Let’s look at two of Town of Oro Valley’s past two operating budgets:
FY2009/2010 (Dave Andrews (Town Manager):
“Local sales tax represents a significant source of the Town’s budgeted revenue. In this category, taxes related to construction activity are the biggest contributor. While residential activity is down, FY2010 will see a major renovation undertaken at the Ventana Medical Systems facility (130K+square feet), which will contribute significantly to taxes on construction, permit and impact fees. The FY2010 budget is also forecasted to see an addition of 350K+square feet of commercial building in the form of hotels, restaurants, retail and office space”.(Page 49, Revenue Summary, second paragraph)
FY2010/2011 (Jerene Watson (Town Manager):
“Local sales tax represents a significant source of the Town’s budgeted revenue at 19% of total revenue. In this category, taxes related to retail trade are now the biggest contributor. In previous years, taxes related to construction activity were the greatest contributor. For FY 2010/2011, revenue was projected assuming limited development and activity patterns similar to what is currently being observed. Commercial activity is down significantly from previous years with many projects having been put on hold, delayed or canceled. FY2010/2011 will see new construction commencing at the Ventana Medical Systems facility (130K+square feet) which will contribute significantly to permit and impact fees”. (Page 51, Revenue Summary, second paragraph)
WOW! In FY2009/2010 Ventana Medical Systems was making a major renovation (130K+square feet) and in FY2010/2011, Ventana Medical Systems will commence new construction (130K+square feet) Do those statements sound somewhat redundant?
"The FY2010 budget was forecasted to see an addition of 350K+square feet of commercial building in the form of hotels, restaurants, retail and office space." "The FY 2011 budget is forecasted to see an addition of 280K+ square feet of commercial in the form of a hotel, a school, restaurants, and office space." WOW! Sound familiar?
Let’s go to Item B on the consent agenda of the September 7, 2011 Town Council Meeting. Wendy Gomez’s Fiscal Year 2010/11 Year-End Financial Update.
This report states that the construction sales tax revenue projection missed (was short) by $1.7 million for FY2010/2011. When you predict 75 residential starts at the beginning of the year and end up with 47 at year-end, it’s a big surprise? Nobody was monitoring the building starts on a month-to-month basis? I suppose they were depending on hope and change! Also, some of commercial development with Ventana got delayed! Surprise! Surprise! Nobody was talking to the company? Nobody get excited! Did the Mayor just put this item [the budget report] on the consent agenda because it is routine and non-controversial so as to rubber stamp it? Problem solved?
Take a look at the Town Manager's Budget for FY2011/2012. Do you see any Revenue Summary discussion on how low our construction sales tax revenue might be for FY2011/2012? It looks like that construction sales tax revenue problem has disappeared. Not to worry! The Town Council could always double our utility taxes again.
Oh, by the way, Greg Caton, our interim town manager, doesn’t believe a hiring freeze exists and is considering adding people to the Development and Infrastructure (DIS) department because of the intolerable increased workload for the residential and commercial development activity!
John Musolf
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