Asheville City Council reviews budget impacts following storm recovery update

In a recent budget work session held on March 25, 2025, Asheville City Council members discussed the city's financial outlook in the wake of recent economic challenges, particularly following a significant storm that impacted local employment and revenue. The meeting highlighted key indicators, including unemployment rates and sales tax collections, which are critical for shaping the city's budget for the upcoming fiscal year.

The council reviewed the unemployment chart, noting a spike in rates immediately after the storm, followed by a gradual decrease. While January saw a slight uptick—a typical seasonal trend for Asheville—the overall unemployment remains above pre-storm levels. Encouragingly, the North Carolina Department of Commerce predicts that Asheville could return to its previous employment figures by the end of the year.

Sales tax collections, however, present a more complex picture. The city reported a 6% decrease compared to the previous year, with December figures indicating a continued decline. This trend raises concerns about the city's revenue streams, as property tax projections suggest a potential loss of $1 to $1.5 million compared to last year.

In terms of expenditures, the city has already spent approximately $23.3 million on storm response and recovery efforts, with an additional $17.3 million under contract. The council anticipates receiving $10 million in FEMA reimbursements and a $2.8 million state loan to assist with cash flow while awaiting these funds.

The budget discussions also revealed a projected revenue decrease of $1 to $4 million for the upcoming fiscal year, prompting city staff to recommend maintaining flat operating budgets across departments. Despite these efforts, unavoidable cost increases of about $4.1 million—primarily due to healthcare and state-mandated retirement costs—remain a significant challenge.

To address the budget gap, which could reach $11.4 million, the council is considering a property tax increase of 4.65 cents per $100 of assessed value. This adjustment would result in an estimated annual increase of $163 for the average homeowner in Asheville. The city aims to restore its fund balance to the policy level of 15%, which may require further refining of revenue estimates and exploring additional funding sources.

As the council prepares for its next work session in two weeks, members expressed a commitment to finding ways to minimize the tax increase and mitigate service impacts on the community. The discussions underscore the ongoing financial challenges facing Asheville, as city leaders navigate the delicate balance between recovery efforts and fiscal responsibility.