Christopher E. Martino, interim town manager of the Town of Herndon, presented his proposed Fiscal Year 2026 (FY26) budget during the Town Council’s March 11 work session. Martino emphasized the driving force behind the FY26 budget was the town’s Strategic Plan and its vision statement for a sustainable, safe and equitable town. 

The FY26 proposed budget of $95,628,447 meets the needs of the General Fund, Stormwater Management Fund, all enterprise funds, Water and Sewer, Cemetery, Golf Course, and the FY 2026 portion of the Capital Improvement Program (CIP). It is a 28.1 percent increase from the previous year adopted budget of $74,632,183.

“Much of the budget is focused on and supports the regular ongoing provision of programs and services throughout the town, the overwhelming majority of our costs. And then there are emerging issues that we need to respond to and deal with, whether it's the weather and snow or some other event,” Martino said. “Then there's a small portion that provides some capacity to begin to focus on the strategic initiatives. I reflected back on that, because so much of the budget and what is driving the cost increases exceeding our revenue capacity are those regular programs and service needs,” he said.

Martino said multiple departments are planned to have programs reduced or slashed, including 

* Community Development-Public Tree Forestry Program, a viable program for replacement and gradual increase in the canopy ($293K); with a proposed cut of $25K

* Parks and Rec-Park Operations-Safety ($166K); proposed cut of $38K by delaying inspections and turf testing and making repairs reactively rather than proactively

* Public Works-Building Maintenance and Repairs- Continued maintenance of town facilities ($358K) budgeted below recent actuals; all facility systems are aging and past useful life, cut of $185K

Martino’s proposed FY26 balanced budget anticipates increased costs associated with projects, personnel and operations, and capital spending across all funds. Recommended increases in taxes are:

* Meals tax increase to 4 percent from 3.75 percent, projected to add $300K of revenue

* Real estate tax rate to $0.270 per $100 of assessed value tax from 0.260 when combined with the 4.38 percent increase in assessed values would add up to $562K in additional revenue; the average residential owner would pay $133 more annually

* The Business, Professional, and Occupational License (BPOL) rate schedule would match Fairfax County’s 

* Recycling Fee increases from $16 to $21 per quarter.

Additionally, a General Fund Capital Outlay of $2.9 million is planned to be funded via the General Fund Capital Reserve and Capital projects for FY 2026; a total of $5.9 million is reflected in the Capital Improvement Program.

The Fairfax County Department of Tax Administration Real Estate Division collects data for all real property in Fairfax County, including property in the Town of Herndon, at full and fair market value as of Jan. 1 of each year. 

Challenges to the budget picture for the Town of Herndon emerged given the unknown impact of federal policies on the region and grant funding uncertainty, inflationary pressures across products and services used by the town to deliver programs and services, aging infrastructure/facilities, and adjustment to post-American Rescue Plan Act (2021-2022). According to Martino, core service costs, which the town has no control over, have kept going up, which meant that changes had to be made to maintain the level of services people in the town had come to expect. In some cases, resources have had to be repurposed, and services would be cut. The $120,000 cost of the spring cleanup and the $1.2 million needed for brand marketing are both slated for cancellation.

The Town of Herndon’s proposed General Fund expenditures are $50,328,225, an increase of 12.7 percent from the FY 2025 Adopted Budget. This rise is primarily due to higher costs related to staff (8.7 percent rise) and capital (28.7 percent rise) as the town moves from the American Rescue Plan Act (ARPA) of 2021, grant funding to the General Fund and other funding sources for projects and purchases that require capital assets.

The Stormwater Fund is the most significant expenditure change, a 216 percent increase comparing the FY 2025 Adopted Budget and the FY26 Proposed Budget. According to Martino, the primary reason for increasing water and sewer rates for FY26 and in future years is that significant cost increases. In February, the Town Council received an update on the status of the fund and an overview of the multi-year rate plan. Without changes to water and sewer rates, the town would be forced to use retained earnings to balance the fund.

The FY26 proposed budget includes a 20.6 percent increase in water and 9.8 percent in sewer rates for a combined quarterly rate of $210.45. The average quarterly impact per household over FY 2025 is $25.23.

The town's primary funding sources to support the General Fund and provide critical municipal programs and services to the Herndon community are residential and commercial real estate taxes, meals taxes, transient occupancy taxes, and business, professional, and occupational licenses (BPOL). In FY 2026, residential and commercial real estate assessments are estimated to increase by 6.63 percent and 0.62 percent, respectively, resulting in a combined increase of 4.38 percent. 

"Due to rising personnel and operational costs and planning for further capital investments, the overall cost of providing the base level of services and programs to the community has risen further than what town revenues can support at current rates," said Martino to Mayor Keven LeBlanc and Town Council members in a letter dated March 7. 

The Town of Herndon's proposed budget increase of 28.1 percent is the most significant increase percentage-wise compared to the FY26 proposed budgets of Fairfax County and other jurisdictions within the county for which staff leadership has presented their FY26 budgets to date.

* Town of Vienna: “This proposed balanced budget is lean compared to previous budgets, with a modest 3.2 percent increase over the current year’s budget to manage inflationary pressures,” said Town Manager Mercury Payton. “While proposed budgets in some of our neighboring jurisdictions call for an increase in property taxes to cover their operating expenses, our proposed budget demonstrates our commitment to provide services that we can with the revenue that we have.”

* City of Fairfax-Fairfax City Manager Bryan Foster presented his recommended fiscal year 2026 budget. Proposed net total expenditures for all funds in FY 2026 are $306,551,165, representing a 21.3 percent increase from FY 25. “This budget will enable the City to plan, design and build the 130 projects in its proposed CIP [Capital Improvement Program] by appropriating $105.1 million for FY 26 and forecasting $618.3 million for FY 26 to FY 30.”

* Fairfax County- The Fairfax County FY 2026 advertised budget shows a net increase of $297.1 million, or 7.9 percent, over the FY 2025 approved budget. “Even when revenue growth is sluggish, we cannot ignore our community’s desire for high-quality services or our employees’ expectations for fair pay increases,” Hill said. “Responsible budgeting is about balance, and this proposal seeks to strike the right balance in funding necessary expenditure increases, finding sensible reduction opportunities and managing the impact on our residents.”

The proposed FY 2026 Enterprise Fund Budget will be presented at the Town Council's March 18 meeting. The council will discuss the proposed FY26 budget at the work session. 

The council will hold two public hearings on Tuesday, April 8, and Tuesday, April 22. The Town of Herndon seeks community feedback on the proposed Fiscal Year 2026 Budget Plan. Input will help the town shape its financial priorities and decisions. Visit https://www.herndon-va.gov/government/town-budget-and-acfr/fy-2025-budget-comment-form to learn more.

The hearings are open to all residents to provide testimony or express their views on the proposal. Details on these and all components of the proposed FY 2026 budget are available in interactive detail on the town's website at Herndon-va.gov/Budget.