Asheville budget primer: How the city will decide on post-Helene spending for 2025-26
By Laura Hackett
April 21, 2025 at 8:27 PM EDT
The city is in the midst of determining its budget for the upcoming fiscal year, FY 2026, which runs July 1, 2025 through June 30, 2026.
The budget process can be complex and confusing. If you’re struggling to understand how the tax dollars get divided, you’re not alone. We created this updated guide to help explain and clarify the process. Have a question we haven’t answered? Email us at lastnight@bpr.org.
Breaking down the basics…
How much money is in the annual budget?
The annual budget changes every year based on revenue from property tax, sales tax, intergovernmental funding, various fees, charges and permits and other miscellaneous sources.
Last year, the city adopted a total budget of around $250 million. The budget is expected to increase by around $900,000, according to an April 8 city presentation.
How is the money organized?
The city’s finances are organized into three main types of funds: (1) General Fund, (2) Enterprise Funds, and (3) Capital & Special Revenue Funds.
The city manager, Debra Campbell, is responsible for assembling a proposed budget. The city’s budget division of the Finance and Management Services office assists the city manager by planning, preparing and monitoring the city’s budget for efficiency and performance.
Once the budget draft is proposed, it goes before Asheville City Council for a final approval.
What is the timeline of the budget process?
The budget process usually begins in September when city staff establish the cost to deliver basic services and decide what new investments are necessary. This year, due to Hurricane Helene delays, it kicked off in February at the Asheville City Council retreat.
In late winter and early spring, City Council holds at least two budget work sessions to discuss the direction of the budget. This year, it held work sessions on March 11, March 25 and April 8.
On May 13, the city manager will propose a recommended budget to council.
Throughout spring, council provides feedback on the budget and residents get the opportunity to provide input at a City Council public hearing.
According to state law, the budget must be adopted no later than July 1.
What if the city fails to pass a budget by July 1?
If adoption of the budget is delayed until after July 1, the city is still allowed to use funds for paying salaries, debt service payments, and other routine expenses.
Where does the money come from? And where does it go?How does the city bring in revenue?
The majority of the city’s funds come from property tax and sales tax. This year, property tax is projected to bring in $84.8 million, followed by $42.5 million from sales tax, $20.3 million from service charges, fees and permits, $14.1 million in intergovernmental funding (that’s state, federal and other governmental funds) and $6.4 million from miscellaneous sources.
How are property taxes determined?
Property tax appraisal is handled by Buncombe County. State law mandates the county to conduct appraisals at least every eight years; however, county governments also have the option to reappraise on a more frequent basis.
Buncombe County typically conducts a property appraisal every four years. The last one it conducted was in 2021 – and it’s currently finalizing another appraisal that was originally slated for last year but saw Helene-related delays. On Jan. 1, 2026, property owners will receive a new assessed value.
The city taxes property owners at a rate of 40.93 cents per $100 of assessed valuation and the city school tax rate is 10.62 cents per $100 of assessed valuation.
How do fees and rate increases factor into the annual budget?
The city also generates revenue from fees such as water charges or parking fees.
The city typically moves to get fee and rate changes approved separately and ahead of the budget process, according to budget manager Taylor Floyd. This budget season, Asheville City Council voted to approve an increase in water fees for residential and commercial users.
Residential customers saw a 7.5% rate increase, while commercial users may pay between 14.1% and 32.2% more, depending on water use.
What happens to the money that the city does not spend?
At the end of a fiscal year, any unspent money goes into an unassigned fund balance, which is basically the city’s “savings” account.
The City of Asheville Financial Management Policy recommends that the city maintain a fund balance equal to 15% of expenditures in the General Fund. If the city needs to fund extra expenditures, it can choose to dip into its fund balance, as long as it maintains the required balance.
As of June 2024, the unassigned fund balance totaled $28.6 million, or 16.8% of the city’s General Fund Balance, according to city finance director Tony McDowell.
Can the city invest any of its extra funds?
Yes. The city currently has an investment portfolio with Wells Fargo, NC Capital Management Trust and NC Class Trust that totals around $135 million, according to city spokesperson Kim Miller.
Does the city get any money from the tourism tax?
Hotels and short-term rentals in Buncombe County are charged a 6% occupancy tax. These funds do not go to the City of Asheville; they are controlled by the Buncombe County Tourism Authority.
The Buncombe County TDA is required to spend two-thirds of its revenue on destination promotion and one-third toward tourism-related expenditures.
What are the city’s biggest expenses?
By far, the city’s biggest expense is personnel. The city employs 1,259 full-time positions for a total of $144.1 million, according to finance director Tony McDowell.
Operating costs are the second-largest expense, followed by capital and debt and interfund transfers.
Is the city allowed to run a deficit budget? What happens if it doesn’t have enough money?
The city cannot run a deficit with its annual budget, according to state law. If the city needs extra money, it can dip into its unassigned fund balance.
How much debt can the city legally take on?
The city can take on debt in the form of bonds and other financing of up to 8% of its appraised property value, according to state law. As of June 30, 2024, the city had an outstanding debt of $287 million, according to city spokesperson Kim Miller. State law allows the city to take on up to $1.6 billion in total debt.
What to expect this year What are the public input opportunities?
Each budget season, the city kicks off input with a public comment session at the Asheville City Council meeting. Residents can also participate in the budget process by taking a survey.
There is no public comment available during budget work sessions, but there is at least one required public hearing before Asheville City Council votes on the proposed budget on June 10, 2025.
The public hearing is scheduled for May 27, 2025.
What are this year’s funding priorities?
The city is facing a $15 million revenue shortfall, according to Asheville Mayor Esther Manheimer.
This budget challenge comes after the city was already struggling to balance its books during last year’s budget season. Nonetheless, the city is weighing options for how to give its employees – especially its firefighters, police officers and other lower-wage workers – a pay raise.
At the April 8 budget work session, council members debated various configurations for boosting pay, which ranged from a 1.5% increase across the board to a 3% increase.
The city would likely need to pass a property tax rate increase to afford any level of pay raise. One scenario, shared at a recent work session, would be a four-cent tax rate increase.
Helene recovery, especially with regards to infrastructure repair, is also expected to be a large budget priority for the city, though local leaders hope for state and federal funding to support those efforts.
Rebuilding may also be supported by part of the $80 million bond package that residents voted through last November.
The budget process can be complex and confusing. If you’re struggling to understand how the tax dollars get divided, you’re not alone. We created this updated guide to help explain and clarify the process. Have a question we haven’t answered? Email us at lastnight@bpr.org.
Breaking down the basics…
How much money is in the annual budget?
The annual budget changes every year based on revenue from property tax, sales tax, intergovernmental funding, various fees, charges and permits and other miscellaneous sources.
Last year, the city adopted a total budget of around $250 million. The budget is expected to increase by around $900,000, according to an April 8 city presentation.
How is the money organized?
The city’s finances are organized into three main types of funds: (1) General Fund, (2) Enterprise Funds, and (3) Capital & Special Revenue Funds.
- The General Fund includes much of the city’s day-to-day operations, such as police, fire, refuse collection, street maintenance and parks and recreation. General Fund operations are primarily funded through property tax dollars but are also supported through sales tax revenue, charges for service, license and permit fees and investment earnings.
- Enterprise Funds are used for city operations that are able to turn a profit, including: Transit Services Fund, Parking Services Fund, Water Resources Fund, Harrah’s Cherokee Center Asheville (HCCA) Fund, Stormwater Fund and Street Cut Utility Fund.
- Capital & Special Revenue Funds are used to account for capital replacements and improvement and other services that use specific revenue sources, including: General Capital Projects Fund, Community Development Fund, Water Major Capital Improvement Fund, HOME Fund, Harrah’s Cherokee Center Asheville (HCCA) Capital Fund, Parking Services Capital Fund and Transit Services Capital Fund.
The city manager, Debra Campbell, is responsible for assembling a proposed budget. The city’s budget division of the Finance and Management Services office assists the city manager by planning, preparing and monitoring the city’s budget for efficiency and performance.
Once the budget draft is proposed, it goes before Asheville City Council for a final approval.
What is the timeline of the budget process?
The budget process usually begins in September when city staff establish the cost to deliver basic services and decide what new investments are necessary. This year, due to Hurricane Helene delays, it kicked off in February at the Asheville City Council retreat.
In late winter and early spring, City Council holds at least two budget work sessions to discuss the direction of the budget. This year, it held work sessions on March 11, March 25 and April 8.
On May 13, the city manager will propose a recommended budget to council.
Throughout spring, council provides feedback on the budget and residents get the opportunity to provide input at a City Council public hearing.
According to state law, the budget must be adopted no later than July 1.
What if the city fails to pass a budget by July 1?
If adoption of the budget is delayed until after July 1, the city is still allowed to use funds for paying salaries, debt service payments, and other routine expenses.
Where does the money come from? And where does it go?How does the city bring in revenue?
The majority of the city’s funds come from property tax and sales tax. This year, property tax is projected to bring in $84.8 million, followed by $42.5 million from sales tax, $20.3 million from service charges, fees and permits, $14.1 million in intergovernmental funding (that’s state, federal and other governmental funds) and $6.4 million from miscellaneous sources.
How are property taxes determined?
Property tax appraisal is handled by Buncombe County. State law mandates the county to conduct appraisals at least every eight years; however, county governments also have the option to reappraise on a more frequent basis.
Buncombe County typically conducts a property appraisal every four years. The last one it conducted was in 2021 – and it’s currently finalizing another appraisal that was originally slated for last year but saw Helene-related delays. On Jan. 1, 2026, property owners will receive a new assessed value.
The city taxes property owners at a rate of 40.93 cents per $100 of assessed valuation and the city school tax rate is 10.62 cents per $100 of assessed valuation.
How do fees and rate increases factor into the annual budget?
The city also generates revenue from fees such as water charges or parking fees.
The city typically moves to get fee and rate changes approved separately and ahead of the budget process, according to budget manager Taylor Floyd. This budget season, Asheville City Council voted to approve an increase in water fees for residential and commercial users.
Residential customers saw a 7.5% rate increase, while commercial users may pay between 14.1% and 32.2% more, depending on water use.
What happens to the money that the city does not spend?
At the end of a fiscal year, any unspent money goes into an unassigned fund balance, which is basically the city’s “savings” account.
The City of Asheville Financial Management Policy recommends that the city maintain a fund balance equal to 15% of expenditures in the General Fund. If the city needs to fund extra expenditures, it can choose to dip into its fund balance, as long as it maintains the required balance.
As of June 2024, the unassigned fund balance totaled $28.6 million, or 16.8% of the city’s General Fund Balance, according to city finance director Tony McDowell.
Can the city invest any of its extra funds?
Yes. The city currently has an investment portfolio with Wells Fargo, NC Capital Management Trust and NC Class Trust that totals around $135 million, according to city spokesperson Kim Miller.
Does the city get any money from the tourism tax?
Hotels and short-term rentals in Buncombe County are charged a 6% occupancy tax. These funds do not go to the City of Asheville; they are controlled by the Buncombe County Tourism Authority.
The Buncombe County TDA is required to spend two-thirds of its revenue on destination promotion and one-third toward tourism-related expenditures.
What are the city’s biggest expenses?
By far, the city’s biggest expense is personnel. The city employs 1,259 full-time positions for a total of $144.1 million, according to finance director Tony McDowell.
Operating costs are the second-largest expense, followed by capital and debt and interfund transfers.
Is the city allowed to run a deficit budget? What happens if it doesn’t have enough money?
The city cannot run a deficit with its annual budget, according to state law. If the city needs extra money, it can dip into its unassigned fund balance.
How much debt can the city legally take on?
The city can take on debt in the form of bonds and other financing of up to 8% of its appraised property value, according to state law. As of June 30, 2024, the city had an outstanding debt of $287 million, according to city spokesperson Kim Miller. State law allows the city to take on up to $1.6 billion in total debt.
What to expect this year What are the public input opportunities?
Each budget season, the city kicks off input with a public comment session at the Asheville City Council meeting. Residents can also participate in the budget process by taking a survey.
There is no public comment available during budget work sessions, but there is at least one required public hearing before Asheville City Council votes on the proposed budget on June 10, 2025.
The public hearing is scheduled for May 27, 2025.
What are this year’s funding priorities?
The city is facing a $15 million revenue shortfall, according to Asheville Mayor Esther Manheimer.
This budget challenge comes after the city was already struggling to balance its books during last year’s budget season. Nonetheless, the city is weighing options for how to give its employees – especially its firefighters, police officers and other lower-wage workers – a pay raise.
At the April 8 budget work session, council members debated various configurations for boosting pay, which ranged from a 1.5% increase across the board to a 3% increase.
The city would likely need to pass a property tax rate increase to afford any level of pay raise. One scenario, shared at a recent work session, would be a four-cent tax rate increase.
Helene recovery, especially with regards to infrastructure repair, is also expected to be a large budget priority for the city, though local leaders hope for state and federal funding to support those efforts.
Rebuilding may also be supported by part of the $80 million bond package that residents voted through last November.