What is the relationship between the Buncombe County property re-evaluation and the City of Asheville tax rate?
In 2026, Buncombe County is reappraising property values for the first time in five years. Because of this revaluation, North Carolina law requires the City of Asheville to calculate and announce a “revenue neutral tax rate.”
This neutral rate shows the tax rate needed to bring in the same total amount of property tax money next year if the revaluation had not occurred. The State provides a specific formula for this calculation, which considers the average annual growth of the tax base since the last revaluation in 2021.
How does the new City of Asheville revenue neutral tax rate impact tax payers? How does the revenue neutral tax rate impact our projected budget shortfall?
City Council will set the property tax rate in June when they adopt the fiscal year 2027 budget. They are not required to set the tax rate at revenue neutral and the rate may ultimately have to be set above revenue neutral in order to balance the budget which could potentially raise City of Asheville property taxes.
Will City of Asheville residents see an increase in their property tax bills?
City Council will adopt the property tax rate in June with the budget. This rate, along with the new property values from revaluation, will determine the amount of property taxes owed by residents. The impact to residents will vary due to the fact that property values increased at different amounts across the City.
In general, what role does property taxes play in the overall City of Asheville budget for any given year?
For the City’s General Fund, which is the place where most major government services such as police, fire, garbage collection, street maintenance, and parks and recreation are housed, property taxes make up over 50% of the total revenue in that fund.
Are you raising property taxes to compensate for this missing $30 million dollars?
The City is not missing $30 million nor is the City running a $30 million deficit. The City has a balanced budget for the current fiscal year and expects to end the year in June with revenues and expenses very close to budget estimates.
When City staff began budget projections for next fiscal year this past December we estimated that revenue growth was not going to keep up with expense growth. The projected shortfall was around $30 million.
Where are we now?
Over the past few months, staff has identified a number of strategies to address this gap, which include a mix of revenue increases and budget cuts. For example, the City will eliminate some vacant positions, reduce some non-critical services, and wherever possible find less expensive ways to continue operations. The projected shortfall has been reduced to approximately $10.5 million. Staff will continue to work with Council to close the budget gap for next year and have a balanced budget for Council to vote on in June.
Why did we project a $30 million deficit in December?
Slowed revenue growth, partly due to statewide trends and partly due to the lingering impacts of Helene, had a negative impact on the City’s incoming funds. Meanwhile, inflation on the expense side of the budget continued to drive up costs, particularly for health care for city employees. Additionally, City staff also included the debt from the 2024 voter-approved GO Bonds in the initial expense estimates for next year.The early December projection showed that expenses next year could be as high as $30 million more than revenue.
Having a gap at the start of the budget process is not unusual, but this year’s projected gap was larger than normal. For context, early estimates for last year’s gap were about $15 million. Though we knew this projection would be decreased significantly before a draft budget was brought to council, identifying a potential gap of this size early allowed City staff and Council to begin considerations and take actions mentioned to bridge the gap.
Is the need to raise taxes related to Helene recovery efforts?
While the budget has been impacted by Helene recovery, the need to raise property taxes is not.
What are the next steps for the adoption of the City’s Fiscal Year 2027 budget?
The proposed budget will be presented to Council on May 12 and a public comment opportunity will be May 26. Council will vote to adopt the FY27 budget on June 9. All of these meetings will take place at 5 p.m. in Council Chambers of City Hall, 70 Court Plaza. You can find the council agendas here.