$284M Budget Shortfall Expected In Fairfax County Amid County, School Funding Factors

FAIRFAX COUNTY, VA — Fairfax County could have to tackle a budget shortfall for the upcoming fiscal year 2025, according to a budget forecast presented to the Board of Supervisors and School Board Tuesday.

The budget forecast, while not a formal budget proposal, tells elected officials what to expect during the county and school division's budget process. Fairfax County government and Fairfax County Public Schools staff presented a budget forecast showing a projected shortfall of $284.5 million.

The expected shortfall is due to anticipated funding exceeding the anticipated revenues. The county expects 1.9 percent overall revenue growth (152.3 million more), which is down from the 3.6 percent projected for the end of the current fiscal year.

One factor affecting anticipated revenues is real estate values, as real estate revenue makes up about 66 percent of the county's general fund revenue. The county projects residential properties will have an average increase of 2.07 percent due to equalization in fiscal year 2025. The projected increase is not as much as the 6.97 percent average value increase in the last fiscal year.

"The market continues to decelerate in response to mortgage rates, which reached 8% in October," the county noted in a news release. "The number of home sales in the county is down 23% through October, compared to the same time period last year.
Non-residential properties could see a 1.6 percent average decrease due to market factors like vacancy rates and telework.

One of the factors affecting spending is employee pay and benefits — a $180.5 million increase for the county and $166.1 million for FCPS. The county has made collective bargaining agreements with the Southern States Police Benevolent Association and International Association of Fire Fighters unions for police and fire employees, respectively. The police collective bargaining agreement alone will cost the county an extra $37.5 million in fiscal year 2025, while the fire and EMS agreement will cost $23.7 million in fiscal year 2025. The Board of Supervisors is expected to vote on approval of the collective bargaining agreements on Dec. 5.

Other salary and benefit-related increases could be $4.7 million for collective bargaining agreement impacts on non-represented employees, $48.4 million for market-rate salary increases for non-represented employees, $17.9 million for performance and longevity salary increases, $2.1 million for merit and longevity increases for non-represented public safety, $11.8 million as a market study placeholder, and $34.4 million retirement rate adjustments.

For FCPS, the $166.1 million increase for salary and benefits factors in $172.7 million to provide a 6 percent increase for all employees, $19.1 million for benefits and a reduction of $25.7 million for savings from employee turnovers.

Another expense could be funding for the DC region's Metro system. Metro is projecting a $750 million deficit in fiscal year 2025 due to pandemic ridership loss, spend down of stimulus funds and telework trends. Potential scenarios to reduce Metro's deficit would involve increased support from governments, fare increases, cost savings, service reductions or impacts to preventative maintenance. The budget forecast says Fairfax County could contribute between $16 million to $55 million more to Metro after applying resources like gas tax revenue and state aid. Metro's proposed budget for fiscal year will be released in December.

Other expected increases for FCPS include $17.1 million for student needs like ESOL services, special education services, and eligibility for free or reduced-price meals; $9.9 million for contract cost increases like utilities,IT projects, facilities and inflation, $57.6 million from the state-provided 2 percent teacher pay increase starting Jan. 1, 2024; $10.5 million for adjustments like fine arts stipends, winter cheer, certified athletic trainers and achievement gap strategies; and $2.1 million for a turf and debt service lease payment for Gatehouse Administrative Center. Another $5.5 million is anticipated for multi-year investments like a three-year environmental plan to include electric buses, an HR technology infrastructure project, an effort to add another athletic trainer position for each high school, family liaison positions and inclusive preschool expansion.

Other projected funding increases in fiscal year 2025 include $17.4 million for county debt service and capital requirements, $10.9 million for FCPS debt service and capital requirements.

County agencies were asked to identify savings for 7 percent of their budgets. Reductions are being reviewed, but $20 million in savings is estimated. The county will focus on efficiencies and eliminating long-term vacant positions in its review of savings.

The budget outlook does not include county priorities like IT initiatives, increased affordable housing funding, basic needs assistance and other program expansions as well as FCPS priorities like expanding middle school athletics and a special education enhancement plan.

The FCPS budget will be proposed by the superintendent on Jan. 25. The county budget, which makes up a large share of the FCPS budget, will be proposed by the county executive on Feb. 20. The Board of Supervisors' final budget approval will come on May 7. The School Board's advertised budget will be adopted on Feb. 22, but the final budget will be approved May 23 after the county's budget process concludes.