Audit near completion; Asheville reports $23.2M obligated for water recovery and monitors cash flow

Asheville finance officials told the Policy, Finance and Infrastructure Committee on Oct. 28 that the city’s fiscal year 2025 audit is nearly finished and that first-quarter FY26 revenues and expenses are generally performing as expected.

“We do plan to present the results at this meeting in on December 9,” Assistant Finance Director Becky Hochul said, noting auditors have reviewed drafts of the financial statements and the final step is submission to the Local Government Commission, a requirement to maintain the city’s debt ratings.

Hochul said grant-related work under the single audit is delayed because a federal guidance supplement for grants was not released before a government shutdown, which has held up final federal-grants testing even while core financial statements are being finalized. She told the committee staff are continuing to work with auditors and will present final findings in December.

Budget and Performance Manager Lindsay Spangler said the city currently projects using about $1.7 million in fund balance at year-end, compared with $2.2 million in the adopted plan. Sales- and property-tax timing reduces available data in the first quarter: sales taxes are collected on a three-month lag and property taxes are concentrated near the January due date.

“Revenues are slightly below a quarter of a year’s budget, so they’re at about 19% right now,” Spangler said of the parking fund, which has a roughly $7.1 million FY26 budget and about $1.4 million in receipts to date. Staff attributed the shortfall to garage construction and slower tourism recovery and said they expect revenues to recover through the year.

On recovery spending, Hochul said the state has obligated about $23.2 million to support temporary pretreatment work at the city’s water facility and the city has received roughly $5.1 million in reimbursements so far; staff plan another reimbursement request next week. She said about $13 million has been spent to date on water-project work, including roughly $4 million on temporary pretreatment systems and about $9 million on early pipe replacement and reconnection work.

A council member asked how close the city is to a cash-flow warning under the reverse-reimbursement model used for many recovery grants. Staff said they monitor cash balances daily, have substantial reserves and that the $23.2 million obligation reduces near-term pressure, but added that risks rise as large contracts come due.

The committee had no immediate action on audit items; staff will return with final audit results in December.