Hendersonville City Manager Recommends Holding Property Tax Rate in FY27 Budget
City Manager John Connet has announced his recommendation to City Council to adopt the Fiscal Year 2027 (FY27) budget with no increase to the City of Hendersonville's property tax rate. City Council is scheduled to vote on the budget at its meeting on June 24, 2026, at 4:00 PM at the City Operations Center located at 305 Williams Street.
The recommendation keeps Hendersonville's property tax rate at $0.52 per $100 of assessed value, with no change from the previous year.
Holding the Line for Residents
This decision comes as neighboring governments have moved to raise taxes. Henderson County recently approved an increase from $0.4310 to $0.4740 per $100.
"We understand that our residents and businesses are already feeling the impact of rising costs across the board," said City Manager John Connet. "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.
Sound Long-Term Financial Planning
The City Manager’s recommendation to hold the tax rate this year is not a short-term fix; it 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.
Under North Carolina law, each city's share of county-wide 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 two cents on the property tax rate. This is a real and planned-for budget impact.
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."
Commitment to City Employees
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," said Connet. "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," said Connet. "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."