FAIRFAX TOWN COUNCIL MEETING
STAFF REPORT
AGENDA ITEM #2
MEETING DATE June 4, 2025
PREPARED FOR Mayor and Town Council
PREPARED BY Michael Vivrette, Finance Director
SUBJECT Adopt a Resolution Setting the Utility User Tax for Fiscal Year 2025-26
RECOMMENDATION
Staff recommends that the Town Council adopt the attached resolution setting the Utility User Tax (UUT) rate at 5% for Fiscal Year 2025-26.
BACKGROUND
Each year, the Town of Fairfax must adopt resolutions to establish or confirm various tax rates. These taxes are an important funding source for municipal operations and include assessments related to municipal services, pensions, infrastructure, and environmental management.
Historically, the Town has adopted all five tax resolutions—Special Municipal Services Tax, Utility Users Tax, Pension Tax, Stormwater Pollution Prevention Fee, and Measure K Bond Assessment Tax—together in one staff report and Council item.
However, during the Town Council Budget Workshop in April 2025, the Council reviewed potential revenue enhancements and specifically discussed increasing the Utility User Tax rate by 1%. The Council directed staff to bring forward this proposed increase as a standalone item for consideration, separate from the other tax resolutions, to allow for a focused review and public discussion. The Police Department had previously proposed un-freezing an entry level police officer position that has been frozen (i.e. unfilled and unfunded) since 2008. The estimated total cost to fill this position is $130,000 including salary and benefits.
DISCUSSION
The proposed resolution sets the Utility User Tax rate at 5%, up from the current rate of 4%. This tax applies to charges for electricity, gas, water, and telecommunications services. The increase is projected to generate approximately $125,000 in additional annual revenue for the Town’s General Fund. If approved, the frozen police position could be reflected in the final FY 2025-2026 budget to be considered by the Council on July 16, 2025.
The Utility User Tax has remained unchanged in recent years. Given rising operational costs and the need to maintain service levels, the Council determined that a modest increase in the UUT would help support ongoing municipal services without relying solely on further budget reductions or service cuts.
The Town's Municipal Code allows the Council to set the UUT rate annually within the voter-approved range. The proposed 5% rate remains within that legal limit. 2 FISCAL IMPACT
Increasing the Utility User Tax rate from 4% to 5% is estimated to generate approximately $125,000 in additional General Fund revenue for Fiscal Year 2025-26.
ATTACHMENTS
Resolution for Utility Users Tax
RESOLUTION 25-
A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF FAIRFAX SETTING THE AMOUNT OF THE UTILITY USERS’ TAX FOR FISCAL YEAR 2025-2026 WHEREAS, Ordinance No. 552 requires that the rate of the Telephone, Gas, and Electricity Users’ Tax shall be set annually by Resolution; and
WHEREAS, the Town Council has reviewed a preliminary Operating and Capital Budget for Fiscal Year 2025-26 as presented by the Town Manager, and has determined that in order to maintain the current level of municipal services, as well as the long-term fiscal health and stability of the Town, and to maintain the Town’s excellent bond rating, the assessment of this Utility Users’ Tax for Fiscal Year 2025-26 is a necessity; and
WHEREAS, the Town Council has also determined that for the fiscal year commencing July 1, 2025, without the levy of this Utility Users’ Tax, the cost of providing municipal services will exceed the amount of funds and revenues generated from all other sources of income; and WHEREAS, the Town Council has determined that the Utility Users Tax rate shall be increased from four percent (4%) to five percent (5%) to help offset rising operational costs and support ongoing municipal services; and
WHEREAS, the proposed five percent (5%) rate remains within the voter-approved range authorized by the Fairfax Municipal Code; and
WHEREAS, this tax will continue to apply to charges for electricity, gas, water, and telecommunications services, and is projected to generate approximately $125,000 in additional annual revenue for the Town’s General Fund.
NOW, THEREFORE, BE IT RESOLVED that the Town Council of the Town of Fairfax authorizes the amount of the Telephone, Gas, and Electricity Users’ Tax for Fiscal Year 2025-26 to be set at the rate of five percent (5%).
The foregoing Resolution was duly passed and adopted at a meeting of the Town Council of the Town of Fairfax held in said Town on the 4th day of June 2025, by the following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
_________________________________
LISEL BLASH
MAYOR
ATTEST:
_________________________________
CHRISTINE FOSTER
DEPUTY TOWN CLERK