Huge tax hike looms as affordability crisis hits Haywood’s budget
Haywood County commissioners have held the line on budget increases in past years. This year, that line is collapsing due to a number of outside factors.
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Haywood County’s proposed fiscal year 2026-27 budget carries the kind of consequence that will land in every mailbox and on every mortgage statement across the county — a 7-cent property tax increase, pushing the rate from $0.55 to $0.62 per $100 of assessed valuation.
For a county that has held the line on its tax rate through the current fiscal year, the proposed jump is abrupt and, according to the numbers, difficult to avoid. Chair Kevin Ensley called it “an inflation budget.”
The story behind the proposed budget is not runaway revenue growth or new programs, but a squeeze familiar to working families across the United States — unexceptional gains on the income side paired with rapidly accelerating costs on nearly every single item.
“We’re in a period of modest growth in our revenues, but the expenditures are not modest,” said Bryant Morehead, Haywood County manager, during a May 5 meeting. “Things are increasing rapidly.”
The manager’s recommended general fund for 2026-27 stands at $121.6 million, up from $111.9 million in the FY26 adopted budget — an increase of $9,686,135. That follows a prior increase of $5,794,396 from 2024-25 to 2025-26, showing that the upward pressure on spending has not only continued but intensified.
At the same time, the county’s property tax base has grown only slightly. Valuation rises from $10.3 billion in 2025-26 to $10.4 billion in 2026-27 a gain of roughly $129 million, or just over $700,000 in revenue. That modest increase doesn’t come close to covering the nearly $10 million jump in expenditures, leaving the tax rate as the primary lever.
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The impact is clear — a home valued at $100,000 would see its annual county tax bill rise from $550 to $620, an increase of $70 per year or about $5.83 per month.
The revenue picture underscores the imbalance. Property tax collections are projected to climb from $56.6 million in 2025-26 to $64.4 million in 2026-27. Real property alone increases from $46.72 million to $52.85 million, while motor vehicle tax revenue rises from $4.79 million to $6.12 million, largely due to the increasing cost of both new and used vehicles. Personal property grows from $2.87 million to $3.40 million, but corporate utilities actually decline from $1.19 million to $0.94 million.
Sales tax offers some relief, but not enough. The 2025-26 budget adopted figure of $16.4 million, which is projected to increase to $17.2 million in 2026-27, a gain of about $883,552.
That follows a period of relative stagnation, where sales tax receipts barely moved between 2024-25 and 2025-26. Even with the bump, sales tax remains far from a solution to the widening gap between revenues and expenditures.
Other revenue streams tell a similar story.
Investment earnings are projected to drop from $2.8 million to $2.5 million, reflecting market conditions and reduced returns — FEMA has been slow to reimburse the county for money the county has spent on Hurricane Helene recovery, so the county has far less money sitting in interest-bearing accounts. In 2024-25, the county earned about $4.8 million. In 2023-24, that figure was more than $5 million.
Only a few categories show meaningful growth. Sales and services increase from $6.2 million to $6.7 million and permits and fees hold steady at $692,000 after a drop from earlier years. PILT and beer and wine revenue tick up modestly from $621,000 to $646,000.
Even with those gains, the overall revenue picture remains flat compared to the pace of spending.
On the cost side, the pressures are unmistakable and widespread.
Salaries and benefits lead the surge. The 2026-27 budget includes a 2% merit increase, a 3% cost-of-living adjustment and a 4% midyear salary adjustment, totaling more than $3.5 million in compensation changes alone. Haywood County has worked hard in recent years to bring employees to market-rate salaries. Employee retention is important, mostly because the cost of replacing a seasoned worker is roughly 1.5 times the cost of their annual salary, but also because taxpayers want professional, experienced employees to deliver services efficiently.
State-mandated retirement contributions continue to climb, with general employee rates increasing from 14.6% to 15.1% and law enforcement from 16.1% to 17.1%.
“We’re covering what I would consider in many cases unfunded mandates or requirements from the state that we have to shoulder,” Morehead said.
Restricted intergovernmental funding — which comes from the state or the federal government — also takes a hit, thanks to President Donald Trump’s “Big Beautiful Bill,” by eliminating more than $300,000 in federal payments to the county for the administration of the Supplemental Nutrition Assistance Program. The cuts will take place in the fall, so the deficit in restricted intergovernmental funding is expected to grow in subsequent years.
The Big Beautiful Bill also requires the county to increase staffing to comply with new requirements for the 19,000 Haywood County residents on Medicaid. Currently, county staff must review each case once per year, but the Big Beautiful Bill now requires cases to be reviewed every six months —effectively doubling workload without providing any federal funding to pay for the increased staffing levels.
Health insurance, a near-constant source of financial stress in local government budgets, will rise from $20,000 per employee to $21,800.
In 2025-26, compensation increases totaled $2,354,244. In 2026-27, that figure grows substantially when midyear adjustments and overtime true-ups are included, pushing the total compensation impact well beyond the previous year’s level.
Operating costs are also accelerating. In 2025-26, major operating increases totaled $1.2 million. In 2026-27, that figure will jump to $2.9 million — more than double.
Education funding is a major driver. High-performing Haywood County Schools operating funding increases from $18.4 million to $19.7 million, a gain of $1.3 million. Haywood Community College — also a high-performer, compared to its peers statewide — operating funding rises from $3.5 million to approximately $3.8 million, an increase of more than $268,000. Capital allocations remain steady, but debt service shifts significantly, with school debt dropping from $2.3 million to $380,700 and community college debt falling from $753,839 to $390,532. Both entities had asked for significantly more funding than they’re slated to receive.
Fuel costs are another pressure point, reflecting broader economic conditions. The budget explicitly notes increases in fuel, gas and diesel costs, which have been exacerbated by national inflation trends and ongoing geopolitical instability in the Middle East.
Last weekend, gasoline prices in Haywood County jumped another 30 cents, reaching $4.29 per gallon in the wake of the Trump administration’s Iran war, adding immediate strain to county operations that rely on fleets for emergency response.
That volatility feeds directly into departmental budgets, particularly EMS, sheriff’s operations and transportation-intensive services.
Tariffs imposed during the Trump administration are also rippling through county purchasing, driving up the cost of vehicles, heavy equipment and replacement parts. Those increases are showing up in everything from fleet purchases to building maintenance, adding another layer of pressure to a budget already strained by inflation and rising service demands.
Capital spending also rises sharply in the proposed budget. Vehicle and equipment costs increase from $1.4 million in 2025-26 to $2.2 million in 2026-27, an increase of nearly $790,000, even though the number of new vehicles dropped from 18 to 14.
The higher cost reflects inflation in vehicle pricing, supply chain pressures and the increasing expense of specialized equipment.
Capital replacement projects, while slightly reduced in total from $858,354 in 2025-26 to $691,643 in 2026-27, still represent ongoing obligations that cannot be deferred indefinitely. HVAC systems, roofing, flooring and critical equipment replacements remain necessary to maintain county infrastructure.
Debt service presents a mixed picture. Non-education debt continues to decline in outlying years, but jail expansion costs and associated operational demands continue to influence the budget. The 2026-27 plan also includes ongoing financial obligations tied to that expansion, both in staffing and operations.
Service demand adds another layer of pressure. Foster care costs, which drove a $1 million increase in 2025-26, remain a concern as the number of children in county custody continues to rise.
The cumulative effect is a budget where nearly every major cost center is moving upward at a pace that far outstrips revenue growth. Fund balance appropriation reflects that reality. The county plans to appropriate $12.1 million in 2026-27, up from $11 million in FY26.
The broader financial picture reinforces the central theme — modest revenue growth will not keep pace with rising costs. Even looking ahead, the budget acknowledges continued uncertainty. Legislation proposed by the Republican-led General Assembly could limit property tax revenue growth or alter revaluation schedules, adding another layer of unpredictability. The county has already voiced its formal opposition to such tactics out of Raleigh.
Meanwhile, current property values are estimated to sit roughly 44% below market value, suggesting that future revaluations could introduce additional shifts in the tax base.
For now, however, the immediate challenge is clear. The county faces rising personnel costs, increasing service demands, higher fuel and operating expenses and ongoing capital needs, all within a revenue environment that is growing slowly at best and an economy that may be on the brink of a recession.
Commissioners didn’t have many questions about the proposed budget, as Morehead said he’d already spent several hours with each individual commissioner talking about it.
Ensley, however, ran down a laundry list of changes in economic conditions across the county that demonstrate the squeeze residents are experiencing right now and also pointed out that Trump’s Big Beautiful Bill, at least for local governments, has been anything but.
From 2021 to 2026, Ensley said, Haywood County housing cost has gone up 44%, well above the national average increase of 26%. Home insurance has increased between 46% and 64%. Mortgage interest rates in 2021 were 3.15%, but now they’re approaching 6.5%. Electricity has increased 30% to 36%. Grocery costs have increased 22%. The consumer price index also increased 22%.
“The mill closure has cost us about $2 million, I believe, in tax revenue. The Big Beautiful Bill that they passed in D.C. looks like it’s going to cost us around a million dollars,” Ensley said. “We’ve had to add positions and then we’ve got to add a little over $300,000 to the SNAP program. The feds aren’t funding that. This is another unfunded mandate, in terms of a million dollars.”
Western North Carolina Republican Congressman Chuck Edwards, now under investigation by the House Ethics Committee, voted in support of the Big Beautiful Bill.
Per state law, local governments must pass a balanced budget by July 1. State and federal governments are under no such constraints. The state has not passed a budget since 2023, while the national debt recently surpassed 100% of the country’s annual gross domestic product for the first time since the end of World War II.
Commissioners have some big decisions to make. The timeline for those decisions is already in motion. A public hearing on the 2026-27 budget may be called for May 18, and the board is scheduled to consider adoption of the budget on June 1 at its regular 9 a.m. meeting.
