Arlington Finance Team Reviews Fiscal Year 2026 Budget Outlook and Revenue Concerns

Arlington County's financial outlook for fiscal year 2026 is under scrutiny as officials report significant budget pressures and potential revenue shortfalls. During a recent recessed meeting, County Manager Mark Swartz and his financial team provided a detailed update on the county's fiscal situation, highlighting a projected discretionary savings range of only $5 to $15 million—less than 1% of the total budget.

The team emphasized that while the final performance numbers for fiscal year 2025 will not be available until late August, early indicators suggest that revenues are tracking closely to budget, but expenses are rising due to increased service demands and healthcare costs. Notably, the county is facing acute pressures in various departments, with overtime costs exceeding budgeted levels.

Looking ahead, the county is considering deferring expenses and delaying new capital projects to maintain fiscal flexibility amid economic uncertainties. Swartz noted that while no immediate changes to the adopted budget assumptions are recommended, the county will continue to monitor revenue trends and federal legislation that could impact funding.

Concerns were raised about the potential loss of federal funding, particularly in housing and human services, which could amount to millions in cuts. The county is also grappling with rising unemployment rates and declining consumption tax revenues, which could further strain the budget.

The board plans to reconvene in November for a more formal check-in on the fiscal situation, with interim updates expected as new information becomes available. The discussions underscored the importance of careful financial management as Arlington navigates a challenging economic landscape.