Asheville – At a budget retreat the Buncombe County Commissioners held on December 10, staff reported that the impacts of COVID-19 on the fiscal year ending June 30, 2020, were not that bad. While too little data is available to know for sure how FY2020-2021 will go, staff expressed no alarm and expected a continuation budget for pre-COVID budgets would not be out of line.
To get through the last fiscal year, the county appropriated $14,779,669 from its fund balance, leaving a total amended budget of $393,464,352. A breakdown of revenues and expenditures by broad categories showed only one tremendous jump, and that was reported as “Public Safety.” Budget Director Jennifer Barnette explained the line item accounted for CARES Act funds received by the county and spent on testing sites, contact tracing, staffing, and facilities modifications, for example.
Budget analyst Rusty Mau next reviewed a few economic indicators for the past year. He said the signals were mixed, and most indicators manifested after a two-month lag. Looking at employment, Buncombe County fared worse than the state and the Asheville Metropolitan Statistical Area. Its peak unemployment during the crisis was 17.7 percent in April, but it has returned to 6.2 percent. The state, by way of comparison, hit peak unemployment at 12.7 percent and is now at 6.1 percent.
Mau added that the denominator of the unemployment rate was the sum of those working, those looking for work, and those receiving 12 weeks of unemployment benefits. It did not include the 9,000 net who have opted out of the workforce since the outset of COVID-19. Examples included needing to stay home because childcare wasn’t an option and deciding to pursue higher education.
Mau said if the trend were to continue at today’s levels, with 12,000 people out of work, the county would lose $387 million per year in payroll. The losses for the year, of course, were bleaker with 31,000 fewer employed from February through April.
Mau then broke the statistics down into low-, middle-, and high-wage groups, with middle-income defined as earning at least $27,000 but not more than $60,000. In the state, the employment rate of high-wage earners on October 1 was actually 1.7 percent higher than on January 1. The change in the employment rate for the middle- and low-wage groups was -4.5 percent and -18.3 percent, respectively. In April, at the nadir (low point), the drop in high-wage employment was only 9.2 percent; for the low-wage group, it was 38.7 percent.
Job recovery in Buncombe County was doing worse in all categories. High-wage employment fell 21.3 percent in April but has since recovered to -4.7 percent below normal. Corresponding numbers for the middle- and low-wage groups, respectively, were 35.5 percent and -10.1 percent below normal, and 46.7 percent and -30.5 percent below normal.
Mau added sector analysis of current hiring would not be predictive of future trends because one can only speculate when “uncertainty is the new certainty.” Unknowns included how long increased interest in manufacturing masks, Plexiglas dividers, floor markers, etc. would be sustained; how much of continued business was due to one-time stockpiling; whether or when businesses would be able to resume operating at full-capacity and in-person sales will become preferable; or whether or when future shutdowns may occur.
Mau, Chair Brownie Newman, and County Manager Avril Pinder next discussed how restaurants fared fairly well since they were deemed essential and were able to pivot to takeout and delivery with outdoor dining. Hotels were hit much worse, and Asheville’s tourism industry was hit worse than other vacation destinations in the state. Tourism, however, is rebounding.
Looking at other factors, Mau shared that real total permitted values for construction, if anything, were performing stronger year over year. Realtor.com’s Market Hotness Index, which rates areas on the basis of the number of listing views and the days properties are on the market, has shown Buncombe County to remain “warm.”
Mau said property taxes represented the county’s greatest source of revenue, and currently, there were no alarms sounding. The county is running $500,000 behind preliminary estimates, but in difficult times, people aren’t motivated to pay early, either.
It was sales taxes that had been the most impacted by COVID. He recalled hearing newscasts projecting a 35 percent loss of GDP and trying to get commissioner direction when there was a three-month lag in sales tax receipts: Customers pay the taxes, businesses turn them in a month later, and then the state processes them before redistribution. While sales taxes took a hit in March, they hit 90 percent of projections in May; and this fiscal year, they’ve been performing better than expected.
This was a reappraisal year, and so the county is likely to change the tax rate for the next budget. Tax Assessor Keith Miller said the residential real estate market was, “one of the craziest times I’ve probably ever seen,” on a steep incline like it was before the Great Recession. While people unable to pay rent feel COVID-19 has taken its toll on housing, Miller said the overall local market is in dynamic equilibrium, with what’s lost to locals being picked up by people moving into the area.
Miller said he didn’t have enough data to make projections about the commercial real estate market. His hunch was that it was “pretty flat.” Trends he watches include vacancies, concessions on leases, bankruptcies, and sales taxes. Nothing in these categories has raised a flag, and business appears to be rebounding quickly. New restaurants are opening, and brick-and-mortar retailers are closing, but they were already struggling pre-COVID.