Monday, May 12, 2014

Oro Valley Town Council Majority-4 Approve Massive Increase In Oro Valley Spending Cap

Oro Valley's Majority-4 town council members voted to approve the largest budget cap in Oro Valley history. It is $107.1 million.  It is 14% greater than last year's budget.   The "yes" voice votes of Mayor Hiremath and Council Members Hornat, Snider and Waters were registered at last week's council meeting.  Council Members Burns, Garner and Zinkin voted against this cap.

We have previously written regarding this budget.

Caton Chart Understates Proposed Wage Costs By $2.9 Million
There was little new information presented at the council meeting.  A chart presented by Town Manager Caton did not include the substantial increases in earnings per person for Oro Valley employees.  The chart (right) understates the 2014-15 personnel cost by $2.9 million.

According to this chart, as revised for the understated budget dollar amount,  direct pay per employee was $67,352 in 2008-09.  It is $80,117 in the 2014-15 budget.  That is an increase of almost 20% in an economy where wages have been stagnant, even decreasing during those years.

During the "public hearing" portion of the meeting,  Oro Valley resident John Musolf voiced his concern that this budget is outrageous.  He entered into public record some of what he had wrote in John's Place, last Wednesday.

Oro Valley resident Bill Adler has frequently advocated for an additional revenue source for the town.  During the hearing he said he was pleased with the relative health of the town. "It is clear from the graphs that the future is tenuous.  We're not going to achieve any significant surpluses. It is clear from the projections. So, I don't know where the money is going to come from to continue improving the town."

Generally at council meeting, Council Member Waters makes the motions to approve something and Council Member Snider second the motion. For this discussion, the roles were reversed.  Was this because Council Member Waters appeared overwhelmed during the night's proceedings.  "Must be a product of my getting up at 5 am" he joked at one point.  At 9:06 pm, Waters quickly arose to second a Council Member Snider motion to approve the cap.

After making this motion, Council Member Snider celebrated the budget:  "I think this budget shows innovation... I want to thank the staff... I think that this is a great budget. We are the envy of the State. We have a balanced budget with a slight surplus. It is nimble enough to allow us to adapt to changing conditions."

Two other views of this budget cap were presented.

Mayor Hiremath feels that this budget presents strategic spending at a time when the country remains in a recession.  The Mayor does not believe that the money should be returned to the public as a "dividend", such as reducing or eliminating the utility tax.  Rather, Oro Valley should spend this money on more services.

Council Member Zinkin, on the other hand, considers the budget to be overspending, ramifications of which will last well into the future.  Watch their remarks.

Tell us what you think.  Do you think the budget represents wise strategic investments or do you think it represents overspending?


Richard Furash, MBA said...


Richard Furash, MBA said...

I came from an industry where third party compensation surveys were in vogue until participating companies realized they were being priced out of the marketplace by following the survey recommendations. Those who recovered from the faulted salary survey process rapidly returned to labor market availability based compensation in order to survive. I highly suspect this could be the end result in OV as well. From my perspective the only way the 20% increase in personnel cost is justified are, (1) personnel turnover analysis indicates compensation deficits, and (2) if qualified personnel recruiting is deterred by inadequate compensation.

Additionally, compensation increases require sustainable funding and I am hoping our Town Management has very strong confidence of the long term availability of the revenues to support this increase.

Richard Furash, MBA said...

..... and the long term benefits liabilities for all those retirees. Think of Bell, California, Detroit, Chicago, etc.. and worry for the future.