Blowing Rock proposes flat property tax rate for 2025-26, plans to use fund balance and raise water rates 7%

Blowing Rock officials presented a proposed fiscal 2025‑26 budget on Tuesday that would keep the property tax rate unchanged, use a modest portion of the townfund balance to balance the general fund, include a 2.5% cost‑of‑living adjustment for employees and would raise water and sewer rates by 7% to cover meter debt and other capital needs.

Shane, the staff presenter, told the Town Council that the draft budget as presented proposes no property tax increase and would use roughly $194,000 of fund balance to balance the general fund. "No proposed property tax increases for this year's budget," Shane said. "We are proposing to utilize some fund balance to balance the budget." He described the budget as "priority based" and said staff aimed to preserve service levels while planning for future capital and debt trends.

The proposal assumes a 2.5% COLA for full‑time employees and continued employer benefits, including a 5% 401(k) match and existing vision/dental plans. Staff flagged two external cost pressures: an estimated 6% increase in state retirement contribution rates and changes in health insurance costs following a switch from Blue Cross to Aetna. Payroll and benefit costs were identified as the town's largest expense category; staff projected total salaries and benefits at about $7.49 million.

On revenue, staff emphasized Blowing Rock's reliance on a mix of property tax and tourism‑driven revenues. Property taxes make up about 44.7% of general fund revenues; sales tax and the townportion of the Tourism Development Authority (TDA) revenues together approach 39% of the general fund. Shane told council the town's TDA gross receipts are about $2.4 million and that the town's one‑third share is roughly $600,000 each year for tourism infrastructure, planting, decorations and projects the TDA funds.

Water and sewer: staff proposed a 7% rate increase in the enterprise (water and sewer) fund, citing new AMI meters and related debt (about $156,000 annually) and a planned USDA‑backed project (approximately $4.6 million) that will be bid later this season for plant upgrades and a new lift station. Shane said the AMI meters are already installed and have reduced water loss by alerting staff to leaks sooner. "The new meters have done a tremendous job at instantly detecting most of the time where the leaks are," he said, which has reduced usage but increased the need to cover fixed costs.

Capital: the draft budget includes about $415,554 in capital outlay for fleet replacement and software payments, including a final payment on the town's new finance software and a planned police vehicle purchase. Staff also proposed phased fleet replacements (chipper, dump truck, snow plows) and small equipment replacement in parks and landscaping.

Debt and fund balance: Shane said general fund debt has fallen from about $11.0 million two years ago to $8.9 million currently and projected lower debt service in coming years as some obligations (Buxton property, a fire station) roll off. The town's unassigned fund balance was about 46% of the general fund as of June 30, 2024; the proposed use of fund balance in 2025‑26 would reduce that level modestly.

Process and next steps: staff will post the full budget and presentation online and hold a public budget workshop May 27 and a public hearing on the budget in June (the town typically must adopt a budget by June 30). No vote was taken Tuesday; council members thanked staff and asked follow‑up questions about debt, TDA revenues and planned capital work.

Why it matters: the budget outlines services, capital projects and rate decisions that affect residents, businesses and visitors: changes to water/sewer rates will affect customer bills; use of fund balance and debt trends shape near‑term fiscal flexibility. The council will consider adoption after the public workshop and hearing.