City Council Meeting

Jennifer Rosepublic commentGood evening, Mayor and members of Council. Jennifer Rose, Executive Director of the Central Fairfax Chamber of Commerce. Thank you for the opportunity to speak and for the significant work by Fairfax City staff that has gone into developing the fiscal year 27 proposed budget. We recognize the real fiscal pressures the City is managing, particularly increases in school tuition and debt service. and we appreciate your commitment to maintaining services without adding new full-time equivalent positions. From the Chamber's perspective, I want to focus on one key issue, ensuring that Fairfax remains competitive for small businesses while making necessary revenue decisions. First, the proposed meals tax increase from 4% to 4.5%. We understand the goal of diversifying revenue.

However, a meals tax is, in practice, a single industry tax. It places the greatest burden on restaurants, many of them small, locally owned businesses. We know this. They operate on thin margins and on the customers who support them. Restaurants are not just another sector. They are a cornerstone of our local economy. They drive foot traffic, support tourism, and contribute to the vibrancy of Old Town and our commercial corridors. And I would like to point out, for the first time in more than 20 years, our restaurants are finally on a level playing field with Fairfax County restaurants, now that the county's implemented its own 4% meals tax. We respectfully urge council to reconsider this increase, or at minimum, include a clear sunset and ensure that any new revenue is reinvested in ways that directly support the hospitality and small business community.

Anthony AmosThank you. I know I submitted a number of questions prior to going on my trip and I know you're still working on those and I'm assuming generating response to circulate to everyone or to me whatever works best the only other question and follow-up I'd like to discuss is specifically I know that the chamber just brought it up I would like to have a more serious discussion on adding a sunset to the increase in the meals tax contingent on the 1% being activated and I may be misunderstanding this but once we get the 1% for school construction essentially restaurants would be at 5.5 percent versus 4.5 percent at least for the time being until they're paid off is that correct

Martinezstaffit's going to depend on the current language the last language I saw I think on meals tax and looking at the budget director because I think she showed it to me the language may not be applicable to meals or or restaurant meals for the additional 1% that is still something that is being evaluated we won't know and I think that's sort of the biggest predicament that we're in There has been no final determination by Richmond, so we're trying to be as adaptive and as prudent as possible.

Rachel McQuillenthat what? Sorry, I couldn't hear the whole thing, so I was just needing a little bit of clarification on that. Thank you. I did want to mention to my council colleagues I am the representative of the Food and Agricultural Regional Membership Policy Committee, Farm, and we recently had a meeting in which, and I just want to share a few little updates and facts. This supports my position on the meals tax. You guys all know where I stand on that. I've been really open about that. National Restaurant Association reporting this year says that 42% of operators were not profitable and had limited ability to raise menu prices further in 2025. It matters because restaurants do not absorb taxes, inflation, labor costs, insurance, rent and supply, volatility in separate buckets.

insecurity, especially among our lower middle class families. So please keep all of this in mind when we're discussing increasing the meals tax because it doesn't, it's just not one meal. This is several meals. People eat hundreds of meals over their lifetime or over a year. So when we're talking about increasing the tax, yeah, it sounds like a small amount, but it's really hitting our restaurants hard. And we like to brag we're often celebrating the city's restaurant scene as unique and defining these cultural strengths. Just recognize that this is impacting those businesses when we do this. That's all I wanted to share. Thank you.

Stacy Hallor will leave in the coming years. This person also had some very interesting information with regard to the meals tax and specifically said that there's a restaurant that has a chain here that also has one near us in the county, and he said that he purposely doesn't go to the one in the city because it had the 4% meals tax. So I think he was fairly shocked when he went to the county counterpart restaurant and found that that meals tax was there now. So he said, I guess I can go back to the local city one. However, what he did suggest was that maybe we consider reducing the meals tax rate to 2%. And I understand that will have financial impacts, and I would also just like to have staff's thoughts and feelings on this.

And so she was doing the correlation of just what that half cent would be. So personally, I hate the meals tax. I've always hated the meals tax. I'm happy the county now has one because I think it makes us comparable. I also do recognize that in order to generate that $1.25 million that the meals tax increase of half a cent, sorry, half a percent will bring in would also require, I believe it's 1.417 cents on the real estate tax rate. So I understand that's a one or the other or a both, but these are just some ideas and some thoughts that I would like to hear about. The other thing is, you know, everyone I talk to when I talk about the lesser of two taxes or what if we only had to raise it one cent,

Stacey Hardy-Chandlerand I hate to ask for data that I didn't previously ask you to prepare but I'm just curious if there is just historic knowledge of sort of the for lack of a better word sort of restaurant migration sort of behavior historically when there have been changes in the in the meals tax I might not be recalling this accurately but I believe that there was sort of some landscape multi multi jurisdictional information that was previously presented I'm just wondering if in addition to the anecdotal conversations that we might have with residents what sort of the trends show in terms of what actually happens in the what actually has happened in the past when there have been those changes I'm

Martinezstaffgoing to try to go off of memory councilmember we did present something at a work session with some historical data that actually compared the city of Alexandria who has a 5% meals tax compared to the city they've had it for about 20 years so very similar to our 4% as well. Additionally, in that presentation, there was an actual number of increased restaurants over the same 10 to 15 year period in the city. So not necessarily a migration out, more of an expansion. I want to say it was on average two and a half or three and a half per year that we increased the restaurant count between the time frame that we looked at, 15 years it was actually an increase in that increase here goes excellent thank

Billy BatesSo as before, I support the proposed increase in the meals tax. It's much more modest than what was proposed last time around. of the day, you know, certainly not something that we love to do, but even if we're able to make up that revenue through an increase in the BPOL tax or fees and, you know, some other revenue source, that ends up being that much less funding that we could use to perhaps for the support our employees our public safety employees who respond to emergencies that occur at the restaurants in the city at the end of the day housing is certainly more of a necessity than eating at a restaurant you know certainly some people you know don't have time to cook however there are you know frozen meals filled with grocery store that kind of thing so you know that's also kind

Martinezstaffyes mr. Martinez thank you Mary just want to add a couple clarifying notes regarding the meals tax a potential 2% reduction with each half percent being about 1.3 that's 5.8 million dollars almost six million dollars that would be reduced or I'm sorry that would be 1.3 so about over five million dollars of the equivalent of almost six cents 5.8 cents on the current real estate tax rates and I think councilmember Hall made that statement and then additionally just to clarify and it's not on the screen per se but when the manager proposes budget about $1.3 million in savings from available balances specifically in operating CIP funds that came over to the general fund side and now we've shown another $400,000 so in totality the city has saved about $1.7 million in the FY