News

City expected to hold line on taxes — for now

By Lightning Reports, Published: June 17, 2026

City Manager John Connet announced Wednesday that he is not recommending a property tax increase in the city's 2026-27 budget but signaled that a projected reduction of in sales tax revenue and the outcome of a pay and classification study were likely to trigger a rate increase next year.

The Hendersonville City Council is scheduled to vote on the budget at its meeting at 4 p.m. Wednesday, June 24, at the City Operations Center, 305 Williams Street. If adopted, the recommended budget would keep the city's property tax rate at 52 cents per $100 of assessed value.
The manager's decision comes as neighboring governments have raised taxes. Henderson County commissioners two weeks ago adopted an FY 2027 budget that increased the tax rate from 43.1 to 47.4 cents per $100 valuation and funded an 18 percent pay increase to county sheriff's deputies and jailers. One day later, Connet told the council that he wanted to analyze the impact the county's decision might have on sales tax revenue and on the city's ability to recruit and retain police officers. In the end Connet decided to recommend holding the line, at least for now.
"We understand that our residents and businesses are already feeling the impact of rising costs across the board," he said. "This budget holds the line. It is the right decision for our community right now."
The FY27 recommended budget also maintains previously planned increases to water and sewer rates, which fund critical infrastructure investments. No new taxes or fees are being added beyond what was already presented in the recommended budget earlier this year.

Long-term financial planning

The city manager’s recommendation to hold the tax rate this year is not a short-term fix, the city said in a news release, but is part of a deliberate, long-term financial strategy.
"While the city is holding its tax rate this year, residents should be aware of a financial reality on the horizon and how the city plans to address it responsibly," the city said. 
 
Under North Carolina law, each city's share of countywide sales tax proceeds is calculated based on the relative taxable value of property within its boundaries compared to all other jurisdictions in the county. When other jurisdictions raise their tax rates and the City does not, Hendersonville's proportionate share of that sales tax pool decreases. 
 
Based on current projections, the city expects to see a reduction of approximately $600,000 in annual sales tax revenue beginning in July 2027, the equivalent of around 2 cents on the property tax rate.

"This is a real and planned-for budget impact," the city said. "Rather than react hastily or layer multiple rate changes on top of each other, the City's strategy is to address this known gap, alongside the results of a new Pay and Classification Study, in a single, comprehensive FY28 budget adjustment. That approach gives residents and businesses plenty of notice and clarity around rates, rather than two back-to-back increases."
 
"Good financial planning means doing things once and doing them right," Connet said. "We want to bring Council and the community a complete picture with compensation data, revaluation data, and a long-range revenue plan." 

An important aspect of the FY27 budget is a new Pay and Classification Study to compare city pay to the current market and peer agencies. 
"These studies are how we make sure we are paying people fairly, not based on guesses, but based on real data," Connet said. "We have done this before, and it works." Previous pay studies have resulted in developing career ladders across all City departments and salaries that recruit and retain a professional team to provide services across the City and clean drinking water throughout the County.
The FY27 budget continues with the City's record of steady, meaningful investment in its workforce, with a 4% cost-of-living adjustment (COLA) that exceeds many comparable organizations in the region. Additionally, the City also provides mid-year merit increases to staff, averaging 2.5% annually, which is an added benefit above those offered by peer organizations.

What comes next

The city's plan is clear and on a defined timeline:

• Summer 2026: Pay and Classification Study begins
• Early 2027: Study results are presented to City staff and City Council
• Spring 2027: City Council uses study results, sales tax projections, and property revaluation data to build the FY28 budget
• June 2027: City Council considers a comprehensive FY28 budget that addresses compensation adjustments, market alignment, and revenue replacement needs in a single, transparent action

"We know what is coming in FY28," Connet said. "We are not ignoring it. We are planning for it deliberately and transparently so that when the time comes, we can act with confidence and clarity."

To read the FY27 recommended budget visit www.hvlnc.gov/Budget.