As expected, the Falls Church City Council moved through the final seven of its votes smoothly Monday night to adopt the Fiscal Year 2027 operating budget and six-year Capital Improvement Project budgets with a net half-cent drop in the residential real estate tax rate.
All the votes were 7-0 unanimous with the exception of the one setting the tax rate, which was 6-1 due to opposition to cutting the rate at all by Councilman Arthur Agin. The half-cent cut amounts to about $50 on average to tax bills that on average top $12,000.
If there is anything remarkable about this year’s budget season, it was how painless it was for the City of Falls Church, as Mayor Letty Hardi remarked prior to the final vote (see the full text of Hardi’s remarks elsewhere in this edition). The record layoffs of government and government contract employees in the wider region resulted in budget processes much more painful for Falls Church’s neighbors, especially Arlington and Fairfax counties.
While the half-cent cut in Falls Church was largely symbolic, it did point to something much more important: namely, the City’s two-decade push for aggressive economic development has paid off for City residents, as the commercial component of the revenue picture here has mitigated the burden on local residents, even as the City has built important new infrastructure, such as a new high schools, major upgrades to its other public schools as well as to City Hall and the public library. Once again this year, the City was able to fully fund the School Board’s request. In this context, the overall real estate tax rate has dropped in the last half-dozen years from $1.355 to $1.18 per $100 of assessed valuation.
Hardi cautioned in her remarks that commercial sources of revenue to the budget cannot be expected to help out meeting the City’s needs much longer, however, and that tougher times loom on the horizon that could require the City to reconsider its revenue sharing agreement with the schools and perhaps into new tax option, a Commercial and Industrial (C&I) real estate tax allowed by state law that members of the Northern Virginia Transportation Authority can use to impose a C&I tax up to 12.5 cents per $100 of assessed value of commercial and industrial property, excluding commercial property that is used for residential purposes, such as apartments and senior living establishments. These taxes would be used for transportation projects only.
The Falls Church City Council took at an initial look at this option last fall when the outlook for the City was far more uncertain and potentially troubling. But while it was not seriously engaged in this budget cycle, it came up repeatedly as something the Council should not ignore going forward.
During Monday evening’s City Council meeting, the Falls Church City Council voted to approve the Fiscal Year 2027 (FY27) budget and six-year Capital Improvements Program (CIP).
The General Government operating budget (not including debt service) for FY2027 provides for operating expenditures of $59.5 million — an increase of 3.4 percent over FY2026. The FY2027 transfer to schools from general tax revenues is $58.1 million — an increase of 4.8 percent over the FY2026 transfer. The total School Division operating budget, including state and federal revenues, is $71.9 million — a 3.6 percent increase over the FY2026 budget.
The budget provides a reduction to the real estate tax rate by half a penny to $1.18 per $100 of assessed value. The median homeowner’s real estate tax bill will increase by $557 — or 4.6 percent, owing to the rising assessed value of homes due to market appreciation.
The Capital Improvements Program provides a six-year plan for investment in City roadways, schools, parks, and utilities. Transportation projects total $100.6 million, City and School Facilities $19.7 million, Sanitary Sewer $33.5 million, and Stormwater $8.7 million. The CIP is funded with $94.8 million in federal, state, and regional grants, with $90 million of that for transportation projects to improve safety and accessibility on City roadways. There is no new taxpayer-funded debt planned in the CIP until FY2031, when $5 million is planned to replace the roof at the Falls Church Fire Station.
The theme of the budget for FY27, “Reliable, Responsive, and Resilient,” is clear in the adopted budget and CIP priorities and highlights:
Reliable: Sustaining State of Good Repair of City Streets, including a $1.5 million operating budget with a request for a $1 million grant for paving Routes 7 and 29. Investing in the City Workforce with a 4 percent merit pay increase for general government staff, a 5-12 percent market rate adjustment for Sheriff deputies, and a 14 percent adjustment for Police officers. Continuing support for affordable housing with twelve City Committed Affordable Units. Additionally, the City is investing in safety by addressing the gaps in fire hydrant access.
Responsive: This budget invests $100 million in CIP in transportation projects while also addressing increases in Inter-jurisdictional and contract costs with $1.5 million in budget cuts. It also demonstrates the City’s commitment to structural changes and process improvements by funding a new department of code administration and contracted IT support for enterprise resource planning and information security. Responding to community requests, the City’s investment in Watch Night, the annual New Year’s Eve celebration, has returned by popular demand.
Resilient: With investments in Sanitary Sewer, the budget allocates $4.5 million to reduce “inflow and infiltration,” $6.7 million for upsizing of pipes with Fairfax County, and a $1 million federal grant just awarded for sewer system improvements. Continuing to invest in Stormwater, the budget provides $8.7 million for larger conveyance and green infrastructure to reduce flooding and a $500,000 grant for stormwater resilience planning.
The City budget process included ten meetings with the public, which were also live- streamed on the City’s website, YouTube channel, and on local public access TV channels.