Revenue-neutral tax rate could be lowest in years

Property values in Asheville and Buncombe County are up, which could result in a decrease in both muncipalities' tax rates. (Photo credit: WLOS staff)

Property values in Asheville and Buncombe County are up, which could result in a decrease in both muncipalities' tax rates.

Buncombe County revalued its nearly 125,000 properties this year, resulting in big increases across the county -- an average of 28 percent.

If county commissioners decide to take a revenue-neutral tax rate approach, the tax rate could decrease, but most people would pay about the same amount.

Kathy McConnin and her daughter are trying to sell their homes so they can move the family to Charlottesville, Virginia. McConnin's son-in-law is transferring there for his job.

"I know a lot of people got enormous tax increases right now, and they're not happy with it," said McConnin. "Me on the other hand, I'm about to sell my home and so is my daughter. So, we're kind of thrilled that the value went up."

Sellers are pleased with a property value increase, because it likely increases the amount they can get for their homes.

"Most of the time, if you've ever bought a home or sold a home, you want the value to stay low, so that you don't have a lot of property taxes year-over-year," said Barbara Whitehorn, chief financial officer for the City of Asheville. "When you're selling your house, a reval that makes it shoot way up is fantastic."

Local officials are required by law to publish the revenue-neutral tax rate in revaluation years. But they're not required to adopt the rate, and it doesn't mean everyone's taxes will go down. The process is "complex, confusing and unavoidable," according to one expert.

In Asheville, the revenue-neutral tax rate includes the debt service on the three bond referenda passed by voters in November 2016.

"Our current tax rate is 47.5 cents per $100 of valuation," said Whitehorn. "Revenue-neutral, assuming some appeals loss, is 39.5 cents. Then we add what we think it will cost us to implement the bonds and pay the debt service. Right now, our estimate for an all-in revenue-neutral [tax rate] is 43 cents per $100 valuation. So, it's 4.5 cents lower than the current rate."

The "appeals loss" is the amount that will need to be adjusted based on revaluation appeals by property owners. About 6,100 people appealed their valuations this year, "most of them" protesting that their revaluation is too high, according to Whitehorn. Owners appeal to the county, regardless of whether their property lies within the city.

Whether the tax rate is decreased is "entirely a policy question for council," said Whitehorn. On the county side, commissioners similarly decide the tax rate.

Whitehorn presented the revenue-neutral tax rate to Asheville City Council on Tuesday night.

Council will continue digging into the "nuts and bolts" of the budget in the next two council meetings on March 28 and April 11.

Buncombe County commissioners plan to start their budget discussions later this spring.

close video ad
Unmutetoggle ad audio on off