Buncombe County projects $15–25M revenue shortfall after Tropical Storm Helene; staff propose midyear cuts and 4% school reduction

Buncombe County finance and budget staff told elected leaders that Tropical Storm Helene sharply reduced near-term local revenues and warned the county faces a possible $15 million to $25 million gap in fiscal year 2025 if conditions do not improve.

The short-term revenue hit stems from storm-related damage, higher local unemployment and a collapse in tourist-driven taxes. County Budget Director John Hudson and budget analyst Jay Shee presented the office’s analysis at a joint meeting with the county and both school boards.

Key figures and causes

- Projected revenue shortfall: county staff estimated a range of $15 million to $25 million in decreased revenues for FY 2025. - Occupancy tax (tourism): “On a year to date basis, occupancy tax collections are down 35%, which equates to $5,900,000,” Jay Shee said during his presentation, describing steep declines after the late-September storm. - Sales tax: year-to-date sales tax distributions were down about 7% (roughly $1.0 million) compared with the prior year, with October collections sharply lower; staff projected sales tax could fall $3.5–7.5 million below budget, depending on recovery patterns. - Property tax: property collections were at 93.52% at the time of the meeting, 0.9 percentage points behind the same time in the prior year. The county tax assessor is conducting damage assessments; staff cautioned that damage to thousands of residences and businesses will reduce future property-base growth.

Why this matters: property tax and county sales tax together fund roughly 76% of the general fund’s unrestricted revenues. A sustained revenue shortfall of the magnitude discussed would force midyear cuts, an appropriation of fund balance or both; the county’s policy floor (15% fund-balance) limits the ease of using reserves.

Immediate spending actions and proposed cuts

County management described steps already taken to reduce spending in FY 2025 and proposed further actions. Measures the county said it had implemented and proposed included:

- Hiring freeze across departments (89 vacancies remained at the time of the meeting); anticipated salary/benefit savings from the freeze were estimated at about $2.0 million. - Reduced library hours, halted temporary staffing, and sheriff’s office hiring freeze for non‑certified personnel (additional savings estimated at $2.0 million). - Program support reductions: $2.5 million in cuts to client assistance and grant-funded programs, school nurse funding and an economic-development project. - Operating adjustments: $5.1 million in deferred IT purchases, deferred maintenance, reduced library and parks programming, reduced animal-shelter operations and postponed equipment purchases. - Transfers: a $1.0 million reduction by delaying or adjusting interfund transfers (including the reappraisal fund and some unallocated items).

Midyear total: staff reported $12.7 million in expenditure reductions across these ledger categories.

Proposed education reduction

To further close the gap, county staff asked the boards to consider a 4% reduction in local current expense allocations to K–12 schools (the county’s discretionary operating contribution) totaling $4,690,451. Staff said the requested cut would be divided between Buncombe County Schools ($3,971,874) and Asheville City Schools ($718,577) according to average daily membership calculations.

County staff characterized the approach as a cautious path that, combined with the midyear operating reductions, would close most of the shortfall. At the time of the meeting, the commissions had not voted on that reduction; state law requires a general reduction in county expenditures to support a corresponding reduction in school allocations, and county staff said a public hearing and vote would be scheduled (January 21).

Fund balance, credit rating and constraints

County finance staff underscored the limits of using reserves. The county’s fund-balance policy requires a minimum available fund balance of 15% of the general fund to preserve liquidity and a strong credit rating. Staff said FY 2024 ended with an unexpected use of fund balance ($11.3 million) and that the FY 2025 budget already included some appropriated fund balance; fully using the balance to close a $15–25 million gap would leave the county well below policy.

Staff noted that a downgrade of the county’s credit rating would increase borrowing costs for the county and for school capital projects, amplifying long-term fiscal pressure.

Federal and state recovery funding—timing uncertainties

Staff and county management emphasized that federal and state disaster programs will affect the ultimate fiscal picture but warned of timing and eligibility uncertainties:

- FEMA reimbursements are distributed largely as reimbursements after local spending. County managers warned that FEMA’s reimbursement timeline can stretch across fiscal years and that some local expenses may not be eligible. - State and federal programs (Community Development Block Grant disaster funds, SBA disaster loans, and state cash‑flow loan proposals) could offset damages and revenue losses. County staff said a $100 million state loan program had been created but had not been operationalized; program terms and whether money could be used to offset operating losses remained unclear.

Next steps and board process

County staff outlined near-term steps:

- Further monitor revenues month to month and update projections; staff said they would provide more frequent updates rather than waiting until the typical March budget cycle. - A public meeting and formal vote on any requested reduction to school local current expense was scheduled for Jan. 21 (per state statute requiring a general reduction to county expenditures before reducing school allocations). - Staff planned a budget amendment to formalize interfund transfers related to the expenditure reduction plan.

Quotes from staff

John Hudson, budget director: “All told, our analysis projects a range of decreased revenues of between $15 to $25,000,000.”

Jay Shee, budget analyst, on occupancy tax: “Occupancy tax collections are down 35%, which equates to $5,900,000.”

What officials and board members said

School board and county leaders acknowledged the difficulty of making midyear cuts while many services remain in high demand. Several commissioners stressed the need to continue advocating for federal and state relief and to pursue operational collaboration with the school districts to control costs.

Provenance: The data and statements summarized above were provided by county budget staff and the tax assessor during the joint meeting (budget presentation beginning ~02:11:05; revenue detail and proposed reductions from ~02:39:00 onward).