Asheville – Budget and Performance Manager Lindsay Spangler informed the Asheville City Council that the proposed $256.1 million budget “minimizes cost increases as much as possible.” The budget is being balanced, in part, by $5 million in cuts, one-time revenue infusions, and a 3.26-cent property tax increase. The city will also be able to maintain its fund balance at its self-imposed minimum of 15% of general fund expenditures. Additionally, the city will proceed with its capital improvement plan and general obligation bond expenditures.
Earlier this year, staff informed the council that a continuation budget would require a 6.3-cent tax increase. They reduced the rate by eliminating contributions to the Housing Trust Fund, Strategic Partnership grants, and Neighborhood Matching grants; cutting the travel and training budget in half; skipping OPEB contributions; and adjusting the city’s healthcare plan.
By April, staff was considering a budget with $168.9 million in projected revenue, $178.9 million in expenses, and a fund balance of 10.4%. Staff and council insisted that city employees should receive a 3% COLA adjustment, but this was deemed unfeasible. Now, the city will provide that adjustment to all permanent, full-time staff earning at least $58,000, which represents the median pay for the city, along with a flat pay increase of $1,740 for other permanent full-timers. The city will also cover the costs of rising insurance and retirement programs.
Police and firefighters have different pay structures. The pay scale for police personnel is being restructured to reduce compression. Officers who do not receive a pay increase as a result will still receive a 3% COLA adjustment. Firefighters will also receive a 3% pay adjustment, and in line with Asheville Firefighters Association recommendations, $205,000 has been allocated for funding promotions to ensure enough supervisors for a fourth shift, even though additional firefighters won’t be hired until “future years.”
Public comments on the budget were largely dominated by individuals advocating for pay increases. One person specifically requested increases for police pay, while several others urged the council to raise firefighter pay and establish a fourth shift for them. Following multiple demands, council members discussed among themselves, saying, “I thought we did that.”
Revenues are down primarily due to Helene. Property tax collections were expected to be significantly lower than actuals but are now estimated to fall only 1% short of this year’s collections. In a typical year, property tax revenues would grow by 1.5%-2.0%. There remains considerable uncertainty regarding estimates of sales tax revenues. Staff budgeted collections to be 5% lower than last year due to Helene and actions being taken at the federal level. While uncertainties in federal grant revenues were acknowledged, they were not believed to be significant. Other notable impacts include shortfalls of about $1 million each in ABC and parking revenues.
To balance the budget, Spangler stated, “Departments were instructed not to request additional funding or positions.” Nevertheless, expenditures were outpacing revenues due to mandatory increases in insurance and retirement contributions. Consequently, staff effectively transferred excess fund balance from the Street Cut and Transit funds to the General Fund. The city was then awarded $5 million from the FEMA Community Disaster Loan program. Like most one-time infusions, this funding only provides another year for the city to address its structural budget problems.
The city plans to spend $24.35 million this year in accordance with its five-year capital improvement plan. This is in addition to the $80 million in general obligation bonds for which it will soon issue debt to be covered by a tax increase in future years. Capital investments are also being made in hurricane recovery, particularly along the French Broad and Swannanoa rivers and at the Municipal Golf Course. Other capital highlights include ongoing work toward the $240 million in recommended water system maintenance projects, partially funded by the additional $2.4 million generated from this year’s water rate increases.