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TRACKING ARP: Hendersonville

Using ARP money to pay firefighter salaries helped the city of Hendersonville avoid a property tax increase. Using ARP money to pay firefighter salaries helped the city of Hendersonville avoid a property tax increase.

Taxpayers in the city of Hendersonville can thank the American Rescue Plan in part for avoiding a tax increase this year.

Last year the city administration had forecast a property tax increase of 3 cents for the 2022-23 fiscal year. In part because the city spent conservatively during the pandemic and in part because it is using $2.5 million in ARP money to help pay firefighters’ salaries, the city council was able to adopt a fiscal 2022-23 budget with no tax increase. That’s significant because it bridges the city into 2023, when the countywide real property valuation takes place, Assistant City Manager Brian Pahle said. The new assessment is expected to significantly increase the overall value of the tax base.

The city has $2 million to spend on what the City Council has described as “transformative” projects.

“We’ve left that for council to decide how much they want to put into nonprofits,” Pahle said. “We’ve received all of our applications for that money and the direction was to fund two to four transformative projects for the community through the nonprofits. Council will be reviewing those in September or October.”

Transformative projects are those “that will make a significant difference in the community or a problem or situation that if we didn’t have this money, we wouldn’t be able to address it,” City Manager John Connet said. “It’s something that’s long term, that we can look down the road 10 years or so and show that we’ve made a difference.”

Elected leaders countywide viewed the federal regulations with dread until the Treasury Department loosened the strings substantially when it issued the final rule this past spring.

“Anybody that got the money — you can spend up to $10 million as it relates to revenue replacement,” Connet said. “And what that means is you can take that money and put it into the general fund and the reporting requirements and everything are less strenuous.” Using revenue replacement for firefighter salaries — an ARP-eligible category — freed up money elsewhere in the city budget for other expenditures. “The $10 million ‘free spend,’ for lack of a better term, just gave local governments more flexibility on how to use the money, to get it on the street to have these transformative projects,” Connet said.