City Council Meeting

Catherine Readby collecting and contributing to the city's meals tax revenue, which provides funding for critical public services all residents and visitors. And whereas the 2026 Winter Fairfax City Restaurant Week features 24 of the finest restaurants throughout the city, all offering set price lunches, dinners, two for $10 options, and more, along with programming to entice our residents, visitors, George Mason University and Northern Virginia Community College students, and the business community to try something new and to bring along family and friends. Now therefore I, Catherine S. Reed, Mayor of the City of Fairfax, do hereby proclaim February 27 through March 8, 2026 as Winter Fairfax City Restaurant Week and call upon everyone to visit fairfaxcityrestaurantweek.com

Daniel AlexanderstaffThis slide summarizes the tools used to close the earlier FY27 funding gap that I mentioned earlier. First, a 2.5% increase in the real estate tax rate moving from $1.55 to $1.08. Second, a 0.5% increase in the meals tax from 4% to 4.5%. For context, that equates to about 25 cents on a $50 meal. Third, a 6% increase in wastewater rates, which results in an average annual increase of approximately $44.65. Fourth, a 5% increase in the stormwater utility rate, which translates to about $10.19 annually for the average property. And finally, we're utilizing a $5 million in assigned fund balance as part of a balanced approach. Together, these measures close the structural gap created by tuition growth, debt service, and workforce stability while maintaining service levels and protecting our long-term financial position.

This slide shows the FY27 general fund revenue total at $207.5 million, matching expenditures as required by law. The composition underscores why diversification matters. Real estate remains the dominant revenue source. This is a consistent theme I mentioned earlier and a consistent theme for a built-out jurisdiction. Growth and diversification strategies remain essential to long-term stability. This slide highlights the main revenue changes from FY26 to FY27. Key items include $6.9 million in real estate tax revenue, including 4.7 million associated with appreciation. 2.1 million in meals tax revenue, including approximately 1.3 million associated with the proposed rate adjustment. 5 million in assigned fund balance utilization and 1.7 million in school aid.

And it includes two important reference points. One cent on the real estate rate equals approximately $883,929. Half percent on the meals tax equals about $1.25 million. The slide visually shows the revenue delta from FY26 to FY27. The core point is that a significant portion of growth comes from assessment appreciation new performance, not purely from rate changes. This is why tax base growth and economic development remains central to long-term fiscal stewardship. The slide shows the recommended tax rate changes. The current tax rate is $1.55. The proposed increase that by 2.5 cents brings the total to $1.08. Proposing to adjust the meals tax rate, as I mentioned earlier, to 4.5%. All other major tax rates remain the same as you see them listed here.

The equalization rates shown here are technical adjustments that help keep the tax burden balanced between residential and commercial properties when their values change at different rates. In simple terms, a modest real estate adjustment, a meals tax adjustment, and no other change to major tax categories. This slide translates the proposal into the impact for the average residential property. It shows the proportion attributable to natural assessment growth at $335, which is not a change in tax rate, and the portion attributable to the rate change, $182. Total annual increase is shown as 517, which is about $43 a month. This slide shows comparative real estate tax rate among local jurisdictions.

The point is to provide context. As you note at the left end of the chart, Fairfax City remains competitively positioned among Northern Virginia communities. We'll continue to monitor these comparables because we want a rate structure that supports competitiveness while sustaining core services and our capital commitments. The slide provides regional context for meals tax rates. The key policy rationale here is diversification. Meals tax is partly paid by non-residents, people who use city amenities and services while they dine here. Also the last meals tax adjustment in Fairfax occurred in 2004. This provides context for why meals tax is part of the overall balanced strategy. This section shifts from the general fund to other funds that have distinct revenue

direction and refinement. This is just the beginning. The slide previews the planned work session topics. notably on March 3rd we will hold the joint meeting with the school board will continue general fund discussions review historical real estate tax trends and discuss setting the maximum real estate tax rate to advertise on March 10th we will focus on meals tax proposal and continue our general fund questions on March 24th we will review the CIP and the stormwater utility fund and water fund on April 7th we reserve time for additional general fund discussion if needed on April 14th we'll discuss any council identified topics and on April 28th we'll hold the final work session present draft changes and deliberate prior to adoption the schedule provides multiple

Anthony AmosThank you. I only have two comments, both regarding March 10th, and I'd be curious on my colleagues' thoughts. Because of both public comment and the public hearing, potentially in the budget, I feel like it would make sense to have the child care go first before the FY27 budget public hearing. Since we'll have guests here, We don't know how long that'll last. We don't know how many people will come out. So that's the first item. And then similarly, for the work session, having beacon landing go first before the small area, because small area zoning, meals tax, and general fund questions, that's likely to easily be an hour, half, two hours. So those are my two requests.