Asheville – Former Asheville Vice Mayor Chris Peterson was a regular attendee at the city council’s annual public hearings on the budget. He would caution leaders that the budget was not structurally sound, relying instead on unsustainable, unreliable, one-time infusions. He often faced backlash, getting “snarled at,” becoming angry, and risking being gaveled or thrown out for naming individuals who he felt were not fulfilling their responsibilities. This year, however, he chose to sit out. He explained, “My wife said, ‘Why bother? You’re not doing any good.’” Despite this, he noted that many people thanked him for having the courage to challenge authority, and he remains willing to discuss the budget numbers with anyone interested.
Peterson stated that he had warned leaders about their financial troubles even before Tropical Storm Helene hit. Now, he claimed, they were bankrupt.
He pointed out that employee compensation alone amounted to $148 million. This figure does not include operating costs or capital expenses, which bring the total budget to $256 million. He compared this to the city’s revenue sources, which primarily consist of $92 million in property taxes and $42 million in sales taxes. “Before they even started with the budget, they were $13 million in the hole, just with salaries,” he said. “Then, they gave themselves a 3% raise.”
Peterson believed the city was overly optimistic in projecting that sales tax revenues would come in only 5% under budget. He described downtown as a ghost town: “It looked like I was in a third-world country yesterday, and tents are starting to go up under the bridge again.” He mentioned that hoteliers he spoke with reported a 50% decline in business. The Grove Park Inn is struggling, “and Biltmore got hit really bad.”
The hurricane and subsequent water outage resulted in the loss of many restaurants and chefs in Asheville. As if that weren’t enough, he noted that the mayor was now considering raising a 3% food and beverage tax for downtown. This comes after the city imposed an 8.77-cent business improvement district tax. Peterson remarked that this tax, which was intended for “beautifying downtown and cleaning it up for the tourists,” is now being redirected toward hurricane recovery.
He expressed skepticism about the city’s estimate that property tax revenues would decline by only 1%. Peterson’s calculations suggested a drop about 20 times higher than the city’s figures because he used broader definitions of “destroyed” than FEMA did. Regardless, he is among those who believe Asheville is experiencing a housing bubble. There was significant construction activity before Helene; now, with rising interest rates and people moving away, he anticipates many foreclosures.
Market analysts are more optimistic, but Peterson argues that homes are attracting retirees rather than young working families. He stated that tourism brings visitors who may choose to stay, but currently, the only tourists he sees are elderly individuals likely on fixed incomes. Peterson believes the chamber has not effectively recruited young families with a mix of blue- and white-collar jobs.
Another revenue source is the Buncombe County Tourism Development Authority, which manages Buncombe County’s 6% tourism tax. The city and county had recently succeeded in lobbying the state to create the Legacy Investment from Tourism Fund, which allocates 12.5% of hotel tax revenues for capital improvements to government properties that benefit both locals and tourists. Following Helene, the TDA reported a 33% drop in revenues but hoped to cover this shortfall with their healthy fund balance. They will now allocate $2.7 million for soccer fields and parking gravel in Enka Commerce Park.
Intergovernmental revenues, such as federal grants, are expected to contribute $19 million to the budget; however, these funds merely mask shortages, buying time to address gaps in the expanded budget with reliable revenue streams. In light of Hurricane Helene, Peterson noted that the federal government has been inconsistent with reimbursement promises, and some grants may not be disbursed for 2-3 years.