and federal sources covering the balance. In recent years, he said, $20 million in local spending helped secure $250 million from other sources—a return of more than 12 times the city’s investment.

The budget also fully funds the City School Board’s $71,427,547 request, a 21.4 percent increase over FY 2025. Education accounts for nearly $80 million, or 37 percent, of General Fund spending, with most of that money going toward tuition.

Fairfax pays Fairfax County Public Schools to provide instruction in the city’s four schools. Foster identified a $12.6 million increase in that tuition payment as the budget’s main cost driver.

Without other revenue changes, he said, covering the increase would require adding 13.5 cents to the residential real estate tax rate. He warned that potential additional tuition increases of 8 percent in both 2026 and 2027 would be unsustainable.

The proposal also sets aside an initial $3 million toward a multiyear financing plan for the $220 million school bond referendum voters approved Nov. 5, 2024.

The bond will finance renovations at Providence and Daniels Run elementary schools and a new roof at Fairfax High School. The total includes $177 million for the elementary schools, $43 million for the high school roof and financing costs. Work is expected to span FY 2026 through FY 2031.

Meals tax could bring in $13.5 million

Foster said the property-tax increase by itself would not generate enough money to finance the proposed budget, prompting his recommendation to raise the meals tax.

The change would add $1 to the tax on a $50 restaurant bill. Each percentage-point increase is projected to produce about $2.2 million in additional annual revenue.

The existing 4 percent tax generated $8.7 million in FY 2024 and is expected to yield about $9 million in FY 2025. At 6 percent, meals-tax revenue is projected to reach $13.5 million in FY 2026.

The rate has not changed since 2004, when it rose from 2 percent to 4 percent. Foster argued that the tax allows visitors who use city services and amenities to share more of the cost while easing some of the pressure on property owners.

Total spending rises above $306 million

Proposed net expenditures across all city funds total $306,551,165, up 21.3 percent from FY 2025. The figure encompasses the General Fund, capital projects, Old Town Service District, transportation tax, cable, wastewater, stormwater utility, transit and debt service funds.

General Fund revenue and spending would each total $207,062,898. That represents a 14.6 percent increase from the adopted FY 2025 budget and a 9.6 percent increase from estimated FY 2025 expenditures.

Capital spending on projects supported by the General Fund would reach $50,714,164, a 55.4 percent jump from the FY 2025 total of $32,640,376.

The personnel plan includes a 3.5 percent merit raise for eligible employees on the general pay scale, costing $649,000, as well as the annual step increase for public-safety workers. The city says the raises are intended to help recruit and retain police officers and firefighters.

Unlike in previous budget cycles, Foster did not rely on unallocated money to close the funding gap. He said absorbing the larger costs now would create future debt capacity and could avoid another tax increase next year to support debt service, particularly for the school projects.

Foster also pointed to Fairfax’s AAA bond rating and a real estate tax base that has grown nearly 50 percent over nine years as signs that the city remains financially healthy.

Residents may comment on the proposal during public hearings at 7 p.m. March 11 and 25 and April 8 and 22 in the City Council chambers. The council is scheduled to adopt the budget May 6.