Arlington County leaders are considering delaying the sale of municipal bonds and deferring various capital projects in the face of tight economic times.
It’s too early to think about amending the county’s recently adopted Fiscal Year 2026 budget, county budget director Richard Stephenson told County Board members on Wednesday.
But he said county staff are preparing to pause certain expenditures “as long as possible” in order to gain breathing room and see where things are headed.
County officials seem likely to delay a planned upcoming sale of government bonds and have compiled a $4.9 million list of smaller capital projects that could be postponed.
“Our expectation is to come to you [with an update] in November,” County Manager Mark Schwartz told Board members. “If things change rapidly, we’ll be back to you as needed.”
The Trump administration’s gutting of the federal workforce has upended many assumptions that had informed the county’s planning over the past year — sending local unemployment up, causing more problems in the commercial-office sector and leading to stresses on social-service programs.
“Some things are stable and some things are still struggling,” County Board member Susan Cunningham said after a briefing on the county’s financial picture.
Although meals taxes are trending higher, county coffers are reporting year-over-year reductions in sales-tax and hotel-tax revenue, Stephenson said. That, coupled with unexpectedly large employee health-care costs and overtime payments to public-safety personnel, is likely to leave little left over when the FY 2025 budget ends on June 30.
County finance officials now anticipate $5 million to $15 million in surplus funds, down from $16.7 million in fiscal 2024 and well off the $46.3 million in fiscal 2023.
In addition, about $6.8 million in federal funding is currently at risk. Potential cutbacks run the gamut, from housing and human-services support to funding for the commonwealth’s attorney’s office.
And that could just be the start of federal cutbacks, which could also impact state-government funding to localities as well as funding to non-profit organizations that provide social-safety-net services.
Three financial reserve funds maintained by the county now have just under $120 million in them. While the total has increased in recent years, cash being held in reserve is relatively low among peer jurisdictions, county officials acknowledged.
Schwartz said the inner suburbs are facing more severe impacts from the economic downturn than localities like Loudoun and Prince William counties. But none of Northern Virginia is immune, he said.
“We can all get swamped at the same time if unemployment spikes and inflation spikes,” Schwartz said.
The briefing focused on the current fiscal year as well as FY 2026, which starts July 1. There also were passing references to sustained budget pressures in other years, including costs related to Metro and collective bargaining, and the decline of the commercial-office sector in the county.
Elected officials tried to take a glass-half-full view of the situation.
For now, “it seems like we’re doing OK — we still have a pulse,” Board member Julius “JD” Spain Sr. said.
Spain and Cunningham both urged caution on moving forward with hundreds of millions of dollars in planned capital spending. While “we’re not pulling the plug yet,” specific projects need to be evaluated and possibly delayed, Cunningham said.
The school system needs to have the same wariness, she said, calling dealing with potential economic impacts “a dance through the year that we will all do together.”
