New data on sales tax and meals tax revenues in Falls Church might show the first headwinds of a looming economic storm, leaders say.
Sales-tax revenues in the city were flat in February despite the opening of a Whole Foods supermarket in early February. Revenue from the city’s meals tax also wasn’t as high as officials had anticipated.
“Clearly, usage is down,” said Kiran Bawa, the city’s finance director. She didn’t provide any specific numbers at the meeting.
City Manager Wyatt Shields said that “a good mindset would be this is going to be a multi-year, structural change” in the local economy.
“This isn’t going to be a blip,” he said last week during a calendar-setting session with Mayor Letty Hardi and several other City Council members.
Hardi pointed out that one could view the Whole Foods opening as a form of “cannibalization” — its sales coming at the expense of other supermarkets in town. However, there were enough concerns about the data that Council members also began discussing how to address an economic downturn in the Fiscal Year 2026 budget.
The budget is set to be adopted on May 12. It goes into effect July 1.
City officials expect to end the current fiscal year on June 30 with leftover cash, but Shields said in some ways, that surplus is an illusion. The extra revenue came from increased interest returns on investments and money brought in from speed cameras.
“Our core taxes are all down,” he said.
As in most of Northern Virginia, jobless rates in Falls Church are on the upswing.
With 8,092 city residents employed in the civilian workforce and 253 looking for jobs, the February unemployment rate was 3%. That compares to Falls Church rates of 2.6% in January and 2.2% a year before.
The situation is more stark when comparing city residents looking for work. The 253 reported as seeking jobs in February represented a month-over-month increase of 19% and a year-over-year rise of 30%.
Current economic conditions and the federal job cuts contributing to them already have become an issue in this year’s nascent race for governor between Republican Winsome Earle-Sears and Democrat Abigail Spanberger.
A spokesman for current Governor Glenn Youngkin (R) told ARLnow that Virginia has retained a “strong, dynamic economy.”
“The commonwealth has seen approximately 1,500 combined unemployment-insurance claims from federal employees and federal contractors statewide,” Youngkin spokesman Peter Finocchio said. “In contrast, the commonwealth is home to over 250,000 open jobs, with approximately 100,000 of those being in the Northern Virginia region.”
Regional leaders say the area has proved resilient in the past.
“We’ve got undeniable strengths, a vibrant business ecosystem,” said Mark Carrier, who chairs the Northern Virginia Chamber of Commerce.
Still, at at a recent meeting of the Metropolitan Washington Council of Governments, Carrier echoed the idea that the changes arriving are not transitory.
“There are going to be long-term, fundamental challenges,” he predicted at the forum.
