“The only certainty is uncertainty,” the City of Falls Church’s new chief financial officer David So told the annual early December joint meeting of the Falls Church City Council and School Board held in the new Meridian High School library Monday night.
While early projections indicate the schools will need a 5.02 percent increase in the transfer of funds from the City for the next fiscal year beginning July 2026, and while on the City side, a negative budget gap anywhere between $2.7 million and $5.4 million is anticipated, these projections remain estimates, with better indicators of where they may fall still a few weeks away in the form of October revenues to the City.
Many feel the numbers for October could prove even more daunting than expected, due to the effects of the month-long federal government shutdown on top of drastic federal and contractor layoffs and cuts throughout the region, and they could tip the projections further downward as the City gets the process underway to fashion its budgets for the next fiscal year.
But the anticipation of this figured into why on Monday night So showed not a fixed projection, but a range of outcomes from low, mid and high, for his projected budget gap. The best case scenario would show the City needing to figure out how to come up with $2.7 million more, and a worse case would figure it needing to come up with $5.4 million.
While these early estimates are of a 6 percent hike in real estate assessed values (the actual numbers for those will come out in February), a big factor in limiting projected City revenues has come from the fact that lower interest rates have significantly docked the City’s investment income.
However, for starters, those numbers are based on a transfer of $55 million from the City to the schools, based on a 50-50 revenue sharing deal between the two entities in the context of So’s anticipated net revenues to the City (based on no tax rate increase). But that $55 million number is the same as what the City transferred to the schools last year, last spring, actually.
With the schools saying they will need a 5.02 percent increase over that number to meet the terms agreed to in its collective bargaining agreement with their employees, for annual step and cost-of-living increases, that number would need to be closer to $57.5 million.
How these factors all play into what the new budget season starts with will take the form of a “budget guidance” resolution that the City Council will debate at its meeting this coming Monday night, Dec. 8.
(To put it in perspective, the City’s budget deficit projections should be compared to the $131.5 million deficit facing neighboring Fairfax County, as a combined meeting of that jurisdiction’s Board of Supervisors and school board learned earlier this week).
To the extent that a tax rate increase will be required for the City, So noted that a penny on the tax rate now amounts to $640,000. The City’s current real estate tax rate for FY26 is $1.185 per $100 of assessed valuation, down from $1.355 as recently as FY21, the drop being due to the influx of revenues coming from the recent years’ commercial development boom here.
Some of the other concerns discussed by F.C. City Manager Wyatt Shields at Monday’s meeting were as follows:
1. The Falls Church Police Department is currently down 11 positions, or a full 25 percent below its budgeted staffing level. This is due to problems recruiting across the U.S. and throughout Northern Virginia. The City was on the verge of adding officers to its force but some prepared to graduate from the training school made last minute decisions to take jobs in other regional jurisdictions due to their elevated salary levels.
Shields said that as a result, the force does not have the ability to provide School Resource Officers to the schools, something he said will be corrected as soon as the City is able to correct the overall problem, probably through an effort to boost its own salary offers.
2. Plans for launching Phase 2 of the 10-acre West End project adjacent the Henderson-Meridian secondary school campus include building an office building where the schools currently have access to surface parking. While the terms of the deal with the developers require it to include at least an equal amount of parking in their new structure, it does not address where parking would be provided in the interim, during construction.
However, Shields said it is not clear when the new office building, or another residential building in Phase 2 of the project, would begin to be built, and that significant delays could occur, especially given the current economic environment.
3. The unemployment rate in the City of Falls Church has ballooned from 2.1 percent in December 2024 to 4.6 percent as of this August. That adds up to 200 people.
