Despite an improving real estate market, Arlington could face up to a $35 million budget gap next year, according to a presentation by County Manager Michael Brown this afternoon.

Brown told the county board that his preliminary forecast anticipates a combined $25-35 million shortfall for the county government and the school system. Brown projects a slight increases in real estate assessments and in tax and fee collections. However, he says expenses are rising due to increasing student enrollment, new school facilities and high county personnel costs.

“Current revenue projections could require program cuts and revenue increases,” Brown said. That’s in addition to the past two years of budget cuts and tax hikes.

“We must continue to be extremely cautious fiscally,” Brown said. He will present his recommended FY 2012 budget to the board in February.