Falls Church council holds first readings on FY2026 budget and utility rates; vehicle tax set at $5 for first reading

The Falls Church City Council granted first reading on April 14 to the city’s FY2026 budget and the related tax and utility rate ordinances and scheduled public hearings for April 28 and May 12.

City Manager Shields and finance staff presented a high‑level summary of the proposed FY2026 operating budget, which includes $57.7 million for general government operations and a $69.5 million school budget; the staff packet notes the proposed transfer to schools of $55.6 million. The proposed capital improvements program for FY2026‑FY2031 includes $26.2 million in project spending, with the largest line items for transportation improvements and a sanitary‑sewer detention vault concept estimated at roughly $10 million.

Staff told council that a revised revenue forecast reduced the FY2026 revenue estimate by $1.2 million due to softer sales and meals tax receipts. To preserve flexibility while council evaluates options, staff recommended advertising the real estate rate as unchanged for first reading; council members discussed potential targets that could reduce the tax rate between first and second readings.

On the tax ordinance, council amended the advertised personal property (vehicle) tax rate to $5 per $100 of assessed value for first reading; the motion passed 7‑0. Council members said they considered the vehicle tax change in the context of balancing revenue needs with tax relief options.

Council also approved first readings of stormwater and sanitary sewer rate ordinances with proposed rate increases of 2.7% for each fund. Staff said the proposed stormwater increase would raise the average homeowner’s bill by about $10 per year; the sewer increase would raise the average homeowner’s bill by about $14 per year.

The city retained a $500,000 contingency in the proposed budget to buffer against additional revenue shortfalls and proposed a 5% compensation increase for city employees. Staff also proposed an increase of $700,000 for road maintenance and paving, bringing total road maintenance to $2.2 million for FY2026.

Council members asked staff to prepare benchmarking materials and additional Q&A, including: regional comparisons of salary and cost‑of‑living adjustments, staffing levels (general government and schools) compared with prior years, and the net household tax impact across the region. Council directed staff to provide more detail on solid‑waste financing options in advance of the May 12 budget decisions; staff noted the legal and operational options and said the council could either adopt a fee and reduce the tax rate as part of the May 12 action or, less commonly, make an in‑year adjustment later in the summer.

Votes at a glance (first readings and scheduling): - TO25‑02 (FY2026 budget & CIP): scheduled public hearings 04/28 and 05/12; first reading passed 7‑0. - TO25‑03 (real estate and personal property tax ordinance): first reading passed 7‑0 with amendment to set vehicle tax at $5 per $100 assessed value for advertising; public hearings 04/28 and 05/12. - TO25‑04 (stormwater utility rate ordinance): first reading passed 7‑0; public hearings 04/28 and 05/12. - TO25‑05 (sewer rate ordinance): first reading passed 7‑0; public hearings 04/28 and 05/12.

All ordinances will return for second reading and final consideration on May 12, at which point council can set final rates and appropriate the budget. Staff emphasized the May 12 schedule as the opportunity to reconcile the $1.2 million revenue shortfall with a mix of expenditure reductions and revenue options.