Monday, June 1, 2015

Oro Valley's Spending Per Capita Approaches $2,000; Far More Than Surrounding Communities

Oro Valley spending per capita in 2016 will approach $2,000, according to an independent analysis done by LOVE. This spending is considerably greater than  2 comparable Pima County communities and that of Pima County.

2016 spending marks the largest spending per capita in the past 8 years. 2016 budgeted spending is the 5th consecutive year in which spending per capita has increased.

Spending per capita is not a yardstick that the town uses to set or measure the appropriate level of spending. However, the town does refer to spending per capita when it discusses the police budget. Thus, we have applied the measure to all town spending.

Oro Valley's spending per capita is 33% greater than Marana and Sahuarita
Oro Valley's planned spending per capita is far greater than that of comparable Pima County comparable communites. Marana's planned spending per capita was $1,482 in 2015. Sahuarita's planned spending for 2016 is $1,468.

Oro Valley's 2016 planned spend of $1,984 far exceeds that Pima County. County planned spending per capita was $1,183 in 2015. The county recomended spend per capital in 2016 is $1,154.

Oro Valley spending per capita up sharply since 2014
Oro Valley's 2016 budgeted spending per capita of $1,984 represents a 23% increase over 2015, which was a 27% increase over 2014. During these years, spending has accelerated to accomodate increases in town employee salaries and benefits, an aquatic center, fields at Naranja Park, and the Oro Valley 45 golf holes, tennis courts, and a community center building.

These spending increases are in contrast to the spending constraints from 2009 through 2013.

Oro Valley spending exceeds revenues
Total Oro Valley revenues exceeded spending from 2011 through 2014. This year's budget has a $1.1mil expenditure over revenue level. Next year's planned expenditure over revenue level is $3.6million according to the town manager's recommended budget.

Oro Valley Town Finance Director, Stacey Lemos, presented a 5 year forecast of 3 funds that comprise 45% of the town's revenues at the May 20 council meeting.

The most significant of these 3 funds is the general fund. As we pointed out in a prior posting, this fund pays for some, but not all, of the town's day to day operating expenses

Financial projections, unlike budgets, are a forecast of future revenues and expenditures. They are as believable as the assumptions that are used in preparing the numbers.

Lemos' projection forsees no deficit spending in the general fund in 2017 and thereafter. Her projection is based on conservative assumptions. However, the projections do not include an estimate of discretionary spending. "Discretionary spending" by council does occur. During the past few years, for example, the council has used reserves to fund the aquatic center, to build fields at Naranja Park, and to fund the community center

Will this discretionary spending continue, thus invalidating the Lemos' projections of an operating fund balance?

We don't know. What we do know is that at least one council member views the accumulation of reserves to be a bad thing. Council Member Mary Snider has often stated that she does not want Oro Valley to be a bank. She does not Oro Valley to build  reserves. The implementation of this philosophy encourages more, not less discretionary spending.

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