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Asheville faces $10.5 million FY27 gap; council weighing tax choices to fund bonds and staff raises
Summary
City staff told Council the city faces roughly a $10.5 million general fund gap for FY2027 and presented tax-rate options after Buncombe County's revaluation: a revenue-neutral rate near 33 cents and scenarios that would raise the rate to about 39 cents to cover bond debt or higher to close the full gap. Council debated timing of bond funding and the share attributable to a proposed $3 million cost-of-living adjustment.
City Manager D.K. Wesley opened the April 14 budget work session and said staff will present a manager's proposed FY2027 budget on May 12.
Staff told the Council that, absent other changes, the city would face a roughly $10.5 million gap between projected revenues and expenditures for FY2027. Tony McDowell, finance director, said preliminary county revaluation figures produce an estimated revenue-neutral city property-tax rate near 33 cents per $100 of assessed valuation, down materially from the current 44.19 cents.
Why it matters: Council must choose whether to set a tax rate above revenue neutral to fund voter-approved general-obligation (GO) bonds and close remaining budget gaps. Staff presented three illustrative options: a roughly 2.4-cent increase above revenue neutral (to about 39 cents) to fund debt-service and an affordable-housing position tied to the 2024 bond package; a 3.82-cent increase to close the full $10.5 million shortfall; or doing both, which would amount to about a 6.22-cent lift over revenue neutral. Using a $500,000 example homeowner value, staff estimated the combined option would cost about $311 annually per typical homeowner (about $26 per month).
What the numbers mean: The presentation emphasized that revaluation changes the tax base and that the state's revenue-neutral calculation allows capture of a modest built-in growth rate (about 1.2%). Staff noted the preliminary numbers will be updated as the county completes appeals and that these figures are illustrative rather than final.
Council reaction and options: Members debated whether to adopt the full bond-related tax increase now or stagger it across cycles. Some council members argued voters approved the bond package and that completing funding now could save future costs, while others expressed concern about the combined impact on residents, noting about $3 million of the gap is the proposed COLA for city employees. Several asked staff to provide an itemized list showing which programs and positions remain in or out of the proposed budget to improve public messaging.
Next steps: Staff will finalize and publish revaluation-based revenue-neutral calculations as the county's appeals process proceeds, fold Council direction into the manager's proposed budget on May 12, and schedule public hearings later in the budget process.
