News

City's 3-cent tax increase funds 'arms race' over employee pay

By Bill Moss, Published: June 7, 2024

The Hendersonville City Council adopted a $62.8 million budget on Thursday night that raises the property tax rate by 3 cents in part to fund “an arms race” of pay and benefits to recruit and retain employees.

“I will say that this year's budget processes has been one of the more challenging that I've had in my 32 years as city manager,” John Connet told council members as he presented details of the fiscal year 2024-25 spending plan. “We are in times that my manager generation and manager friends have not seen as it relates to inflation, as it relates to the need, and rightfully so, to raise salaries.

"To hire well-qualified professional city employees, particularly in the public safety departments, has continued to be a challenge. It's very much an arms race.”

The budget authorizes a 5 percent cost-of-living increase across the board and grants police and firefighters a 10 percent raise. Besides covering the significant personnel cost increase, the tax increase to 52 cents per $100 valuation from 49 cents allows the city to keep pace with what Connet called "unprecedented growth in the cost of doing business."

The public safety boost "will allow us to be competitive and to recruit in this very volatile market and difficult environment," the manager said. "It's really more about retention than it is recruitment. We want to retain the folks that we brought here, the folks that we've trained, the folks that we know, and that 10 percent cost-of-living for our public safety departments is our attempt to do that.”

Inflation has forced cost reductions to keep the budget balanced in a “challenging year,” Connet said. “We've done things such as hiring freezes. We've asked folks to take comp time when they normally would get overtime. So our staff has really stepped up. People don't always understand but they have taken it as troupers and we really appreciate the work that they've done.”

The council, which had formed spending goals in a daylong retreat and reviewed the numbers in a budget workshop, adopted the budget unanimously. During their March retreat, council members settled on the top five priorities: public safety, employee compensation and benefits, strong infrastructure, a strategic housing plan and growth management/community character.

In other highlights:

• The general fund and water-sewer department are by far the largest pieces of the budget, at $28.5 million and $28.2 million each respectively.
• The budget adds five new positions — a full-time downtown police officer and four water-sewer employees. “That officer can deal with any downtown issues and other officers will continue to patrol — unless it's a significant event — all other areas of the city,” Connet said.
• The Main Street budget of $799,231 appropriates $5,000 for shrub replacement and $15,000 for brick sidewalk replacement. The Historic Seventh Avenue District budget of $169,000 appropriates $5,000 each for train depot design and signage updates. The property tax rate in the two special taxing districts remains flat at 21 cents/$100 valuation.
• The budget drops the outside city limits water rate to 125 percent of the inside rate as the city continues its commitment to equalize rates by FY2030. Currently the outside rate is 130 percent of the inside rate.
• The 6.1 percent property tax increase will cost the owner of a $400,000 home $2,080 a year, or $120 more. The owner of a $600,000 home will pay $3,120, a $180 increase.

• The city stormwater goes up $1, to $7 a month per household; businesses are charged a higher rate based on square footage but get a 50 percent credit for having “functioning stormwater measures.” In order to fund planned infrastructure improvements, the household rate will climb $1 each over the next two budgets, reaching $9 in FY27. The waste/recycling collection fee remains flat.

• The council OK'd $143,500 in grants to 30 nonprofit agencies serving the arts, health and human services and economic development. “The legal team and our budget team will begin work on drafting contracts with our nonprofits to ensure that the money is spent for a public purpose in accordance with state law,” Connet said. “I just want to be real clear there's still work that will be done over the next several months to get those contracts in order so that we can write the checks.”
• During the public hearing on the budget, there were only two Zoom comments and none in person. One resident urged the council in an emailed comment to spend money in the FY25 budget to repave Church Street. “That is a DOT street and they are working on it and it will be repaved this summer, so we do not have to worry about that in our budget,” Mayor Barbara Volk said.