Before retiring last week, outgoing Fairfax City Manager Rob Stalzer unveiled his proposed FY 25 City budget during the Feb. 27 City Council meeting. He presented detailed information explaining how he and City staff arrived at all the numbers contained within it, as well as how it aligns with Fairfax’s vision for a strong, sustainable economy.

“We used our prioritized, strategic goals and their outcomes as the basis for this budget,” he said. “These goals are economic development, environmental sustainability/stewardship, community, transportation and governance.”

There are a lot of things on the City’s plate, including a slew of capital projects, and it takes money to accomplish them all. So Stalzer’s budget proposes an increase in both taxes and fees, including a real-estate rate hike of 1 cent per $100 assessed valuation, raising the current tax rate from $1.025 to $1.035 and yielding $784,308 to the City coffers.

Since the assessed value of the average Fairfax City home has just increased by 2.63 percent, that action alone will raise a homeowner’s tax bill by $162/year. This amount, coupled with a 1-cent tax-rate increase, would result in the average homeowner paying another $62 for a total of $224/yr. more in real estate taxes.

In addition, 6-percent increases are proposed to both the stormwater utility and wastewater utility fees, costing the average homeowner an estimated annual increase of $9.15/year for stormwater and $20.18/year for wastewater. And although the City classifies these items as fees, not taxes, they still add up. Combined with the proposed real-estate hike, they mean the average residential taxpayer will be paying some $253/year more in fees and taxes.  

Stalzer pointed out, however, that a $1.035 tax rate would still be one of the lowest in the region, compared to other Northern Virginia cities and towns. And, he added, “Since real-estate taxes comprise 48 percent of the City’s General Fund revenues, continuing to grow the tax base is imperative.” 

Fairfax saw a 2.2 percent real-estate valuation growth rate (new and existing construction) from January 2023 to January 2024. The projected regional average is 4.1 percent for the same period; but Fairfax is constrained by its size of just 6.34 square miles.

In the proposed FY 25 budget, General Fund revenues and expenditures equal $180,655,702 – an increase of $7.6 million, or 4.4 percent, from the adopted FY 2024 budget. Net total expenditures for all funds (General, Capital Projects, Old Town Service District, Transportation Tax, Cable, Wastewater, Stormwater Utility and Transit) equal $264,398,748 – a 6.1-percent jump from FY 2024.

Capital Fund expenditures for General Fund-supported projects equal $32,840,376 ($12,136,540 General Fund transfer represents 6.7 percent of the General Fund expenditures), an increase of 28.1 percent from the FY 2024 amount of $25,641,595. The unassigned General Fund Balance is projected to be 16.6 percent of General Fund revenues, helping ensure the City’s continued AAA bond rating.

“There’s a hefty bump in capital funds,” said Stalzer. “But debt service [on money borrowed for capital projects] is a big part of it.” He noted as well, the City’s significant CIP (Capital Improvement Program) investments, specifically in the areas of recreation ($11.2 million), transportation ($19.1 million), wastewater ($15.1 million) and general government projects ($17 million).

He also said one of this budget’s goals is fully funding Fairfax’s FY 25-29 CIP so the City has the money to plan, design and construct the 141 projects this document contains. This goal would be achieved by allocating $82.6 million for FY 25 and $374.3 million over that five-year period. Stalzer said these projects would be funded 60 percent by debt and 40 percent by cash.

The proposed budget also recommends the full funding of the City School Board’s tuition request of $58,815,777. But that’s not all. “Additionally, the process of establishing a multiyear plan to finance the renovations of all City schools is underway,” said Stalzer. “The preliminary cost estimate to renovate the two elementary schools, the middle school and the high school is $700 million. If approved by the City Council and the School Board, this work would occur from FY 26 through FY 39.”

Regarding tax rates, the Commercial and Industrial real-estate tax rate remains unchanged at 12.5 cents per $100 assessed valuation. The personal-property tax rate will also remain the same at $4.13 per $100 assessed valuation. However, the Old Town Service District add-on, real-estate tax rate is recommended to rise from 4 to 8 cents per $100 assessed valuation, and some of it will help fund the City’s many public events held in Old Town Fairfax.

As for fees, the wastewater-utility rate increase of 6 percent goes toward paying the City’s 6-percent share of capital-project costs required for Fairfax County’s Noman Cole wastewater-treatment facility, plus other capital and operating costs there. And the 6-percent stormwater-utility fee increase is to support the utility’s capital-improvement and operating costs. 

The proposed FY 2025 budget also includes a January 1, 2025, 3.5-percent merit-pay increase for the Ciy’s eligible, general pay- scale employees and a 2 percent market-rate adjustment to general pay scales, effective July 1, 2024, to retain parity within the region. These increases are important, said Stalzer, for greater recruitment and retention of employees.

In October 2022, public-safety employees were moved from pay ranges to a step system. The proposed budget includes a 1-percent cost-of-living adjustment for them, effective July 1, 2024, and the programmed annual step increase.

Furthermore, the budget recommends a net increase of 24.5 full-time positions supported via the General Fund, with 8.75 of them to support the Police Department, Public Works, Communications, the City Manager’s Office, Parks and Recreation, and Historic Resources. 

Proposed, as well, is the conversion of 22 temporary positions to part-time benefited positions; this action would equate to 15.75 full-time employees with benefits. These employees would support the Economic Development Office, Fire Department, Parks and Recreation, and Public Works.

Stalzer said the proposed budget also builds on the City’s FY 24 investments supporting economic development to stimulate and grow Fairfax’s commercial base “in an impactful and sustainable way.” Overall, he said, “The proposed FY25 expenditures of $264,398,748 for all funds and $180,655,702 for the General Fund support the significant progress we have made over the last several fiscal years and will help to ensure a financially stable and vibrant City of Fairfax for generations to come.”

Public hearings on the budget are scheduled for March 12 and 26, plus April 9 and 30, with budget adoption slated for May 7. Following Stalzer’s presentation, Mayor Catherine Read thanked him and everyone else involved in “putting this budget together. This is a very good foundation for us to continue discussing it, going forward.”