$2M FY2026 Budget Surplus to Pay for Solar Panels at the Community Center and Critical Vehicle Replacements

Background

The results of the FY2026 budget were discussed at the City Council work s on October 19, 2026. [See Pulse post Cautious FY2026 City Tax Revenue Estimates Yield $2M Budget Surplus at the Expense of Homeowners, October 28, 2026.]  Staff presented a proposal for allocating the budget surplus that was then modified by the City Council.

At the City Council action meeting on October 26, 2026, the amended proposal was presented for approval. It was unanimously adopted on first reading.

As a matter of policy, budget surpluses are used for one-time expenses, not recurring expenses such as salaries.

Calculating the School Board’s share of the surplus

Under the current informal revenue sharing agreement, the City is obliged to transfer 50% of the tax revenue surplus to the Falls Church City School Board, after paying for the debt service on school bonds and maintaining the Unassigned Fund Balance of 17%.

Non-tax revenues such as investment income, fines, fees, and permits are not shared with the School Board. Shortfalls and losses are also not shared.

In FY2026, Hoffman & Associates decided to forgo their option to develop West Falls Phase 2, resulting in a loss of $800,000 that was to be used for the school bond debt payment. This was deducted from the surplus before computing the revenue share. $580,000 was needed for the Unassigned Fund Balance. The final 50% tax surplus share for the schools was $602,675 as shown in the calculation below:

COMPUTATION OF THE SCHOOL BOARD REVENUE SHARE
Tax Revenue Surplus	$2,585,350
West Falls Phase 2	($800,000)
Unassigned Fund Balance Policy – 17%	($580,000)
Net Revenues for Revenue Share	$1,205,350
School/General Government Share (50% split)	$602,675

The City Council and the School Board are currently working to update their revenue sharing agreement to allow flexibility to accommodate unusual needs of either the City or the schools. They hope to conclude these discussions for the next budget.

Community Center to get solar panels

The constant efforts of members of the Falls Church Climate Action Network (FCCAN) and the Environmental Sustainability Council (ESC) have finally paid off. The $182,000 estimated cost of installing solar panels on the Community Center roof will be covered by $132,000 from the budget surplus and $50,000 from the forfeiture of a bond from the Washington and Broad developer because it was unable to achieve LEED Gold certification.

At the October 19 work session, City Council Member Marybeth Connelly received broad support from her fellow Council members when she asked staff to find a way to fund the solar panels for the Community Center, as promised during the FY2027 budget discussions. There was also the possibility of receiving a 30% tax credit if this was completed by the end of 2027, although staff cautioned that there are product sourcing and other stringent requirements.

City Manager Seth Hendler-Voss had opted to postpone the solar panel installation and instead prioritize buttressing the City’s Capital Reserves ahead of a report from the Facilities Condition Assessment that will identify new capital investments that will need to be made.

At the request of City Council, staff accommodated the solar panels installation by reducing the money going to Capital Reserves and delaying funding overtime staffing for City events to the end of FY2027.At the October 26 meeting, staff included the solar panel project in the budget amendments for Council approval.

How the $2.3M FY2026 budget surplus will be used

ALLOCATION OF THE FY2026 NET BUDGET SURPLUS
School Board Revenue Share	$602,675
Unassigned Fund Balance: Maintain at 17%	$580,000
Fleet Replacement (2 Police, 1 Sheriff, 1 Department of Public Works)	$367,000
Replacement of Ballistic Protective Equipment	$36,250
Litigation Expenses	$111,000
Neighborhood Traffic Calming	$100,000
City Hall Repairs (HVAC and Elevator)	$78,000
Contractual Increases	$65,000
Juneteenth, MLK, and Watch Night events	$20,000
Staff Compensation Study	$50,000
Community Center Solar Panels	$132,000
Transfer to Capital Reserves	$141,069
Total Allocation	$2,282,994

• A new Switch-N-Go truck will replace the 20-year-old vehicle in the Department of Public Works (DPW) for $140,000.
• The Police and Sheriff vehicles are two Ford Explorer hybrids and a Chevrolet Blazer EV. Earlier in the year, Police Chief Shahram Fard said the City has fallen behind on its fleet replacement schedule.
• The litigation expenses involved an appeal by Pearson Square to change its zoning from condominiums to apartments and a personnel issue.
• Emergency repairs recently had to be made to the City Hall elevator and HVAC system.
• Contractual costs cover unplanned expenses during the hiring of the new City Manager ($35,000) and the loss of federal funding for the Northern Virginia Emergency Response System ($30,000).
• $10,000 will be given to the Tinner Hill Heritage Foundation for the Juneteenth and MLK Day celebrations, as promised during discussions of the Arts and Humanities Grant Awards.
• The City’s Watch Night budget also is increased by $10,000. (This does not direct the funds to the nonprofit CATCH foundation that organizes Watch Night.)
• The staff compensation study is intended to provide data for the FY2029 budget.

These allocations are proposed as amendments to the current FY2027 budget.

City Council gives unanimous approval

At the October 26, 2026, City Council action meeting, the vote was unanimous to approve the amendments to the FY2027 budget and to appropriate the funds accordingly.