Summary: TThe City projects a $26 million budget gap for next year. Council will likely consider property tax increases, fee increases (e.g. water bills), and service reductions (e.g. fewer bus routes). These decisions directly affect housing stability. Landlords often pass tax increases onto renters. Fixed-income homeowners may struggle with higher costs. And the City might cut services that quietly help people stay housed – like eviction prevention funding, or housing code enforcement – resulting in families that are already on the edge having fewer options to avoid losing their homes. Without safeguards, budget balancing can increase displacement pressure. This moment is exactly the type of circumstance that would benefit from the City’s adoption of a formal anti-displacement policy to guide its decision-making.

The Facts: At its February 24th regular meeting, the Asheville City Council is opening up public comment on its proposed 2026-2027 budget. City staff have presented preliminary projections showing a structural budget gap of approximately $26 million for the upcoming fiscal year (Fiscal Year 2027). The gap is driven by increasing operating costs (e.g. salaries), debt service obligations, and the fact that North Carolina restricts the sources of revenue for cities, preventing them from creating new taxes or running a deficit. Staff have indicated that closing this gap will require some combination of increased revenues, reduced expenditures, or both.

While no final budget decisions have been made, Council is expected to consider options such as property tax increases, fee increases, and service reductions in the coming months. Staff have framed the situation as a structural challenge, meaning that this isn’t a one-time situation with next year’s budget, but an ongoing challenge that’s likely to keep coming up. They suggest that it will require difficult trade-offs to maintain core services and meet financial obligations.

Our Assessment: Balancing the budget is not optional. The City must close the projected $26 million gap. But how that gap is closed matters deeply — especially in a housing market where many residents are already stretched thin.

Strategies to balance the budget like property tax increases, fee increases, and service reductions do not affect everyone equally. When property taxes go up, landlords often pass those costs on to renters by increasing rents. Fixed-income homeowners – particularly seniors – may struggle to absorb higher tax and service bills. Working-class families living paycheck to paycheck have little room to absorb even modest increases in water fees, transit costs, or other city charges. Service cuts to things like transportation or code enforcement (which ensures safe rental conditions) can also increase instability.

In a city where housing costs are already high, these pressures compound. A small increase layered on top of already rising rents and insurance costs can be the tipping point that pushes a household toward eviction or forces a homeowner to sell. Displacement rarely happens because of one dramatic event. More often, it happens because of cumulative financial pressure.

That is why guardrails are critical.

Before adopting tax increases, fee increases, or major service cuts, Council should understand:

• Who will bear the greatest burden?
• How might costs be passed through to renters and low or fixed-income homeowners?
• Are there neighborhoods or populations at particular risk?
• What mitigation tools can be used within existing legal authority?

Without that analysis, the impacts of the forthcoming budget will likely exacerbate the massive equity gaps in the affordability of living in our communities.

This moment underscores GAPavl’s call for the City and County to formally commit to developing a comprehensive anti-displacement policy. A policy framework could ensure that major financial decisions like these are routinely evaluated for displacement risk, rather than allowing harm to occur and attempting to mitigate it after. It would also create a structured process for collaboration between government staff, community organizations, and residents.

In short: how the budget gap is handled could either stabilize or destabilize hundreds of households. That is why equity guardrails must be built in now, not after impacts are felt.

Our Proposal: In finalizing next year’s budget, the City should:

1. Require an anti-displacement impact analysis before adopting tax or fee increases and/or service reductions.
2. Direct staff to identify strategies to protect low-income homeowners using existing legal tools (e.g. state-authorized homestead exclusions, payment plans, proactive outreach).
3. Allocate funding for eviction and foreclosure prevention as part of the budget package.
4. Formally commit to developing a comprehensive anti-displacement policy in partnership with the County and community organizations.

Things to do: We invited you to join us in calling on the Asheville City Council to commit to anti-displacement guardrails in finalizing this year’s budget. We will share a new call to action later on in the budget process.

Report Back

The projected structural budget gap was discussed during the worksession (the conversation takes place at approximately 0:47:00 –1:18:00 of the linked video), and again at the regular meeting (presentation at 0:46:55 and public comment at 0:54:42 of the linked video). Council reviewed the drivers of the deficit — rising operating costs, debt service obligations, and revenue constraints — and discussed potential responses including service adjustments and revenue strategies. Council members emphasized the need for fiscal discipline and sustainable long-term planning. However, there was no explicit discussion of how service reductions, fee increases, or property tax adjustments might affect housing stability or displacement pressures, particularly for lower-income households. Council did not discuss the relevance of anti-displacement guardrails to their decision-making regarding addressing the deficit, nor did they commit to evaluate budget-balancing options through a housing stability or racial equity lens.

Total GAP Supporter Actions Taken: 20

Recipients and Responses:

Asheville City Council

• Mayor Esther Manheimer: No response
• Vice Mayor Antanette Mosley: No response
• City Council Member Bo Hess: No response
• City Council Member Kim Roney: No response
• City Council Member Maggie Ullman:  No response
• City Council Member Sage Turner: No response
• City Council Member Sheneika Smith: No response