It may come down to more school funding or homeowner tax relief as Falls Church city leaders start mulling over budget options for the coming year.

Although the formal presentation of draft city and school-system budgets is more than a month off, city officials now have a better idea of the fiscal condition of the 2.2-square-mile locality.

Recently released property assessments showed a 10.5% increase in the city’s overall taxable property valuation, up $610 million to $6.42 billion owing to both higher residential values and construction of new mixed-use developments across the city.

In December, Falls Church officials had used a growth figure of 7.8% in early budget planning. In budget guidance issued at the time, the City Council stated it “desires” to avoid a tax rate increase but did not commit to it.

Falls Church’s current real-estate tax rate is $1.21 per $100 assessed valuation. While having come down in steps from $1.355 in 2020, homeowners still have been paying more owing to whopping increases in the value of their properties.

And the rate in Falls Church remains higher than in most surrounding jurisdictions.

With recent actions of the Trump administration rattling the federal workforce and potentially impacting the Northern Virginia economy, there is now “more tax-sensitivity” among residents than in the past, Mayor Letty Hardi acknowledged.

“Everyone’s going to be feeling it that much more,” she said at a Wednesday morning (Feb. 19) Council agenda-setting session .

“It’s going to be a really stressful time,” Council member Laura Downs added.

City Manager Wyatt Shields said he continues to work under the presumption that “any new revenue goes to tax relief” in crafting his fiscal 2026 budget. It is slated for release March 24.

December’s first look at the budget process anticipated a fiscal 2026 city budget of about $106.5 million, up just under $6 million, or 5.9%, from the current fiscal year.

Potentially complicating the desire to either keep the current tax rate steady, or cut it, is the funding request from Superintendent Peter Noonan.

Noonan in mid-January sought from the city government a funding increase of $4.67 million , up 6.3%, to accommodate increasing enrollment and provide pay raises for personnel.

The request by Noonan, who is retiring at the end of the current school year, is higher than the 5.9% increase that would typically be provided by the city government under a longstanding revenue-sharing agreement.

Noonan’s presentation in January was just a starting point. The school system will put in its formal request for funding in mid-March.

Whether Noonan ultimately gets what he wants could depend on the still-evolving local economic situation. Shields was making no promises beyond a willingness to listen to school-system leadership’s requests.

“I have endeavored to have good lines of communication with the school administration,” he said.

Recent developments in neighboring Fairfax County may not put a smile on the faces of those leading Falls Church’s school system.

In Fairfax, Superintendent Michelle Reid requested $268 million more for fiscal 2026. But in his budget presentation on Tuesday (Feb. 18), Fairfax County Executive Bryan Hill proposed just $118.6 million more .

Fully funding Reid’s request would add an additional 4.5 cents on Fairfax’s real-estate tax rate, the county executive said. And with several Fairfax supervisors already critical of Hill’s proposed 1.5-cent increase to $1.14 per $100, going further at this point in the budget process was a non-starter.

“A tight budget brings difficult choices,” the county executive said.

Virginia school boards do not have independent taxing authority, and must rely on governing bodies of their localities to provide the bulk of school funding. In Northern Virginia, local tax dollars typically account for 80% of a school system’s revenue.

Fairfax board chair Jeff McKay, who has been among those voicing concerns about the increasing tax burden on residents, suggested school leaders could have to make the best of the situation.

“There may be some very difficult decisions our colleagues on the School Board may have to make,” McKay said.

The budget situation in Falls Church is less dire than faced by its larger neighbors of Fairfax, Arlington and Alexandria, in part because of the arrival of several major mixed-use developments in the city over the past few years.

New development added just over 5% to the city’s tax base over the past year, nearly as much as the 5.46% increase owing to increasing property values.

At the Feb. 19 Falls Church meeting, a number of Council members said residents, including parents of school-age children, need to focus on the city’s overall financial picture, rather than merely school funding levels.

“It’s important to think about the whole budget,” Council member Debora Schantz-Hiscott said.

Final adoption of the fiscal 2026 city budget is set for May. The new fiscal year arrives on July 1.