City Council Special Meeting: Budget Adoption

JC MartinezstaffThank you. Mayor, Council, Section 90-262 of the City Code. currently provides for a 4% meals tax. The proposed ordinance would increase the amount of the meals tax to 4.5% as set forth in the city manager's recommended FY27 budget. The effective date of this change would be July 1, 2026. The previous meals tax change was from 2% to 4% in 2004, over 22 years ago. An increase in the meals tax reduces the financial burden on residents as the meals tax can offset the need for higher real estate taxes due to visitors and non-residents paying this tax. The half percent proposed increase would generate approximately an additional $1.3 million in meals tax revenues. This change would result in a tax increase of approximately 25 cents to a $50 meal.

Stacey Hardy-Chandlermove to approve an ordinance amending chapter 90 article 6 section 9D-262 of the Code of the City of Fairfax, Virginia, pertaining to the levy and amount of the meals tax. I further move to set the meals tax rate for the City of Fairfax at 4.5% effective July 1,

Rachel McQuillenI will not be supporting the meals tax increase tonight. Earlier today, I shared with council a newly completed regional report on food system resilience in Fairfax City. While I know you've just received it, the findings are important and directly relevant to this discussion. The report makes clear that food insecurity in our region is not only real, it's growing and becoming more severe. Estimates show up to 26% of residents are experiencing food insecurity, and the number of households facing the most severe levels have increased year over year. At the same time, the cost of living continues to rise. A family of four in our region now needs over $100,000 annually just to meet basic needs, including food.

Importantly, the report highlights that our food system is fragile, dependent on long shared supply chains. Interruptions can quickly impact access and affordability. So when we talk about a meals tax, we are talking about a tax directly connected to food at a time when both affordability and access are already under pressure. I fully support fiscal responsibility in a balanced budget, but I do not believe this is the right place or the right time to increase this particular tax. And for those reasons, I will be voting no. Thank you.

While I did not support the meals tax increase and voted against that specific measure, I will be supporting the budget tonight. And I want to explain why. This budget was not easy to build. For months, council, staff, partners, and residents, we worked through difficult conversations and priorities, needs, and costs. We reviewed this budget line by line, and we asked tough questions. We requested additional information. we challenged assumptions and we weighed every decision against one central question. How do we protect city services while also respecting the financial pressures our residents are already feeling? Because residents are feeling pressure. The cost of living in Northern Virginia continues to rise.

Housing costs are rising, food costs are rising, utilities and assessments are rising. We heard that clearly throughout this process and that really shaped our discussions every step of the way. Now no budget is perfect. There are components of this budget. including the meals tax increase but budgets are ultimately about balance. And what gives me confidence in supporting this budget tonight is the process we went through to get here. This council took the process seriously. We worked collaboratively, we debated openly, we spent long hours reviewing details and we remained focused on fiscal responsibility and long-term stability. I appreciate that this budget reflects the restraint. It continues

Stacy Hallto the meals tax and increasing the transient occupancy tax from four percent to ten and a half percent. Both taxes are also paid by non-residents who use and benefit from our city. While I do not meals tax and wish we had found an alternate means i do understand it is needed to support a balanced budget our school tuition with fairfax county public schools continues to be one of the biggest challenges in our budget i will paraphrase the cfo from 2020 fiscal year 2023 to the fiscal 2026 estimate cost of increase by 17.4 million a 31.5 31.5 percent jump equivalent to about on the real estate tax rate looking ahead the fiscal year 2027 estimate is 76.4 million bringing that total increase to 21.1 million since fiscal year 2023 or 38.2 percent roughly 23.9