Fairfax staff outline meals, admissions, hotel and probate tax options; supervisors press for impact analysis

Phil Hagen, Director of Management and Budget, and staff presented four options that Fairfax County has not yet implemented or could expand: increases to the transient occupancy tax (TOT), a county meals tax, an admissions tax and a county probate tax. Hagen told the committee these options, if implemented at the illustrative rates staff modeled, would generate the equivalent of roughly $0.07 on the real estate tax rate and about $226 million—equal to roughly 4% of General Fund revenue in a hypothetical FY2025 scenario.

Hagen explained that the 2020 state legislation expanded county taxing authority in several areas and that each option carries distinct rules and implementation needs. He said the County currently levies the transient occupancy tax at 4%, which produces about $25.6 million; staff estimated each additional 1% of TOT would generate roughly $6.4 million, noting the next 1% would have to be used for tourism promotion if imposed. The meals tax, which would apply to restaurants and ready-to-eat prepared foods but not to groceries or vending machines, was estimated to produce about $33 million per 1% of tax. Staff noted the county may levy up to 6% and could authorize a dealer discount of up to 5% to offset restaurant compliance costs. An admissions tax (up to 10%) was estimated at ~$800,000 per 1% and the probate tax (county share set at one-third of the state rate) was estimated to net about $360,000.

Staff described data sources used for estimates: Virginia Tourism Corporation statistics and an analysis using Placer AI georeferenced cell‑phone data to estimate the nonresident share of restaurant spending (staff said roughly one-third of meal expenditures at selected sites were from nonresidents). They also provided comparisons to neighboring jurisdictions’ current rates and dealer-discount practices.

Supervisors used the presentation to press for more analysis before any action. Supervisor Herrity and others requested a clearer split between revenue that is optional and recurring commitments that are driven by state or federal actions (for example, positions tied to Medicaid waiver slots that the county must staff). Supervisor Walkinshaw asked how much of the recurring $8.63 million impact cited by staff is mandatory due to state actions, and requested examples of how tourism-purpose TOT revenue could be used (for example, to support sports-tourism facilities). Several supervisors asked for resident-level impacts (what an average homeowner would pay or save), pre/post visitation studies for restaurants in jurisdictions that adopted a meals tax, implementation cost estimates for IT and business systems, and dealer-discount effects on net revenue.

Tony Castrilli, Director of Public Affairs, described an outreach strategy centered on a multilingual web hub, targeted industry outreach, budget town halls and a ‘common message, many voices’ approach; some supervisors criticized the slides as appearing to 'sell' taxes rather than solicit input and urged direct engagement with Visit Fairfax, Arts Fairfax and the restaurant industry. Staff repeatedly said the materials were informational and that a full outreach campaign would be launched only if the Board authorized further action.

Staff recommended, if the Board were to pursue any of these options, timing adoption steps to align with the FY2026 budget process (advertise ordinances in March, public hearings in late April, action during May markup). They proposed earliest effective dates of July 1, 2025 for a probate tax or TOT rate change and Jan. 1, 2026 for meals or admissions taxes to allow system changes and business preparations.

The committee did not vote on any tax changes; supervisors asked staff for detailed follow-up analyses before any ordinance advertisement.