County discusses revenue diversification, adding taxes

Fairfax County Times

By Jared Wenzelburger

On Sept. 17, the Fairfax County Board of Supervisors met with County Executive Bryan Hill and the Fairfax County Department of Management and Budget to discuss revenue diversification for the county.

Despite voters rejecting the idea in 1992 and 2016, the Fairfax County Board of Supervisors’ most notable consideration is a countywide meals tax — but now, the new tax wouldn’t need to appear on a ballot. A Virginia state law passed in 2020 allowed jurisdictions to impose meal taxes without voter approval.

On May 21, the board of supervisors voted 9-1 to consider a meals tax between 1% and 6%, with Springfield District Supervisor Pat Herrity the only member to vote in opposition.

This proposal came weeks after the Board of Supervisors approved a nearly 6% increase in average homeowners’ taxes. According to a May 21 media release from Herrity’s office, the board denied Herrity’s suggestion for a “deep dive into the entire county budget.”

“Our residents have soundly rejected the meals tax in prior referendums,” Herrity said. “The board should be listening to its residents.”

If implemented, the meals tax would be a tax on food and beverages sold in restaurants in addition to current sales taxes. This includes cafes, cafeterias, taverns, delis, and anywhere ready-to-eat meals are sold. However, the tax would not affect grocery and vending machine prices.

According to a May 21 news release from the Board of Supervisors, the board aims to review “strategies to diversify (its) revenue base and reduce the over-reliance on the real estate tax.” According to the county taxing authority, real estate taxes currently make up nearly 66% of all general fund revenue for Fairfax County. 

“We are likely facing another challenging budget year,” Phil Hagen, director of the Department of Management and Budget, said during the September meeting. “The trend in recent years has been that employee compensation adjustments as well as school funding increases have left little flexibility for other priorities.”

County officials at the September meeting said they believe the county will continue to experience budget constraints in the next few years. In 2020, legislation was passed that allowed for expanded taxing authority and revenue diversification options for counties in Virginia. This includes the possibility of imposing additional taxes on transient occupancy, admissions, probate, and meals.

It is estimated that if these taxes are implemented at or near the maximum percentage, the county would generate nearly $226 million, representing 4% of general fund revenues.

Businesses and community members in the county continue to oppose the proposed meals tax. However, this time, the decision will likely rest with the board alone.

Waria Salhi, a partner with the Mezeh Mediterranean Grill, thinks new taxes are unnecessary and will hurt the pockets of Fairfax County residents.

“With a $261 million budget surplus, it is truly alarming that the Fairfax County Supervisors are considering imposing an additional food tax,” Salhi said. “Our community is already grappling with the heavy weight of high inflation and skyrocketing prices for groceries and daily necessities. Yet, Chairman Jeff McKay seems intent on squeezing more revenue from those who are already struggling to make ends meet.”

Salhi believes this represents “just how out of touch our county supervisors are with the very real challenges that families and small businesses face everyday.”

According to a paper published by the Restaurant Association of Metropolitan Washington, a meal tax would most affect low to middle-income families, senior citizens, and restaurant workers. The paper said that when such taxes are imposed, employees’ wages often suffer.

Resident Chuck McAndrew addressed the carryover budget at the Board of Supervisors meeting on Sept. 24. He said the $260 million county carryover budget combined with the $142 million Fairfax County Public Schools carryover totaled $402 million.

“Some of this surplus should be returned to the overburdened taxpayer that pays real estate taxes,” he said, adding that he is adamantly opposed to a meals tax.

Of course, not everyone in Fairfax County opposes a meal tax. In May, multiple members of the Fairfax County Public Schools Board spoke out in support of the meal tax. One school board member expressed hope that funds raised with a meal tax would go directly into increasing salaries for faculty at public schools in the county.

“I’m generally supportive (of the meals tax), but I would want to see how it is designed and implemented,” said school board member Mateo Dunne, the Mount Vernon District representative. “If we’re going to impose a new tax we need to be thoughtful and make sure we’re focusing the tax on solving real problems. Otherwise (Fairfax County) shouldn’t impose a tax at all.”

Dunne said a good chunk of the meal tax revenue would come from tourists and commuters outside Fairfax County.

“That would represent free money for Fairfax County,” Dunne said. “Ideally, what I would like to see is 100% of that money … used for teacher and support staff salaries.”

Some jurisdictions in and around Fairfax County, including the City of Fairfax and the Town of Vienna, already have a meal tax. This tax can fund various things, such as parks, libraries, and education. However, the Fairfax County Board of Supervisors has yet to detail what exactly the money would be used for.

The next budget committee meeting, a joint meeting with the Fairfax County Public Schools, is scheduled for Nov. 26, at 3 p.m. in Conference Room 11 in the Government Center to discuss the joint Fiscal Year 2026 budget forecast.