Asheville began planning for FY2027 with a projected $30 million gap between expected revenues and expenses. The City attributed that early gap to slower revenue growth, lingering economic impacts from Helene, inflation and increasing costs such as employee healthcare. The City’s explanation of the FY27 budget challenge also noted that some one-time revenues used previously could not be repeated.

The gap was ultimately closed through updated revenue estimates, spending reductions and a property-tax increase. The adopted FY2027 City budget totals about $275.8 million.

Buncombe County faced its own balancing challenge. During the FY2027 process, the County reduced proposed spending by more than $25 million while considering the appropriate balance among service levels, fund balance and taxes. The County ultimately adopted a $484.4 million FY2027 budget.

These are not necessarily signs that either government is “out of money.” They reflect a more basic structural issue: the cost of maintaining and expanding services can grow faster than the revenues available to pay for them.

Because property tax is one of the most significant revenue sources local governments can directly control.

For FY2027, Asheville ultimately set its rate at 50.78 cents per $100 of assessed value, while Buncombe County’s rate is 61.54 cents. Asheville residents generally pay both City and County property taxes, and some also pay the Asheville City Schools tax. Current rates are available through the City’s Budget and Performance page.

Property taxes provide relatively stable revenue, but relying heavily on them creates its own challenges. Higher taxes affect homeowners, renters indirectly through housing costs, and businesses that own or lease property.

That is why conversations about local budgets often become conversations about revenue diversification.

The County completed a countywide property reappraisal and adopted its FY2027 budget in June using the new 2026 property values and a tax rate of 43.2 cents per $100 of assessed value.

After the budget was adopted, however, the North Carolina General Assembly passed legislation delaying the use of the new property values. A subsequent law allowed Buncombe County to use the 2026 values only if commissioners adopted a revenue-neutral tax rate of 40 cents. County officials estimated that doing so would reduce General Fund revenue by about $24.8 million, affecting funding available for education, public safety, human services and other programs. Buncombe County explains the impact of the legislation here.

Commissioners instead chose to use the older property values and changed the tax rate to 61.54 cents to preserve the already-adopted budget. The County’s July 14 action and updated tax rates are available here.

Importantly, the higher rate does not mean the County suddenly increased its overall property-tax collections by that amount. The rate had to be recalculated because it was being applied to the older, generally lower property values.

The change also affected Asheville and other municipalities because they rely on the County’s property assessments. Asheville had to revise its own tax rate after its adopted budget was rendered out of balance by the change in state law.

The episode illustrates a larger point: City and County governments make decisions about spending and tax rates, but the North Carolina General Assembly establishes much of the legal framework within which those decisions are made—and can change that framework.

But local governments do not have unlimited authority to create or increase sales taxes.

Buncombe County already levies the quarter-cent Article 46 local-option sales tax, approved by voters in 2011. Those proceeds are designated for A-B Tech capital needs rather than being available for general government operations. Other local sales-tax revenues are distributed according to formulas established under state law.

That illustrates a larger issue: Asheville and Buncombe County operate within revenue authority established by the North Carolina General Assembly. Creating a new local tax or changing how certain revenues may be used can require state authorization and, in some cases, voter approval.

But that money is not general City or County revenue.

Under North Carolina law governing Buncombe County’s occupancy tax, the proceeds are remitted to the Buncombe County Tourism Development Authority. Two-thirds must be used for tourism promotion and related administrative expenses. The remaining third is divided between the Tourism Product Development Fund and the Legacy Investment From Tourism Fund for qualifying tourism-related projects.

That means the City or County cannot simply redirect occupancy-tax collections to fill a General Fund budget gap, even though visitors generate the tax.

Changing those rules would require action by the North Carolina General Assembly.

This distinction is particularly important in Asheville because it can appear that the community generates substantial tourism revenue while local governments simultaneously struggle to pay for infrastructure and services associated with a major visitor economy. Both things can be true because the law determines where different revenue streams can be spent.

Under North Carolina law, admission charges to entertainment activities are generally subject to state and local sales tax. In Buncombe County, the combined general sales-tax rate is currently 7%—4.75% state and 2.25% local.

That means spending on concerts, performances, museums, attractions and other taxable admissions can generate local sales-tax revenue in addition to supporting the organizations and businesses presenting those activities.

But Asheville and Buncombe County cannot simply create their own additional admissions tax or decide independently how the existing tax is structured. Like other local taxing authority in North Carolina, that power is largely determined by the General Assembly.

This raises a broader revenue question for a community with a significant arts, entertainment and visitor economy: should local governments have greater ability to capture revenue generated by visitors and discretionary spending rather than relying so heavily on property taxes paid by residents and businesses?

For the arts sector, however, there is an important tradeoff. An additional admissions tax could generate revenue from visitors and consumers, but it would also increase the cost of tickets and could place an additional burden on arts organizations, venues and other entertainment businesses unless carefully structured.

The idea dates back at least to the mid-2000s, when Asheville was looking for ways to pay for major repairs and improvements to the Asheville Civic Center, now Harrah’s Cherokee Center Asheville. City leaders discussed a prepared food and beverage tax as one potential dedicated revenue source rather than relying entirely on property taxes.

The proposal did not move forward. Asheville does not have the authority to create a meals tax on its own. It would require authorization from the North Carolina General Assembly, and the proposal did not receive the legislative support necessary to advance.

The idea has resurfaced periodically, including more recently as a potential dedicated funding source for arts and cultural services.

Other North Carolina communities have been granted this authority. Wake County, for example, levies a 1% prepared food and beverage tax that helps support arts, cultural, sports and convention facilities. Mecklenburg, Cumberland and Dare counties and the Town of Hillsborough also have locally authorized meals taxes.

The concept is particularly relevant in Asheville because a meals tax would collect revenue from both residents and visitors, potentially providing an alternative to relying as heavily on property taxes.

But there are tradeoffs. Prepared food is already subject to state and local sales taxes, so a meals tax would increase the tax paid by restaurant customers. Restaurants and other food-and-beverage businesses therefore have a significant stake in whether such a tax is adopted, how large it is and how the revenue is used.

The history also illustrates a larger issue facing Asheville and Buncombe County: even when local leaders identify a potential new revenue source, they often cannot implement it without approval from the General Assembly.

Local governments do have other tools, but each has limitations.

Fees and charges can help pay for services such as parking, development review, solid waste, recreation or utilities. But increasing fees shifts costs directly to users and may create affordability concerns.

General obligation bonds allow governments to borrow for major capital investments such as parks, transportation, public safety facilities or infrastructure. Voters approved Asheville’s 2024 bond package, for example. But bonds create debt that must ultimately be repaid and generally cannot solve recurring operating deficits.

Special tax districts, such as Asheville’s Downtown Improvement District, allow property owners within a defined area to fund additional services through an additional property-tax assessment. These can address geographically concentrated needs but are not a general solution to City or County finances.

State and federal grants can bring substantial outside investment into the community, particularly for infrastructure and disaster recovery. But grants are generally restricted to specific purposes and are often temporary.

And new or expanded local taxes may be possible in some circumstances, but local governments frequently need authorization from the General Assembly—and sometimes voters—to levy them.

Asheville already uses this approach for public art. Under the City’s Percent for Public Art Policy, 1% of qualifying capital-improvement funding is dedicated to public art. This does not provide general operating support for arts organizations, but it demonstrates how a dedicated funding mechanism can create an ongoing source for a particular public purpose.

Other communities have taken the concept further, dedicating portions of sales taxes, lodging taxes, food and beverage taxes or other locally generated revenues to arts and cultural investment.

These mechanisms can make cultural funding more predictable and reduce its dependence on annual General Fund appropriations. But in North Carolina, creating many of these revenue sources—or changing how existing taxes are allocated—would require authorization from the General Assembly.

It is how to pay sustainably for growing community needs when the costs of providing services are increasing, many revenue sources are restricted, and local governments have limited authority to create new ones.

That raises larger questions about how much the community should rely on property taxes, whether revenue should be diversified, how visitors and other users of local infrastructure contribute to its costs, what services residents expect local government to provide, and which investments should be funded locally versus through state, federal or regional partnerships.

For the arts and cultural sector, these decisions matter because public funding for arts and culture exists within the same fiscal environment as public safety, transportation, housing, parks, libraries, infrastructure and other community priorities.