County presents FY25 closeout and warns of a $35–45M FY27 gap as costs climb

Arlington County’s budget director presented the FY25 financial closeout Nov. 15 and outlined early indicators for FY27, telling the board departments ended FY25 nearly at budget with only about $1.8 million in discretionary funds available after reserves and carryovers.

The manager recommended allocating roughly $275,000 to the Safe Havens supervised visitation program and using the remaining closeout balance to cover anticipated compensation and benefit overages in FY26. Staff reported health-care expenses exceeded FY25 budget by about $7.7 million (driven by high-cost claims and increased utilization) and public-safety overtime added roughly $8 million to personnel spending. The county’s Affordable Housing Investment Fund stands at about $111 million, largely committed to projects.

Looking ahead, staff identified revenue risks: weak consumption taxes, the potential for reduced commercial assessment growth tied to office vacancies, and federal funding uncertainties including SNAP adjustments. For FY27 the county estimated a preliminary ongoing funding gap between $35 million and $45 million once collective-bargaining costs, health-care trends and WMATA obligations are included.

Staff outlined levers to close gaps — raising tax rates, deferring capital projects, hiring freezes or program reductions, and use of stabilization reserves — and said the board had set aside $11 million at budget adoption to stabilize uncertainty. The manager will return with budget proposals in February; the board scheduled further deliberations and a recessed meeting on Nov. 18 to continue closeout action items.