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Asheville council reviews Q3 finances and flags elimination of 1% 401(k) employer match
Summary
At a May 21 agenda briefing, council members pressed staff about the proposed FY27 budget's elimination of the 1% employer 401(k) match (estimated at roughly $530,000 annually). City staff also presented a Q3 financial report showing stronger-than-expected fees, near-complete property tax collections and a projected smaller draw on fund balance than last year.
Mayor Esther Vanheimer and council members discussed the proposed FY27 budget and the city's third-quarter financial report during the May 21 agenda briefing.
Councilwoman Nerini raised staff questions circulating about wage, compensation and benefits and asked specifically whether the 1% employer 401(k) match in the proposed budget was a pause or an elimination. Nerini said staff and the public would want clarity on whether the change is permanent.
Lindsay (finance staff) replied that human resources and finance have calculated the 1% 401(k) match at approximately $530,000 per year and confirmed the proposal in the current draft budget is to eliminate the match rather than pause it. City Manager D. K. Wesley and finance staff said council could revisit the benefit in a future budget cycle.
Lindsay presented the Q3 fiscal report showing property-tax collections at about 98% for the year-to-date, sales tax collections currently higher than the post-Helene baseline but still trending under budget, and several fee and charge categories performing above expectations. On the expense side, staff noted continuing upward pressure from health-care costs and that a hiring freeze has been implemented; prior Q2 forecasts expected public-safety overtime to end the year over budget, though the current projection narrows that overage.
On fund-balance projections, staff said the city now expects to use roughly $800,000 of fund balance this fiscal year (compared with $2.2 million used the prior year), which would move reserves from about 14% to roughly 14.6% of operating budget, shy of the 15% target.
Council members pressed staff on overtime budgeting and policy: whether overtime is simply absorbed by the general fund, if vacancy savings are masking recurring overtime costs, and whether trimming vacancies while relying on overtime is sustainable. Finance staff described their annual process of budgeting overtime based on year-over-year trends, working with departments to adjust as necessary, and said hiring in public safety is being considered as part of that balance.
On temporary/seasonal employees, HR Director Emily Proviance said the city is reviewing seasonal classifications; true seasonal positions are typically capped and not eligible for overtime. Staff are evaluating reclassifying some long-running seasonal positions to part-time to reflect actual work patterns.
The briefing closed on budget questions with staff committing to follow up with HR and finance to provide additional detail on participation in the 401(k) match program and to return with more data about overtime drivers.
The next formal council meeting where the budget will be considered is scheduled for May 26 at 5 p.m. in council chambers.
