More than six months remain before the Buncombe County Board of Commissioners must finalize the county’s budget for the next fiscal year. But the board’s basic financial question was already apparent as members met for their annual budget retreat on Dec. 10: How should the county handle the rise in property values expected to result from its impending revaluation?
As explained to the board by Keith Miller, the county’s tax assessor, Buncombe currently levies taxes on about 83% of the true market value for county real estate because properties have appreciated since the last revaluation in 2017. On Friday, Jan. 1, Miller’s office will issue a new taxable value for each of the nearly 127,000 land parcels in the county — a value that will be higher for many property owners, particularly those of residential homes.
“The residential market’s just crazy,” Miller told the Council of Independent Business Owners in a Dec. 11 presentation on the same topic, adding that COVID-19 had not slowed local housing demand or tamped down prices. “We are amazed almost daily in some of the transactions that we see.”
While commercial properties also saw substantial appreciation from 2017 through 2019, Miller noted, the pandemic’s economic impact had cooled values in 2020. He acknowledged that homeowners would thus likely see proportionally larger gains in valuation than would commercial landlords.
What those higher values mean for Buncombe taxpayers depends on how commissioners adjust the property tax rate, which has remained at 52.9 cents per $100 in assessed value since a 1-cent decrease in 2019. After the 2017 revaluation, for example, the board cut the rate from 60.4 to 53.9 cents, meaning that tax bills did not increase by the same percentage as did property values.
However, commissioners did boost the average tax bill after that last cycle, in which the average property valuation increased by 28%. A house assessed at $300,000 before 2017 would have been revalued at $384,000 and faced 2017 taxes of $2,070, a 14.2% increase over 2016.
If commissioners were to maintain the rate at 52.9 cents for fiscal year 2021-22, noted Buncombe budget analyst Rusty Mau, the county would see about $237 million in property tax revenue, up nearly 12% from the $212 million budgeted for the current fiscal year. He did not estimate the tax rate that would lead to a revenue-neutral outcome for the revaluation.
Mau did note that, should the tax rate remain the same, total county revenue for 2021-22 would come close to matching projected spending. Commissioners would only need to appropriate $3.4 million from Buncombe’s fund balance to cover projected operating and capital expenses next year, compared with the $14.9 million budgeted from cash reserves this year.
The commissioners did not offer any guidance to staff members about the tax rate, although Chair Brownie Newman, a Democrat, said he hoped to compare average citizen tax bills between Buncombe and other counties before making a decision. Instead, much of the board’s discussion concerned which strategic priorities might receive additional spending in the coming year.
Early childhood education, affordable housing and climate protection all received support from at least five members of the seven-member body. (As of Dec. 7, the board consists of six Democrats and one Republican.)
The only spending proposal with a specific dollar figure attached came from Democratic Commissioner Jasmine Beach-Ferrara, who is seeking $851,000 in additional funding for early childhood work. She said demand for existing county grants showed that the area’s preschool network was “resource starved.”