It’s been a solemn budget season for the Buncombe County Board of Commissioners. At the end of a nearly four-hour budget work session April 22, reality began to set in that cuts to favored programs — and tax hikes — may be inevitable.
Commissioners took another look at the budget-in-progress, where staff presented predicted revenues and possible expenditures for the 2025-26 fiscal year based on last year’s spending and market conditions. That presentation showed the county has a $22.5 million gap, despite a relatively conservative approach to spending after Tropical Storm Helene.
“I think we said last year that last year’s budget was one of the toughest that we had been through. That’s not even close to where we are this year,” said board Chair Amanda Edwards at the conclusion of the worksession.
The county typically uses the previous year’s budget — along with projected unrestricted revenue — to draft an initial spending plan, said County Manager Avril Pinder.
Seven years ago, the county began posting the rate of unrestricted revenue increase or decrease compared with the previous year — much like the way how gross domestic product is expressed. For the first time since tracking began, unrestricted revenue will be less than last year, Pinder said.
General fund revenues are projected to fall $13.9 million compared with this year, to $415.5 million, according to a presentation from Buncombe Budget Director John Hudson. Now commissioners have to find the right combination of raising taxes and cutting programs to balance the budget.
Thus, the budget draft does not include any of staff’s requested 55 new positions or eight reclassified positions. The budget also included just 13 of 69 vehicles requested by various departments, according to a staff presentation.
The budget does include a 3.5% cost-of-living raise for county employees, Pinder said. Commissioners were adamant that this modest pay bump remain in the budget no matter what.
For the county’s largest expense, education, which makes up 28% of the county budget, Hudson budgeted $121.5 million for the county’s two school districts and Asheville-Buncombe Technical College. It’s $500,000 less than this year, which included a mid-fiscal-year, post-Helene clawback of $4.8 million collectively from Asheville City Schools and Buncombe County Schools.
The two school districts and A-B Tech are slated to present their proposed budgets to commissioners at a special work session Friday, May 2.
Credit hit
One consideration for commissioners as they craft a budget is the county’s previously rock solid but increasingly insecure AAA credit rating. The rating, determined by credit rating agencies to signal the reliability of a county’s financial standing, weighs heavily on its ability to borrow large sums of money for bond projects.
Commissioner Martin Moore asked Finance Director Melissa Moore (no relation) during the work session how bad things had gotten.
“I know how many projects we have that are funded with our very, very positive credit rating. How much panic are you feeling right now about what our decisions may mean for our credit rating?”
Melissa Moore said the county will have to use part of its fund balance to cover expenses for the first time in recent memory. “I would be very shocked if we didn’t get downgraded,” she said.
Putting even further strain on the budget is the length of time the county might have to wait to get storm-related expense reimbursement from the Federal Emergency Management Agency (FEMA). Thus far, the county has spent $19.8 million on Helene recovery that is expected to be reimbursed, but Finance Director Moore said the county likely won’t get reimbursed for three to six years, based on conversations with municipalities that have gone through recent natural disasters.
That means the county has to set aside at least some of its fund balance to cover those expenses until reimbursement checks arrive, Hudson added.
The county has consistently maintained a fund balance of at least 15% of its expenditures, but with unreimbursed Helene-related spending, reserves could drop as low as 8.4% to 10.1%, just above the mandatory 8% threshold, Finance Director Moore reported, leaving little room to deal with unexpected costs.
Cuts or taxes
Hudson outlined $10.3 million in spending that could be cut or paused for a year, including early childhood education, affordable housing services, the reparations commission, conservation easements and various community grants for education, arts, healthcare and seniors. Commissioners agreed to cut around half of that.
“We can cut all of the discretionary and we still wouldn’t have the number we want,” said Commissioner Moore. “So how do we get to a balanced budget?”
Hudson outlined several other opportunities to slightly reduce expenditures, but ultimately the county appears to be headed for a property tax increase.
For each cent increase of the property tax rate — currently at 51.76 cents per $100 of taxable property value — the county can generate $5.23 million in revenue, Hudson estimated. He outlined balancing strategies that ranged from 1.44 cent increase to a 4.31 cent increase per $100 of property value, depending on how much the commissioners agreed to cut from the budget.
Out of 11 other comparable North Carolina counties, Buncombe’s tax rate is fourth-lowest, higher only than two large counties that recently adjusted property tax rates after reappraisals and New Hanover County, which has the largest amount of reserves in the state because of a windfall from a recent hospital sale, Hudson said.
“We’re back in a spot where we need to make some really hard choices,” said Commissioner Moore.
Pinder is scheduled to present a completed draft budget to commissioners at the board’s May 6 meeting.
This story was supported by the Fund for Investigative Reporting and Editing.
