Oro Valley's budget for the coming year will be the tightest in at least a decade as a result of the havoc wreaked upon the town's economy by the events of Sept. 11, according to Finance Director David Andrews.
Town Manager Chuck Sweet is recommending a $84.5 million budget for the 2002-2003 fiscal year beginning July 1, a $7.94 million reduction from the $92.4 million budget adopted by the Town Council for the current fiscal year. Just three years ago the town's budget was a mere $61.9 million.
The adopted budget for this fiscal year includes about $200,000 the council added to Sweet's recommendations after month-long budget deliberations a year ago. While that was substantially less than the $725,000 the council added to Sweet's recommended budget for the 2000-2001 fiscal year, it appears the council will have even far less latitude for additions in coming budget deliberations scheduled to begin May 6.
Town revenues from all sources are forecast to total $42.7 million, up 12 percent from the current budget. Cash reserves of $33.34 million and $8.44 million in long-term debt financing account for the remainder of the $84.5 million.
The town might be looking at an actual revenue decline were it not for $500,000 in library reimbursements it will be receiving from Pima County in conjunction with its new 15,000 square-foot, $5 million library, Andrews said.
The opening of the library in the Town Hall complex at 11000 N. La Canada Drive is scheduled for July, but according to Sweet's recommended budget, operations initially will be conducted on an interim basis with just eight full-time employees instead of the 18 the town has planned to open the library with a year ago.
Even so, personnel costs for the coming year are expected to climb from $138,664 to $526,273 and operational expenses are projected to soar from $63,090 to $477,269, according to Sweet's budget recommendations.
Sweet is recommending the addition of 12 full-time employees, which would bring the town's work force up to 296 employees. Last year, Sweet recommended adding 31 new workers. The council approved adding 25.
Once again, one of the biggest beneficiaries would be the Police Department where Sweet is recommending adding eight police officers to cover the added territory the town plans to annex in the near future, as well as a secretary and a dispatcher.
The department's budget would climb from $7.4 million to $8.1 million while the budget for the Parks and Recreation division would slip from $1.55 million to $1.33 million.
The only other additions recommended by Sweet are a civil engineering technician in the town's new Stormwater Utility and a conservation specialist in the Water Utility.
Not only did the events of Sept. 11 reduce tourism dollars by an estimated 30 percent in the 2001-2002 fiscal year , but the town had anticipated collecting $1.62 million based on the issuance of 750 single family building permits and wound up collecting $1.24 million, or about $380,000 less than expected.
For the 2002-2003 fiscal year, the recommended budget anticipates issuing only 500 single family residential permits. Through the first quarter of this year only about 100 had been issued, not a good sign as the 2002-2003 fiscal year approaches, with each permit representing an average of $2,450 in revenues for the town.
The postponement of construction on the five-star, $85 million Ritz-Carlton Resort in Rancho Vistoso's Stone Canyon also played a major role in reducing revenues anticipated for this fiscal year and will continue to do so in the coming one.
The impact on the town's economic development division where Sweet has budgeted $361,833 for tourism and economic development in the coming year, is a reduction of $65,167 from the $427,000 spent for those purposes in this fiscal year's budget.
Economic Development Administrator Jeff Weir is seeking an additional $10,000 for a consultant to develop a study that identifies, based on existing zoned properties, the amount of retail and corresponding sales taxes that will most likely result from the development of these properties.
Weir also is asking for $25,000 more than recommended by Sweet to hire a consultant to update the town's community economic development strategy, last updated more than five and a half years ago.
The economic development budget cutback represents lost revenues anticipated from the town's 3 percent bed tax, three quarters of the first 1 percent of which go to the Metropolitan Tucson Convention and Visitors Bureau with the remainder to Oro Valley. Northwest Hospital's arrival, however, is expected to make up for some of those lost revenues.
In a memo to the council last year accompanying his budget recommendations for this fiscal year, Sweet warned:
"The expenses of the town have increased due to its growth and increase in services. While revenues also have increased, they will be insufficient to fund new personnel or the expansion of town services and programs over the next few years without any significant growth in the town's local sales tax base."
The warning has a familiar ring to it going into the 2002-2003 fiscal year, and will likely be accompanied by some additional twists that will add to council and town manager concerns.