Falls Church officials are breathing a sigh of relief as meals-tax revenue seems to have bounced back from declines earlier in the year.
“We did have a rebound. We’ll continue watching it,” City Manager Wyatt Shields said at the Oct. 3 meeting of the City Council’s budget and finance committee.
The meeting examined surplus funding from the previous fiscal year and ways to incorporate these funds into the FY 2026 budget or reserves.
Meals-tax revenue began to flatten out citywide last November and experienced year-over-year declines over the next three months.
The data in the springtime caused city leaders some discomfort, as the amount of spending on prepared meals not only impacts the budget, but also indicates overall consumer confidence.
But for the final four months of the fiscal year — March, April, May, June — monthly meals-tax receipts were higher than a year before, helped by the February opening of Whole Foods on W. Broad Street. In addition to groceries, which are not charged the meals tax, supermarkets also dispense a large amount of prepared foods, which are.
For the full fiscal year, the meals tax brought in $5.77 million to city coffers. While up 2.9% (about $164,000) from the preceding year, it was 10% less than the $6.44 million that the city had budgeted for as part of its $128 million FY 2025 spending package.
That could be due, in part, to delayed openings at various restaurants and retail outlets that are part of mixed-use projects across the city.
Overall, however, existing Falls Church businesses seem to be going strong this year.
The average tax revenue per establishment increased from $25,176 in calendar year 2019 to $37,305 in 2024. For the first half of 2025, tax revenue was running an average of $18,941 per establishment — slightly ahead of 2024 figures.
The Oct. 3 meeting touched on a variety of other budget data beyond meals taxes.
During the discussion, city leaders were “trying to get a sense of where the economy is, trying to get a sense of [community] needs,” Mayor Letty Hardi said.
The meeting took place just two days after state officials reported that the number of Falls Church residents counted as unemployed had risen 60% over the past year, from 239 in August 2024 to 382 in August 2025.
Falls Church’s increase was significantly higher than the bumps upward recorded in Arlington (38%), Alexandria (35%) and Fairfax County (28%). The growing number of unemployed people in Northern Virginia has become a key topic in the race for governor.
One indication of the economic uncertainty is the number of city residents who have contacted the treasurer’s office, seeking to be put on a payment plan for vehicle taxes that came due this week.
“Last year we had 15 payment plans overall. This year we’re at 40 — we’re writing them every day,” Treasurer Jody Acosta told Council members.
Regarding the city of Falls Church’s economic stability, Shields acknowledged that headwinds and unknowns lie ahead, but said that in general, “we think we’re in a reasonably good position for the current fiscal year.”
City staff will deliver FY 2027 revenue projections to Council members in early December.
