ASHEVILLE – City Council considered its proposed $249.6 million budget May 14, which includes a 4.1% pay increase for all city employees, but will mean dipping into its fund balance as it struggles to overcome stagnating sales tax revenue and escalating cost of service.

While no property tax increase is proposed in the fiscal year 2024-25 budget, Mayor Esther Manheimer forecast that next year would bring a “painful conversation.”

Drawing from the fund balance for recurring expenses is not a best practice, according to the city’s operating budget policy. Asheville isn’t alone in its struggle, Manheimer said, noting flat sales tax revenues are “plaguing” local governments across the country.

“What all that means is that we’re going to have to raise property taxes next year,” she said.

Finance Director Tony McDowell said the year’s budget focused on compensation and benefits, with limited revenue growth available to fund new initiatives.

It does recommend a general obligation bond referendum in November, a multimillion dollar borrowing program that can be used to bankroll significant city projects, like needed facilities, streets and sidewalks, public transportation and affordable housing projects. A GO bond would necessitate a property tax increase in 2025.

This was among the factors Manheimer pointed to, along with needed revenues to “shore up” the budget and to provide further employee raises.

The current city property tax rate is 40.3 cents per $100 of assessed value. Manheimer estimated, roughly, a possible 7-cent increase next year to meet the above needs. A 1-cent increase creates about $2 million in additional revenue for the city.

Council member Kim Roney aired concerns around what she called the potential for four property tax increases in two years: the Buncombe County tax revaluation; the GO bond; the deferring of property tax increases that are not happening in this current year; and a possible downtown Business Improvement District, which passed the first of two votes that same night. It would levy a 9-cent tax on property owners within the central business district if established.

The city is proposing two $75 million GO bond packages, the first in 2024 and a second in 2028. It has tentatively broken it down into four categories:

Intertwined with the night’s bond conversation were discussions around the Malvern Hills Park pool, which the city announced in February would not open this summer, concluding the 90-year-old pool could no longer be repaired.

It threw the surrounding West Asheville community into disarray, and neighbors rallied around the pool, calling for it to be funded as part of the parks bond referendum, with funds specifically earmarked for a rebuild.

Sally Grau at the May 14 meeting painted a picture of the Malvern Hills pool in the summer — neighborhood children flocking the pool daily, what Grau called the “heart” of her neighborhood and an “affordable, accessible summer recreation.”

“This is the joy that we’re fighting to preserve for another 90 years,” she said.

During the bond conversation, several council members voiced interest in rebuilding the pool, with consideration given to either a higher bond amount — $78 million — or moving money from the other bond categories into parks.

“Yes to Malvern Hills, and yes to a bigger conversation about how we bundle this $75 million,” council member Sage Turner said.

Manheimer said she was also supportive, but would rather see some money moved from housing into parks and public safety — noting she’s hearing from public safety that the proposed $15 million is not enough to meet the facility needs.

“We struggled to spend all of our housing money this last time,” she said, saying it was “challenging” for cities to leverage funds for affordable housing.

Council member Antanette Mosley said she preferred to potentially reduce the housing package, pointing to the annual $500,000 allocation already in the budget that rolls into the Housing Trust Fund.

The proposed 4.1% pay increase will bring its workers up to the WNC Just Economics “pledged” living wage rate of $19 an hour, or $39,520.

This proposal will not reach the city’s actual living wage of $22.10 an hour, calculated by Just Economics based on Fair Market Rents, of which Asheville has the highest in the state.

The proposed raise was made possible in the current budget by utilizing fund balance.

Though council has expressed a desire to do more, but a lack of funds to do it, Roney said she was “deeply concerned” not to reach the living wage.

“Every single time we don’t get to living wages, it will be exponentially harder to catch up,” she said. “Which means it will be harder to recruit and retain quality staff, to provide that local reliable services our community demands and for staff to live in the community they service.”

Roney has advocated for further exploring flat dollar amount increases for all employees, rather than an across-the-board percentage increase.

In a May 3 statement from the city’s Human Resources department, staff said, “increases in flat dollar amounts can have a negative impact on morale by disproportionately benefiting lower-paid employees, leading to salary compression and failing to motivate higher-paid employees. Additionally, this approach can hinder recruitment and retention efforts as it does not enhance compensation sufficiently to effectively attract and retain top talent.”

Roney said she would have a “hard time supporting the budget” as she argued that not all employees would truly receive the pledged living wage, specifically Asheville firefighters, who typically work 24-hour shifts during their 56-hour work week. Hourly, the lowest paid firefighter makes $15.88.

The city argues its pay model for firefighters aligns with others in the state with a 2,912-hour annual work schedule, factoring in regular pay and overtime.

Asheville City Council will hold its budget public hearing at its May 28. The meeting starts at 5 p.m. in City Hall’s council chambers. Budget adoption is slated for June 11.

Read the proposed budget:

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Sarah Honosky is the city government reporter for the Asheville Citizen Times, part of the USA TODAY Network. News Tips? Email or message on Twitter at @slhonosky. Please support local, daily journalism with a subscription to the Citizen Times.

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