Proposed FY26 Budget Invests in Community Values Amid Uncertain Future

Published on February 22, 2025

With a focus on stability, critical functions of local government, and the community’s values, Arlington County Manager Mark Schwartz proposed the FY 2026 budget on Sat., Feb. 22, 2025, following guidance from the County Board and responding to many uncertain variables.

The County Board offered budget guidance in December 2024, but the County finds itself facing new uncertainties that may affect its budget, namely changes in the federal space and impacts to an already stressed commercial market.

Those uncertainties arrive against a background of an estimated $25 million gap for FY 2026, with the continuing trend of expenses outpacing revenue growth.

The $1.69 billion proposed budget is a 2.1% percent increase over the adopted FY 2025 budget, and assumes no real estate tax rate increase, leaving it at $1.033 per $100 of assessed value. The County’s operating budget provides foundational services for the community, including public safety, human services, environmental services, transportation, and schools.

The budget is based on 2% growth in real estate assessments (compared to 2.5% growth in 2024), and a 3.6% growth in overall tax revenue. Commercial property values increased by just 0.1% from the previous year, while existing office property values decreased by 11.1% due to continued pressure of office vacancy rates and changing demand for office space.

To balance the budget, the County Manager proposed nearly $13 million in funding cuts to programs and services, mainly in two categories: reductions that will limit services in some less critical areas, and those that reflect changing demands and can be taken without impact on services. The proposed budget also includes the elimination of 44 positions, both filled and vacant positions and position freezes. 

While the proposed budget does not assume a real estate tax increase, it does include an increase in the meals tax, from 4% to 5%, along with increased fees across many service areas. The County’s meals tax has not been changed since 1991.

“The FY 2026 proposed budget speaks to the values of our community – looking out for those who are most vulnerable and ensuring basic services are done well,” said County Manager Mark Schwartz. “The proposal helps to ensure residents will continue to receive excellent services and that the County government will continue to provide life’s daily essentials – water, sewage, public safety, safe roads and outstanding public and park spaces. Even so, the commercial real estate landscape and the changes in Federal policy are reminders of the need to remain both flexible and steadfast in our commitment to our values.”

INFOGRAPHIC: COUNTY MANAGER’S PROPOSED FY 2026 BUDGET(PDF, 537KB)

Investments in the Community

The proposed FY 2026 budget is the result of months of study, evaluation, and input from the public. Core investments in the proposed budget include:

• Schools: A transfer of $647.4 million to Arlington Public Schools, an increase of 1.2% over FY 2025. The transfer follows the Board’s guidance and is consistent with the Principle of Revenue Sharing between the County and APS.
• Economic Stabilization Reserve: Increasing the stabilization reserve from 1.3% to 2% (which adds $11.5 million in one-time funds, bringing the total funding to $33.0 million) to allow flexibility in responding to unanticipated challenges.
• Housing Support: More than $100 million dedicated to housing programs: $17.6 million for the County’s Housing Grant Program, plus a new position to support the increase in Housing Grants caseloads; $7.0 million for Permanent Supportive Housing; and $12.3 million for the Affordable Housing Investment Fund (AHIF).
• Human Services: Investments in food assistance ($280,000 for the Arlington Food Assistance Center (AFAC) and $105,000 for Meals on Wheels) and Child and Elder Care ($359,000 for Child Care License System, $350,000 for Culpepper Garden Assisted Living Facility (ALF) Subsidy, and $243,000 for Virginia Quality Birth to Five Program).
• Workforce Investment for County Employees: The proposed budget includes salary increases for County staff as outlined in collective bargaining agreements and 3.5% for non-bargaining staff.

Budget Engagement Process

The County Manager collected feedback from the community on approaches to balancing the budget, including which services and programs should be kept as top priorities through an online form and in-person pop-up engagement opportunities. The feedback helped the County Manager determine where to apply resources in his proposal. View the Engagement Overview.

Tax Rate & Next Steps

During the Tuesday recessed meeting on Feb. 25, 2025, the County Board will hold a public hearing and authorize advertisement of proposed real estate, personal property, and Business Improvement District Calendar Year 2025 tax rates, as well as proposed fee changes for FY 2026. Register to Speak at the Feb. 25 Recessed County Board Meeting.

Additionally, the Board will review the budget proposal and conduct a series of work sessions starting in early March. The County Board will then hold a public hearing for the budget on Tuesday, March 25, and a public hearing for the tax rate on Thursday, March 27. Members of the community can sign up to speak at the public hearings in-person or virtually; registration to sign up opens five business days prior to the hearing dates. Visit the County Board Webpage to sign up as a speaker.

The final vote on the FY 2026 operating budget is scheduled for Wednesday, April 9. The fiscal year begins on July 1, 2025.