Falls Church homeowners may or may not see a dip in real estate taxes next year as property assessments continue to rise.
At a Dec. 3 planning session of City Council members, there was general consensus around the desire to lower the current tax rate to offset expected higher home-assessment values. But doing so was left as a goal, rather than made a requirement, as city staff begins developing the fiscal year 2027 budget.
A tax rate lower than the current $1.185 per $100 assessed value “is what we hope for, but we’re saying that the world could change and things may change,” said Council member Marybeth Connelly.
As a result, both maintaining the existing tax rate and even increasing it were kept on the table.
“If that’s what’s required, that’s what’s required,” Connelly said.
Taxes on residential real estate bring in about 40% of the city’s more than $130 million in annual revenue. Mayor Letty Hardi said it was important to let homeowners know their local elected officials are “being sensitive that they’re bearing the brunt” of the city government’s increasing costs.
“Leading with that is an important tone,” she said, urging consideration of changes to other taxes and fees instead.
In early projections, city officials anticipate homeowners will see an average 6% increase in assessed valuation next year. For the owner of a home assessed at $1 million this year, that 6% increase in valuation would translate to a tax bill rising from $11,850 to $12,561, absent any change in the tax rate.
To fully offset a 6% increase in assessments, the tax rate would need to decline to approximately $1.11 per $100 assessed value. Under existing budget scenarios being floated by the city government and school system, that level of cut would be a nonstarter.
Increasing the tax burden on homeowners — most of them voters — could be a hard sell during the current climate of economic uncertainty and rising unemployment in Falls Church.
City Manager Wyatt Shields said the projected 6% increase in assessments is based on recent real estate trends, but is not a firm figure.
“It’s an early projection,” Shields said. “As we know from experience, as we get more information, that could change.”
In the most recent budget cycle, Shields proposed a cut in the real estate tax rate to partially offset higher assessments. The cut ultimately was scaled back when other sources of city tax revenue looked less robust than expected.
Council member Laura Downs said she saw maintaining or increasing the tax rate as a last resort for fiscal year 2027, but said it could be on the table “if the bottom falls out, if something really falls apart” on the economic front.
Final budget guidance from the Council to Shields is expected to be approved on Dec. 8. He has until March 23 to finalize a spending plan before presenting it to elected officials and the public.
The Council is slated to adopt the budget, set tax rates and determine the fiscal transfer to the city’s school system all on May 11. The School Board is expected to adopt its budget the following day.
The fiscal year 2027 budget goes into effect July 1, 2026.
