Blog posts are the personal views of Letty Hardi and not official statements or records on behalf of the Falls Church City Council

Dear Friends,

Thank goodness March is around the corner – I think we’re all ready for spring. And with spring comes budget season! While we’re still a few weeks away from the budget presentation by the City Manager and the Schools on March 23, it is well underway across the region so I am keeping a close eye on our neighbors’ tough budgets. We also just reviewed last quarter’s financial results so I’ll share that good news/bad news take. We also had a report on affordable housing progress so I’ll share the same good news/bad news situation there.

A quick, must read for your weekend: having been a part of many, many discussions on housing here in Falls Church, watching deliberations in the region, in Richmond, and across the US – one of the top concerns I hear in opposition to housing proposals is “it’s not affordable, so we shouldn’t build it” or “we don’t need more $1 million dollar houses!” While one can be opposed to housing for various reasons, the debate should be anchored in facts and economics. There are multiple studies that show adding housing supply at all price points is actually helpful for affordability and last week’s article in The Atlantic again confirms that – building luxury housing frees up naturally affordable housing. And the important corollary: housing markets are regional. Increasing the whole region’s housing supply has 4x the impact on local rents compared with just adding local supply – which is why there is momentum at the state level to push localities to do more.

Finally – potholes! Between the snow and freeze-thaw cycles, our roads have taken a beating. If you see dangerous potholes, report them through the city’s request tracker. Staff has started cold patching the worst ones ahead of our typical spring pothole and paving work.

Look forward to hearing from you.

Best,
Letty

PS – As part of our Fitness Challenge coming back in April, I will have 3 sets of “on the move” office hours in April. Take note of the dates below and join me on a walk or run!

What Happened This Week:

(1) Financials Update – Q2 report, budget prep, debt service, regional budgets

The City Manager presented our Q2 financial report and the headline is a good news/bad news situation. The good news: local economic activity is holding up. With new businesses and buildings opening, sales and meals taxes are exceeding our forecast and growing over last year – our economy is proving resilient against regional headwinds. The not-so-good news: hotel taxes are running about 8% behind last year (likely reflecting federal cutbacks, consumer sentiment, and lower discretionary spending), and the challenges ahead for FY27 are significant especially some surprise costs.

Current year FY26: we’re projecting roughly $1.7M in revenue surplus at the end of the current fiscal year. But that money is already spoken for. We have $1.5M in new costs – we learned that Fairfax County has been underbilling us for homeless shelter costs ($400K), increased costs with snow removal ($300K), and an issue with Phase 2 of the West Falls project where Hoffman indicated they’re not in a position to make an initial $800K payment.

Next year FY27 (our budget deliberations starts next month) – we’re anticipating 4% revenue growth next year, which is better than we thought just a few months ago and way rosier than our neighbors (more on our neighbors below). The revenue comes mostly from residential property assessments increasing, which means everyone’s tax bills will be higher even with a flat tax rate. And with less investment income due to lower interest rates and higher interjurisdictional contract costs – our budget will be tight and leaves little for competitive compensation after the revenue share with the schools – not to mention baseline priorities like paving and affordable housing.

This is also challenging in that we are in the “bridge years” where the initial payments from the West Falls project ends (yellow bars below) and the project’s tax revenues (pink bars) ramp up to offset the $6M/year in debt service for the $120M new high school. For long time readers, you’ll recall that in 2017, this plan of financing was set in motion (this 2017 blog post is a good recap of how we got here plus lots of links).

For reference – it’s important to note how good we have it compared to our neighbors who are all projecting lower revenue growth, budget cuts, and not providing the full requests of their school districts. And because there is always a regional “arms race” with compensation, I like to keep an eye on their budgets and employee raises to ensure we stay competitive.

Arlington budget proposal: https://www.arlnow.com/2026/02/23/arlington-budget-proposes-tax-increase-closure-of-gymnastics-program-and-library/

Alexandria budget proposal: https://www.alxnow.com/2026/02/25/city-manager-unveils-977-million-budget-proposal-without-tax-increase/

Fairfax County budget proposal: https://www.ffxnow.com/2026/02/17/fairfax-countys-proposed-5-7b-budget-keeps-property-tax-rate-flat-leaves-school-funding-gap/

Letty’s Thoughts: While our local revenues are holding this year, I remain cautious. We’re not immune to the same cost pressures and economic headwinds as our neighbors. As of the latest data, Falls Church has the highest unemployment rate and the highest concentration of federal workers in the region. With expected increase in property assessments, I am sensitive to that annual increase in tax burden on our community. I encouraged us to be disciplined on expenses this year in order to fund the essentials before even looking at increasing taxes – because future years may not even have 4% revenue growth. A lot more discussion to come when we start our part of budget season on March 23.

(2) Expiring Affordable Housing

This is another good news/bad news story – two pieces of good news first:

• We’ve made serious progress on affordable housing in the past year. With the 3 new mixed use projects coming online that contain affordable units as well as acquisitions at Virginia Village and the city’s CCAU program (where we use local dollars to subsidize deeply affordable housing units that are otherwise unavailable in the city), we have added 130 units of affordable housing in 2025 – raising our total from 206 to 336.
• Since 2016, all of the units we’ve added don’t expire.

• The bad news is that we have 159 older affordable housing units (everything that came online pre 2016) that will expire in the next 10 years. Discussions have been underway about the policy, cost implications of those expirations, and the importance of the Virginia Village project.

What’s Coming Up:

March 2 – City Council Work Session*

March 9 – City Council Meeting*

March 16 – City Council Work Session*

March 23 – City Council Meeting* (budget presentation)

*All Mondays (except 5th Mondays and holidays) at 7:30 pm. You can access the agenda and livestream here, including recordings of past meetings

Office Hours:

City Council’s Office Hours – Wednesday, March 4 (9 am, City Hall)

Letty’s Walking Office Hours – Friday, April 10 (5 pm, Broad St / Howard Herman Trail)

Letty’s Jogging Office Hours – Friday, April 17 (12 pm, Library)

Letty’s Walking Office Hours – Friday, April 24 (5 pm, W&OD / West End Park)