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Asheville staff say FY27 budget faces $14.2M gap after bonding costs; GEO-bond debt service built into projection
Summary
City finance staff told council the FY2026-27 general fund faces a projected $14.2 million gap after adding estimated GEO-bond debt service of $6.5 million; staff outlined options including a phased tax-rate increase, use of fund balance and program cuts.
Tony McDow, finance director, told the Asheville City Council at a March 24 work session that staff currently estimate a $14.2 million gap between projected revenues and expenses for fiscal year 2026–27 after accounting for rising personnel and operating costs and the full debt service on voter-approved general obligation (GEO) bonds.
At the meeting McDow said voters approved $80 million in GEO bonds in November 2024 and staff estimate annual debt service on those bonds at about $6.5 million. "That would require a property tax increase of approximately 2.58 cents," McDow said, adding that staff have shown that full debt service in both the revenue and expense sides of the FY27 forecast.
Why it matters: the debt service and inflationary pressures — notably health-care and retirement costs — drive much of next year’s projected increase. McDow said base budget expenses are up about $16.8 million year over year, citing healthcare, retirement and restored police staffing as primary contributors.
What staff proposed: McDow and budget staff outlined several approaches to closing the gap. These include (a) using a portion of fund balance (which would reduce reserves well below the city’s internal 15% target and risk debt-rating impacts), (b) phasing in the GEO-bond tax-rate increase over two years instead of fully in FY27, and (c) implementing staff-recommended savings and service reductions presented later in the session.
Council reaction and next steps: council members pressed for concrete tax-impact numbers tied to recent revaluation data. McDow said earlier estimates put one penny of property tax at roughly $2 million but that the city will provide updated calculations at an April 14 work session. Staff emphasized that a full picture — combining revenue-neutral scenarios, revaluation outcomes and the proposed cuts — will be returned to council in April before the May proposed budget.
The meeting closed with staff committing to updated revaluation estimates and a more detailed budget package at the next work session.
