After five months of preparation, Oro Valley Town Manager Mary Jacobs presented the fiscal year 2019/2020 recommended budget to the Town Council last Wednesday.
Key aspects of the budget reflect the council-approved Strategic Leadership Plan, which places priority on economic vitality; recreation and culture; public safety; roads, water and town assets; land use; efficient and effective government and town finances.
“That really put that exclamation point on their expectations for next fiscal year,” Jacobs said of the SLP. “At the end of those two fiscal years, I want them to look back and say we got everything accomplished that they asked us to accomplish.”
The most notable recommendations include collapsing the community center fund into the general fund along with its designated half-cent sales tax, increasing capital investment projects, removing reserve funds from the overall budget and planning appropriately for a forecasted economic downturn at the end of the upcoming fiscal year.
The operating budget, about $107.5 million, is a $1 million decrease from this fiscal year. It plans about $1.8 million for one-time use of excess reserves. The overall budget anticipates $110.3 million for the town next fiscal year, which is about $32.6 million (23 percent) less than this year.
“This reduction is attributable to best practice changes…which is to include in the budget only the portion of the town’s fiscally strong contingency reserve funds that are expected to actually be spent,” Jacobs said at the council meeting.
She compared this to an annual household budget, where you wouldn’t include your total savings amount, because you aren’t planning to spend it all. The contingency reserves will still be reported in the fund summaries section of the budget and in the Comprehensive Annual Financial Report.
The community center and golf courses have been listed as two separate divisions in the Parks and Recreation department budget, which is included in the general fund.
“Combining the half-cent with all other sales taxes, as well as the corresponding budget of the operations into the General Fund, increases efficiencies and community understanding of the budget and its total operations,” the budget document states.
The budget reflects continued operation of all 45 holes of golf owned by the town. It calls for regular operations of the community center as well, “until such time as the town council has an opportunity to make a decision regarding its future.”
There is $6 million in bond capacity for capital improvements to the community center and golf courses, split into $3 million over two years. This amount was approved by the previous town council, but was put on hold due to the election of four new council members. The money will remain unused until the town council provides direction.
The budget includes a transfer of $1.35 million from the general fund to the capital fund, which allocates $1.1 million for next fiscal year’s projects as well as $250,000 for future projects. Jacobs said staff broadened the use of the capital fund ensure the town is maintaining its $250 million portfolio of assets.
Capital fund projects budgeted in the general fund for next fiscal year include the Naranja Park playground, police station renovation, Public Works and Community and Economic Development building safety improvements, and updates to technology facilities and James D. Kriegh Park.
Non-general fund capital projects include the La Cholla Widening project, La Cañada and Moore roundabout, completion of the police evidence facility, golf course renovations (pending council approval), water utility improvements and pavement preservation. All of these have outside funding sources.
The budget recommends a $500,000 payment toward Oro Valley’s $22 million Public Safety Retirement System. The town is able to make this contribution thanks to the expiration of the sales tax sharing agreement with Vestar, the developer of the Oro Valley Marketplace. This development resulted in an estimated $750,000 annual savings. The remaining $250,000 will go to the capital fund.
All town staff salary ranges not covered by a negotiation agreement are recommended to increase by four percent due to a comparison of other communities and the increase in minimum wage.
“As a municipality, having a competitive compensation and benefits package is important to recruitment and retention,” Jacobs said.
About $70,000 will go toward an external retail assessment to help the town identify retailers and restaurants that would succeed in Oro Valley. In addition, the budget includes a $50,000 donation to the Oro Valley Innovation Labs to help the nonprofit reach their $315,000 goal to begin construction on their facility which hopes to attract technology-based start-up businesses. Another $10,000 will be paid to Sun Corridor, Inc. as a membership fee for access to the economic development organization, and $30,000 is included as funding for “industry-specific collateral materials and other marketing tools.”
Due to a predicted economic downturn at the end of FY 2019/2020 and for all of FY 2020/2021, Oro Valley is expecting a decrease in commercial development activity as well as license and permit fee revenues, which add to the general fund. However, the town is expecting about 300 single family residential permits to come in, as well as an increase in state shared revenues.
Council will hold study sessions April 24 and May 8 to discuss the details of the recommended budget. On May 15 they will hold a hearing to adopt the tentative budget, with the adoption of the final budget scheduled for June 5.
The full recommended budget can be viewed online at orovalleyaz.gov/town/departments/finance/town-budget.
Editor's Note: The print edition of this article indicated that staff salaries would increase by 4 percent. Staff salary ranges will increase by 4 percent.