Showing posts with label 2012-2013 Oro Valley Town Budget. Show all posts
Showing posts with label 2012-2013 Oro Valley Town Budget. Show all posts

Friday, April 5, 2013

Bits and Pieces

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As previously reported, Oro Valley Town Manager Greg Caton presented to council on Wednesday his recommended town budget for 2013-14.  You can view the document and his presentation to council on the town's website.
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Wednesday, on a 5-2 vote, the Oro Valley Town Council approved the an ordinance for the sale and consumption of liquor at Steam Pump Ranch.  Such is still banned from all other Oro Valley parks and venues.
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Tuesday, the Oro Valley Planning and Zoning Commission voted unanimously to approve a conditional use permit for the Memory Facility to be located on the southwest corner of Oracle and Desert Sky Rd.  We have previously reported this to to you.  The actual permit can only be approved by council.  During the hearing on the facility, resident Bill Adler observed that the facility can not be approved on the basis that it is a "skilled nursing facility." This is one of the categories for permitting a conditional use permit.  Bill noted that it is not skilled nursing facility.  Indeed, most of these facilities are staffed by medical aids.  We learned that Bill's concern is being considered by Oro Valley Development and Infrastructure Department and that they are planning to create a new category for this type of facility.
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Dollar Express has opened in the Oro Valley Marketplace. It is next to WalMart.
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The dates for the Oro Valley Friends Of The Library spring book sale are:
  • Wednesday, April 10, 9 am – 7 pm Thursday, 
  • April 11, 9 am – 7 pm 1/2 Price Sale begins at 3 pm! 
  • Friday, April 12, 10 am – 5 pm 1/2 Price Day! 
  • Saturday, April 13, 9 am – 5 pm $5.00 Bag Day
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Watch the dumbest crooks on the planet rob the self-serve car wash on Cool Drive.
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Drivers Beware: HiVE motorcycle police deployments this month will be on Oracle Road between Magee and Suffolk Drive.

  • April 11, 2013 PM Deployment 4:00pm to 7:00pm. 
  • April 29, 2013 AM Deployment 7:00am to 10:00am.
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Wednesday, March 27, 2013

Guest View-John Musolf: Where's Do The Savings Go?

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Several months ago, the Town Council approved a $2.1 million expenditure to TEP for three TEP projects to underground power lines.  The funds were "appropriated" from the general fund's contingency reserve.  Generally, the contingency fund grows either from direct appropriation in the budgeting process or as a result of what's not spent at the end of any budget year.

During the FY2012/2013 budget year the Town announced the savings of some recurring expenditures:
  • Library About $585,000 savings from the turnover of the Oro Valley Library to PIMA County.
  • Coyote Run About $200,000 savings from the RTA funding of Coyote Run Recreation Room
  • About $30,000 savings from the cancellation lease of Oro Valley Recreation Room. Tucson
  • Regional Economic Opportunity (TREO) About $42,000 savings from the cancellation of the TREO contract. 
What historically has occurred in the budgeting process is the redistribution of those savings like this to other departments to increase their service budgets for new projects or services for the following budget year.

Instead of doing this,  let’s distribute those savings back to the general fund contingency reserve.

These savings of $852,000 would give the Town of Oro Valley a good start towards replenishing the general fund contingency reserve.
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Tuesday, February 12, 2013

Oro Valley Mid Year Report: Budgets On Target

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Town  of Oro Valley Director of Finance, Stacey Lemos, presented a mid-year finance report to the Oro ValleyTown Council last Wednesday.  Overall, revenues are a bit above budget while spending is below budget.

General Fund:

The general fund is projected, by year end, to have revenues that are $500,000 more than planned. This is due to an increase in estimated local sales taxes and construction residential and commercial permit fees; and because of the two point increase in utility tax.

Greg Caton, Oro Valley Town Manager, noted that "We have seen a pickup in activity…We continue to see strong growth in that sector." in explaining the increase over plan in construction permit activity.

General fund expenditures are projected to be $430,000 less than plan because of unfilled position vacancies.

In observing that the general fund fiscal situation is in order, Council Member Hornat noted that: "We did a lot of things, and I think that Mr. Musolf would agree with that, to reduce our costs" from 2010. At that time, projected revenues were 7% below budget and there was a projected deficit of over $1 million.

Highway Fund

Highway funds come from the construction sales tax and rom state shared highway user revenues. Construction sales tax revenues are over budget while highway user revenues are on budget. Overall, highway fund revenues are over budget by 4.9%.

Highway spending is estimated to be on budget. Spending on pavement preservation is bering held at $1 million. The result is a fund balance decrease of $139,000 this year which is close to planned.

Bed Tax

This is the fund that is paying for the Aquatic Center.

Bed tax revenues are projected to be on budget. These are trending 7% higher than last year. Expenditures are estimated to be under budget by $75,000. This is because the savings from a discontinued TREO contract and savings from unfilled positions. Overall, the bed tax fund is projected to decrease by $104,000 by year-end. This is less than the $178,000 planned decrease.

Council Member Zinkin asked where estimated revenues from Aquatic Center events were included in the budget. "We did not include any expectations for that. So any additional revenues received from that activity will be over and above what we assumed in the budget," Lemos noted. Lemos also went on to note that they did include estimated cost increases from the new aquatic center in the budget.

Water Utility

"Both of our utility funds are showing strong budget performance," Lemos observed. "Revenues of the water utility funded trending right on budget. We are seeing a little bit of a slightly below budget situation in our water sales as our customers continue to conserve water. But we expect to end the year on target." Water utility expenditures are estimated to be under budget a year and by 3% or $438,000 due to capital outlay savings.

Stormwater Utility Fund

Lemos noted: "We're trending right on target with our Storm Water Utility Fee Revenue."
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Wednesday, February 6, 2013

Council Meeting Preview

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Tonight's Oro Valley town Council meeting includes a six month update on town finances.

Some highlights from the report that is included in the posted town council meeting packet:
  • The General Fund is the fund into which sales tax and utility tax revenue comes and from which, spending on town operations flows. "The financial condition in the General Fund has improved significantly over the past several fiscal years. This is due in part to a recovering economy, but more importantly, from structural changes made to the budget to reduce expenditures through such means as vacancy savings, transferring library operations to the Pima County Library District and partnering with the Regional Transportation Authority to expand transit services while reducing costs to the Town."  
  • The Bed Tax Fund is the fund that pays for the aquatic center. Its revenues are a bit more than last year at $333,000.  Bed tax spending is below plan, primarily because the town no longer funds TREO.  
Other topics to be discussed tonight include discussion of and vote on:
  • A Planned Area Development (PAD) exemption for signs in Rancho Vistoso (meeting item 2). The requested exemption is for unlit signs that provide directions to local businesses. The Conceptual Design Review Board is recommending approval.
  • A Conditional Use Permit for public art at the Town Center. The art will include "...two bronze sculptures of native reptiles, to be located between Shops C & D" in phase 1; and in phase 2: "... a bronze sculpture of a javelina or a pair of white-winged doves, to be located in the civic area."
  • A Conditional Use Permit for drive-thru's for CVS' pharmacy and for Paradise Bakery.  These retailers will be located in Town Center, which is on the the east side of Oracle Road, at the First Street intersection. The Oro Valley Development and Infrastructure Department is recommending approval conditional use permits.
This should be one of the Council's quieter meetings.
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Thursday, January 17, 2013

Town Council Approves $2.1 Million To Fund Burying TEP Wires

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The Oro Valley Town Council approved the $2.1 million for the burying of TEP power lines. The expenditure is for three projects that will be built on Tangerine and on Oracle Road. (See our previous postings ).  The move preserves the view shed.

The  measure passed 6-1. The lone dissent was from Council Member Burns.  He noted that TEP had made a conscious decision not to bury the lines; that, in doing so, TEP was not operating as a responsible corporate citizen. This was especially troubling because TEP is an enormously  profitable company.  In addition, the company purports to be a positive influence in the communities it serves.

The TEP represented had previously noted that the decision to put the wires underground was made because the Arizona Corporate Commission will not TEP them recoup their costs in its rates.

In contrast to the comments of Commissioner Burns, Mayor Hiremath thanked TEP for giving Oro Valley the opportunity to bury the lines.   TEP is also "contributing" about $400,000 to the project.

The Oro Valley contingency fund will pay for this project.  It has yet to be determined whether this is a loan from the contingency fund, such as was done in funding a portion of the aquatic center overrun, or a permanent withdrawal of funds.  The contingency fund balance will be above Oro Valley required levels (25% of the operating fund) after the payment of the $2.1 million.
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Monday, January 14, 2013

Undergrounding The Power Lines: Our Citizens Opine

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Eight citizens spoke publicly about under-grounding TEP transmission lines at last Wednesday's Special Oro Valley Town Council Session.  We've previously written on the issue in our posting: "Would You Spend $2.1 Million?"  For more on this, read our special page entitled: Primer:  Underground TEP Wires.

Most of the speakers were in favor of under-grounding of the transmission lines to preserve aesthetic and scenic views.

Issues that arose during the study session include:
  • Who should pay for burying these wires? 
    • The Town considers the zoning code, adopted by Ordinance, to be legally valid and binding on TEP.   To date, TEP has been unwilling to locate lines underground without up-front payment for the differential cost of above ground versus underground installation for infrastructure improvements not associated with any particular development. TEP has placed the burden of paying the differential cost on the Town. TEP's refusal is based on a ruling by the Arizona Corporate Commission.
    • TEP helped craft the Town of Oro Valley Ordinance requiring the power lines be buried. All developers have had to comply on their projects. TEP may have a potential conflict of interest in recommending that Transmission Poles be used on these projects (per TEP’s standard internal policy policy of above grounding) instead of undergrounding.
  • Should ADOT pay for burying wires on Oracle Road?  Some information was introduced that question whether some of the Oracle Project cost should be borne by ADOT. The reinstallation of poles where under-grounding now exists may be against state law. The Town attorney should investigate statutes 40-352 and 40-353 for clarification.
  • Can the three proposed projects be unbundled?  TEP opposed this.
  • How can Oro Valley reduce construction cost?  There was mention of the Town subcontracting some of the infrastructure to save cost instead of using the normal TEP subcontractors.
  • What about current view obstructions?  Some spoke of the fact that on the Tangerine Project there would still be existing transmission poles that cannot be undergrounded because of power engineering constraints in undergrounding them. These existing poles have already compromised the scenic view. TEP is recommending further compromising of the scenic view with added above ground poles.
Funding of this project is a major issue.  This was also discussed during the study session.

One idea is to borrow the funds form the contingency fund.  Repayment would come from a yet to be determine source.

One funding source a franchise tax, seen as a potential source of continuous funding of the buying utility lines.  Voters would have to approve this tax in August if Council decided to move ahead it.  We noted in a previous posting that a franchise tax is a pass-through tax.  It would be included in your utility bill.

Another suggestion is that the Town of Oro Valley might consider lending the $2.1 million to TEP as a loan and have TEP pay it back with interest.  Oro Valley should not be subsidizing a multi-million dollar public utility. TEP is a subsidiary of UNS Energy Corporation.   This is an unlikely alternative as it would require litigation.

The Wednesday's council meeting includes a hearing on the under-grounding and whether to use the contingency fund for the $2.1 million cost. Then the Council would study all alternative methods to fund the $2.1 million cost.
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Our thanks to John Musolf for contributing this posting.

Friday, January 11, 2013

Bits and Pieces

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This week, Oro Valley Police arrested a man for taking videos in one of the ladies changing rooms at Target. The man,Eduardo Dominguez, is charged with two counts of surreptitious videotaping.
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This week, the town issued its monthly "Economic Development Report". The Good Egg Restaurant is listed as a possible tenant at Rooney Ranch-Target Center.  Other possible new tenants in Oro Valley include Cattleman's Cafe (San Jose Plaza on Oracle), Mathnasium (Oracle Road) and a Memory Care Facilty in Innovation Park.  Securaplane's expansion to Innovation Park is also listed. We reported on this a monh or so ago.
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The results are in on this holiday season's "Shop OV" campaign.  The town awarded 40 gift card and free services awards to those who participated in the weekly drawing.  Congratulations to Oro Valley resident Diane Gill, winner of the $500 grand prize. (Oro Valley Press Release)
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Van Flowers will speak at 1PM tomorrow at Oro Valley's Second Saturday at Steam Pump Ranch. Doors open from 11am to 2PM
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Read about exciting discoveries at Oro Valley's BIO5 U of A facility.
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The Town of Oro Valley will host a public forum on the 2013-2014 budget. "The purpose of the forum is to provide information on the Town's 2013-14 budget, educate residents on the budget process and solicit input." (Source: Oro Valley Press Release) ---

Wednesday, January 9, 2013

Underground Wires: A Best Use Of Oro Valley's Contingency Reserves?

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 Oro Valley has a contingency fund.  The purpose of  such reserves are: "...to offset difficulty economic times, stabilize fluctuations in cash flow requirements, provide for emergency situations threatening the public health or safety and provide for unanticipated increases in service delivery costs, unanticipated declines in revenues, unanticipated opportunities and contingencies... reserves should be used only after all budget sources have been examined for available funds and subject to Town Council approval."(Source: Document Page 36 )

Funds available in the Oro Valley contingency fund have varied over time (See chart)  The fund currently sits at a level of about $9 million. Its target level, by town rule, is 25% of the town's operating budget, not including any funding of the operating budget that may come from the contingency fund.  This year's operating budget is $26.8 million.  The town required funding level is $6.8 million.  So, the fund balance is well over town required funding levels.

You can imagine that these fund should be used for extraordinary measures: Threats to public health and safety being the primary focus.  This is not the case. Historically, this fund has been used for ongoing expenditures and "special investments":
  • $1.05 Million was used in 2011 for Energy efficiency upgrades
  • $410,000 was used in 2010 for Steam Pump Ranch
  • $600,000 was used in 2009 and 2010 for services related to Arroyo Grande
This year, $300,000 was used to fund the town's new health care self-insurance fund.  $524,000 was invested in the Oro Valley Aquatic Center construction cost overrun. (Our Report)

Does using $2.1 million the contingency funds to pay for the under-grounding of TEP wires constitute a reasonable use of such funds in light of the funds purpose and its historical use?

Tonight at 6PM in council chambers is your opportunity to give your opinion to Town Council.  They are looking for your input at this special session.  It's your chance to let them know how you feel.  Don't pass up the opportunity.
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Monday, January 7, 2013

Oro Valley Considering Franchise Fee


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There is a second discussion item for this Wednesday's special Council Meeting.  It regards the idea of creating a Franchise Agreement between the town and a public utility.  Read about it here.  A franchise agreement gives the utility the right to use town "right-of-ways."  In return, the utility pays the town an annual franchise fee.

You will have the opportunity to vote on this next May if the Town Council votes, at some point, to recommend it to you.  It becomes law only when the voters approve.

Sound's like a great idea, right? The Town of Oro Valley gets a sustainable source of revenue and an agreement on how the right of way can be used.  The Utility then pays for the right to use that right-of-way.

Here's the problem: "when a franchise fee is levied on a utility the fee is passed on directly to the customer and itemized on their bill as a municipal fee."

That's right. A franchise fee imposed on a utility becomes a back door tax for you to pay on your utility bill.  This is in addition to the Oro Valley utility tax that you already pay.

The typical franchise levy on a consumer utility bill is 5%.  The current Oro Valley utility tax is 4%.  The total is 9% simply because you turn on your lights or have a landline.

What do you think?  Is this a good or a bad idea?
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Tuesday, August 28, 2012

Shoring Up The Bed Tax

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Yesterday, in "How Fiscally Sound Is The Bed Tax?", we discussed the bed tax, which is the "work horse" for paying for the reconstruction of and the operation of the aquatic center.  We have concluded there is some need to "shore up the bed tax", especially for 2013 and beyond.  This is because there is a shortfall of funding at that time.

We believe there is another reason to bolster this fund.  This is because there is a risk that the revenue stream will not materialize as projected.  Such could occur because the economy continues to be sluggish.  It could also occur if the major revenue source, the El Conquistador, has financial problems. And it does!

The bed tax is only as successful as the  El Conquistador. This is because the  El Conquistador is the main source of bed tax revenue.  There are others sources of the bed tax but they are not significant in relation to the El Conquistador.

If anything happens to the El Conquistador's revenue stream, if their sources of room bookings are lower than projected, then bed tax revenues will not be as projected.  So, its a "problem" when SAACA decides to not hold its Jazz Festival in October at the El Conquistador, choosing instead to hold it outside or Oro Valley.

Now, we have learned that the El Conquistador is in consensual bankruptcy.  This adds another level of uncertainty around the stability of this bed tax revenue source. 

The resort is owned by Ashford Hospitality Trust.  It is managed by Hilton. On 12/29/09, Ashford refinanced an almost $20 million loan from Met Life. (Source)  Met Life actually is the primary secured debt holder.  As such, they will  "call the shots" in any bankruptcy or reorganization proceeding.

Yes. The El Conquistador is in the process of renovation. Our guess is that the property is being put in "shape" in order for it to be sold.

The future of the El Conquistador is uncertain. Therefore, the future of bed tax revenues are uncertain.

When we asked if the town was concerned with the potential impact of a bankruptcy of El Conquistador ownership and management  in terms of endangering the bed tax revenue stream we were told by Town Manager Greg Caton and Town Finance Director Stacy Lemos that they were not concerned since situations like the one facing the El Conquistador rarely result in the facilities "going dark, so they will have bookings."  We asked if the town had a contingency plan and Greg did not respond.

There is another reason to shore up the bed tax. That is the uncertainty of the expenditure stream.  The town has already experienced a substantial increase in the cost of reconstructing the aquatic center.  The town has used its bed tax reserves to cover these costs. There are no more reserves.  In addition, the feasibility report on the aquatic center indicated that the center would not be a self-sufficient operation; that it would cost the town money. How much depends on uncertainties like the number of meets held and the costs of running a new facility.

We think that it never hurts to be cautious.

We need to shore up the bed tax.  We need to make it more secure.

One solution is to annex Westward Look.  We have heard that  Westward Look does not want to be part of Oro Valley because of the bed tax, which is 6%.  Council Members with whom we have spoken regarding the bed tax have indicated an interest in reducing the bed tax to 5% as in inducement to Weswtard Look.   This would have the benefit of giving Oro Valley resorts a financial advantage over those outside Oro Valley. It would also broaden the base of the bed tax, well beyond the El Conquistador.  Certainly, it is worth considering.
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Monday, August 27, 2012

How Fiscally Sound Is The Oro Valley Bed Tax?

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The Oro Valley Bed Tax is a source of funding for the aquatic fund.  So, the financial health of bed tax is critical to the financial success of the aquatic center.  If the bed tax is not sufficient to pay for the debt service on the aquatic center and for the operating cost of the center, then the general fund will have pick up the "slack."

We think, therefore, that it is reasonable to ask: "How healthy is the bed tax?"

With this question in mind, John Musolf met with Town Manager Greg Caton and Director of Finance, Stacy Lemos.   They provided John with their perspective which is:
  • Projected bed tax revenues for 2012-2013 are $788,000. This is 99% of last year's level.  Caton and Lemos feel comfortable that this amount of revenues will occur.
  • They project expenditures of $666,500.  They feel comfortable that this level of spending will be met.   
  • Next year, Oro Valley will take more from this fund than they put in, assuming that bed tax revenues meet this year's projected level.  Lemos believes that next year's spending level will be substantially more; approximately $925,000.  This is because of interest payments on the aquatic center bonds and greater spending on MTCVB. 
The big risk with the bed tax this year and, therefore the aquatic fund, is that the bed tax revenues will be less than projected.  This will even be a bigger risk next year when spending will increase, resulting in the need for substantial additional bed tax revenues.

How fiscally sound is the bed tax?  Is there is some reason for concern?  Does Oro Valley need to stabilize and increase this revenue source?  We will discuss more on this tomorrow.
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Thursday, August 23, 2012

Update: Is There A Pothole In Your Future? "No"

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Is there a pothole in your future? 

Oro Valley Town Engineer Craig Civalier and Development and Infrastructure Director Paul Keesler say "No."

Both met with John Musolf this week to discuss the Oro Valley 2012-13 pavement preservation budget.  They stated that the $1.2 million being spent each year is sufficient to maintain the quality of the Oro Valley Roads.  So, there should be no potholes in your future.  This is good news!

We wanted this meeting clarify a previous posting regarding pavement preservation funding needs.  We have minutes from a discussion prepared by the town four years ago. This discussion concluded that the town was underfunding its pavement needs at that time by significant amounts.  We were surmising that the findings of that discussion are still valid since the town had not addressed this supposed funding requirement.  We are not sure exactly why; but the findings of that discussion are no longer valid.

Councilman Mike Zinkin was kind enough to facilitate our meeting.
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Thursday, August 16, 2012

No Free Lunch: Assignment Of Oro Valley Police Officers To "Outside" Agencies Does Cost Oro Valley

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There is no "free lunch" when it comes to the costs of Oro Valley police officer's assigned to agencies outside of Oro Valley ("outside assignments").  This, despite the fact, that we have frequently heard that outside assignments cost Oro Valley nothing. They do cost Oro Valley something!  Last year, outside assignments cost Oro Valley $244,589.

The following information was copied from The Oro Valley Police Department web site in May 2012. Since that time, the table was removed. We, however, have a copy of the original page before deletion of the table. We are displaying it exactly as printed. ( Click on the image to enlarge it.)


You can read about these assignments on the Oro Valley Police web site:
  • Counter Narcotics Alliance (CNA)
  • Drug Enforcement Administration (DEA)
  • Arizona Gang Intelligence Immigration Team Enforcement Mission (GIITEM)
  • FBI Joint Terrorism Task Force (JTTF) 
Once assigned, the officer works under the direct supervision of the task force. Though the officer is a town employee, the town is prohibited from supervising the officer while the officer is on the task force.  Yet, the town pays the assigned officer and does incur cost of doing such.

This spending on outside assignments by the town of Oro Valley may be understated.  There may be "hidden" costs that appear elsewhere in the Oro Valley budget as line item expenses. These hidden costs could include the costs of take home cars, if the assigned officers have one; the costs of operating and maintaining Oro Valley vehicles they use, including the liability and insurance coverage; and the employee benefits associated with their employment.  "Hidden" costs, such as these, would further increase the Oro Valley investment in outside task forces.

The 2012-2013 police budget applies seizure and forfeiture funds to pay for 3 of these 8 outside  assignments. This amounts to an estimated $193,000.  So, one might argue that this reduces the cost to Oro Valley of these outside assignments; thus, some may argue, these outside assignments no longer cost Oro Valley money.

We disagree.   Outside assignments do cost the town.  The application of funds previously used for other uses does not change this fact.

This is the first year that the police department is allowed to use seizure and forfeiture funds to pay for police positions.   In prior years, seizure and forfeiture funds were used to pay for equipment.  The use of these seizure and forfeiture funds to pay for police officers is simply an accounting shift of the funds from one use, equipment, to another, personnel.  There is no net savings to the town.

Reimbursement for oustide assignments also depends on grants.  As Oro Valley history demonstrates, grants are not "forever".   If grants do not materialize then no grant reimbursement occurs.  Often, however, the item for which the grants applied does not disappear.  Instead, it becomes an ongoing expense to the town.  This is what happened when the state eliminated grant funding by the Arizona State School Resource Officer Program.  Oro Valley taxpayers now pay for the entire School Resource Officer program.

The Oro Valley web site contains details of the benefits the town gets from participation in each task force.  Benefits include:
  • "Provides intelligence, expertise, personnel and resources to OVPD units, including the Community Action Team and the Criminal Investigations Unit, (CNA)
  • The officers are provided extensive training from the federal government at no cost to the Town. This training benefits the police force upon the officers’ return to Oro Valley. (DEA)
  • Helps direct OVPD efforts toward combating terrorism and protecting the Oro Valley community.  (JTTF)
  • Discovered the following contacts existing in Oro Valley (GIITEM)
    • four (4) types of motorcycle gangs
    • two (2) different types of white supremacist faction
    • fourteen (14) types of street gangs either traveling through or living in Oro Valley."
We don't know whether these and the other benefits listed on the web site justify Oro Valley's investment in outside assignments. We do know, however, that outside assignments do cost Oro Valley money.  As a result, these outside assignments should be discussed in a open forum by our Council.

The question: Is Oro Valley getting a return sufficient to justify its investment in outside assignments?

What do you think?
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Tuesday, August 14, 2012

Is There A Pothole In Your Future?

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We have read about and experienced the pothole problems in the City of Tucson.  Simply put, the City has underfunded its pavement management program for years.  The result: Broken roads and potholes galore. PIMA County, too, has long standing pothole problems! Pressure to do something is coming from frustrated residents.

What about Oro Valley? Do we have a pothole problem in our future?

About 5 years ago, the Oro Valley “Pavement Preservation” program was discussed by the Town Engineer Civalier and Operations Manager Trenary (Source: February 26, 2007 Finance and Bond Committee meeting).   At that time,  Mr. Civalier stated that, at that time, $14 - 15 Million was needed in order to get to the point where our streets were maintainable.  After that, about $2.5 million would be required each year to maintain our streets.

So, when we look at the 2012-13 Oro Valley Town Budget, a budget that include surface treatment spending of $1.2 million, we wonder:  Why so little?

We recall the discussion five years ago:  Mr. Lamm of Finance and Bond Committee suggested borrowing $15 Million over a period of years to get the roadways up to a stabilization point where we could maintain them.  That never happened.  The funds were never acquired. The roads were not “stabilized”.

Since that time, Oro Valley has spent far less than the $2.5 million per year; and certainly never the $15 million one-time “catch-up” amount. 

This is how the town views its current program:
“The budget includes more than $1 million for the pavement preservation program in the Highway Fund, which maintains the current condition of our streets and roads. Although the funding level is slightly below 2011/2012 funding, the bids have been favorable, and the amount of maintenance expected to be delivered remains at a level which will not allow the infrastructure to deteriorate.” (Source: Oro Valley 2012-2013 Town Budget)
We wonder: What changed in the past five years that caused the town to be able to fund pavement preservation at levels that are far less than those recommended by the town engineer and the town’s finance and bond committee?

Is it time for Mr. Civalier to release an update to our “Pavement Preservation” situation?  Are we underfunding our pavement preservation requirements.  Is there a pothole in our future?

John Musolf
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Monday, August 13, 2012

Up Next: Our Analysis of the 2012-13 Oro Valley Budget

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At the end of May, we asked John Musolf to put together a "summer piece" that discusses the 2012-2013 Oro Valley Town Budget.  John did a fabulous job, as usual. He created 13 separate postings. These are easy to access from our tab above.

We asked John to do this for several reasons.  First, the overall spend is approaching $100 million.  That makes Oro Valley a big town.  Second, there was little public vetting of the budget.  Only one public hearing took place and that was on the day that the budget was approved.  Third, the Council itself held only two study sessions on the budget for a total of three hours.   So, total public view of the budget was maybe 3 hours.

If you read the 13 postings you will probably be more knowledgeable of the budget than the council members were when they voted to approve it.

Now, we plan to analyze the budget. Here's a preview of what's to come:
  • Pavement Preservation:  Is there a pothole in your future?
  • Police Task Force:  Resources Committed to Federal and State Responsibilities
  • Telecommunications:  Using technical expertise to reduce cost
  • Police School Resource Officers:  Whose budget supports? Training?
  • Bed Tax Fund:  Are we getting Return on Investment for Economic Development?
  • Police Fleet Maintenance/Information Technology: Why did these functions return to the Police Department?
  • Self-Funded Health Insurance Fund:  Fiscal Risk
  • Police Motorcycle Unit:  Size, cost and utilization
  • Steam Pump Ranch/Recreation Room: What does Steam Punch Ranch contribute to Oro Valley? Why eliminate Recreation Room?
  • Police Take Home Cars: Is the current approach justified?
  • Capital Improvement Programs:  Can we afford these commitments? What happened to Citizen Input?
  • Police Community Action Team: What practical results are accomplished through this function?
  • Aquatics Center Fund: How will we pay for the ongoing expenses of this new facility?
Our first piece in the series starts tomorrow.
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Thursday, August 9, 2012

Budget Primer: Self Insurance Fund

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When a private company or government entity wants to self-fund health insurance it is betting that it will be able to control the difference between the money (fund) set aside from the general fund (in the case of Oro Valley) and claims actually submitted by employees. It is not trying to make a profit but break-even and thereby lower its cost and use any gain if it occurs elsewhere in the budget.
  • The Town of Oro Valley did not want to incur new budget costs in setting up its own internal administrative services for this self-insurance. The Town of Oro Valley is considering buying Third Party Administration (TPA) called Administrative Only Services (ASO) from a subsidiary of United Healthcare called UMR.
  • The Town of Oro Valley will need a Provider Network for basic health insurance protection (doctors, hospitals, etc.). The Town of Oro Valley is considering buying that service from United Healthcare in the form of a plan called High Deductible Health Plan (HDHP).
  • The Town of Oro Valley has to lay-off some of the risk of excess or catastrophic health claim problems (like cancer clusters or significant long term health problems) by buying stop/loss insurance (which is commonly called re-insurance). The Town of Oro Valley is considering buying that service from United Healthcare.
  • The Town of Oro Valley will also continue to provide prescription or drug coverage. The Town of Oro Valley is considering buying that Pharmacy Benefit from a subsidiary of United Healthcare called Optum.
  • Arizona has a state law that allows someone to directly sue an insurer (Town of Oro Valley) for errors and omissions in claims problems. The Town of Oro Valley may already have liability insurance that covers this potential problem. The Town may have to purchase liability insurance to protect itself if it does not.
  • Most self-funded approaches have someone that has the fiduciary responsibility for the program. Many government entities create an advisory board to perform that function. The Town has not yet announced the creation of an advisory board.
This is first year Oro Valley has self-insured health program.  This fund will manage costs related to the Town’s self-funding of health insurance.  The budget includes establishing the Self Insurance Benefit Fund was started with a base of $300,000 contributed from General Fund contingency reserves.  The budget for this year is $2.1 million, sourced from premiums that the town would have  paid to the health insurers.
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This is the last of our "informational pieces" on the budget. Monday, we will begin posting our analysis.
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Wednesday, August 8, 2012

Budget Primer: The Aquatics Fund

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The purpose of the Aquatics fund is to pay for the reconstruction of the pool and for its ongoing operation. This fund is integrally linked to the bed tax fund because it is the bed tax fund that funds the aquatics fund. This fund, as revised by town council in June, is $5 million.

The initial financing for the aquatic fund was $3.45 million. On June 20, 2012, town council was forced to add $1.55 million to the aquatics fund to the pool they thought they were going to get for the initial funding. You can read our postings about the aquatic center to read about what happened here.

Because extra required late funding, the funding of the aquatic fund is a "hodgepodge". You can read our comments on this also in a previous post.  Here is the "hodgepodge":



      *To be repaid into the General Fund with Bed Tax Funds over next 15 years

      The FY2012/2013 Aquatics Pool Center Project Fund has a designation called Donations for $300,000. These donations represent what the Town calls “Capacity” (setting up a reserve for expected future money). This $300,000 will supposedly come from contributions from Naming Rights to the Pool, Corporate Sponsorships, Individual Businesses and Citizens. These funds have not yet materialized
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      Monday, August 6, 2012

      Budget Primer: The Bed Tax Fund

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      The bed tax fund is created from a 6% tax on hotel room bills.  Towns can use this fund for tourisim and economic development purposes.  Total revenues from this source are estimated to be a bit more than $782,000 in 2012-2013

      The fund pays for a variety of items. The following are include in the budget:
      • Three economic development department personnel: $231,126
      • Economic development department operations: $180,536
      • Economic development marketing: $60,000
      • $194,810 transferred to the aquatic center.  Some of this, approximately $177,000 is being used to fund increased personnel to operate the aquatic center. The remainder is being used to pay for the interest on the bonds in January 2013 of $18,603.
      There is one item, subject to check, that should have been included in this budget.
      • The town's contributions to MTCVB, TREO and or Oro Valley Chamber of Commerce for a total of $149, 981
      In addition, the ending balance of the fund of $311,301 has been depleted via a $300,000 transfer to the aquatic fund to cover some of the pool reconstruction overrun.  This is in addition to the $500,000 that was transferred in 2011-12 to fund the aquatic center construction.

      So, it is relatively easy to see that....

      The bed tax fund is, in reality, the "workhorse of the aquatic fund." This is because the bed tax fund has been and will be used over the years to service the substantial debt incurred to rebuild the facility and to operate the facility.

      Our next posting will be about the aquatic fund.
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      Monday, July 30, 2012

      Budget Primer: Public Service Funds

      There are a number of funds used by Oro Valley for Public Services:

      Seizures & Forfeitures – Federal Fund
      Federal anti-racketeering revenue is generated as a result of the Police department’s participation in investigating and seizing assets associated with illegal activities. The reimbursement of approved expenditures is administered by the PIMA County Attorney’s Office under strict Federal regulation. These funds are intended to be used in support of continuing law enforcement efforts and cannot be used to supplant any part of normal budget items. These seized assets cannot be used until the case has been adjudicated.

      Seizures & Forfeitures – State Fund
      State anti-racketeering revenue is generated as a result of the Police department’s participation in investigating and seizing assets associated with illegal activities. The reimbursement of approved expenditures is administered by the PIMA County Attorney’s Office under  State regulation. These funds are intended to be used in support of continuing law enforcement efforts and cannot be used to supplant any part of normal budget items. These seized assets cannot be used until the case has been adjudicated.

      Municipal Debt Service Fund
      The Municipal Debt Service Fund allocates money for principal and interest payments on the issuance of Municipal Property Bonds. The Town has issued bonds for the acquisition of land and construction of buildings to support Town Services. Repayments of this debt is pledged with excise sales tax, state shared revenue, and other permit and fee revenues.

      Oracle Road Improvement District Fund
      The Oracle Road Improvement District Fund allocates money for principal and interest for payments on the issuance of improvement district bonds. The Town issued bonds in 2005 to finance the widening of Oracle Road along the Rooney Ranch development. The bonds are repaid by the assessments levied on the property owners in this improvement district.

      Impound Fee Fund
      Impound fees are required payments for an impounded vehicle. Vehicles may be impounded by the police for a variety of reasons and violations. Impound fees may vary by jurisdiction and may also alter depending on the circumstances leading to the car's removal.

      The law requires that the vehicles impounded under this law be stored for a period of thirty (30) days before being released.

      The registered owner of this vehicle is liable for towing fees, storage charges of not more than $15.00 per day and administrative fees of up to $150.00.

      The impound fees pay for a Records Specialist position in the Police department who has responsibility for collection of impound fees and oversight of the impound function.


      Recreation in Lieu Fee Fund
      Recreation in Lieu fees were previously collected in the General Fund in FY 11/12 and segregated out into their own fund in FY 12/13. These are fees paid by developers to the Town in lieu of building pocket parks or other recreational amenities within constructed subdivisions.

      The budgeted capital outlay of these funds is for a restroom facility at Steam Pump Ranch along the CDO multi-use trail at the back of the property.

      Fleet Maintenance Fund
      Fleet Maintenance is an internal service fund. Each department that maintains a fleet of vehicles and/or equipment contributes to this fund based on their respective fleet size and related costs. The Fleet Maintenance is responsible for the preventive maintenance and repair of the town’s fleet of vehicles and heavy equipment. This is accomplished through the combination of service contracts and staff.

      The budget for these funds for 2012-13 follows:


      Amounts S&F General Fund S&F State Fund Minicipal Debt Service Fund Oracle Road Improvement District Fund Impound Fee Fund Recreation In Lieu Fleet Maintenance Fund
      Beginning Balance:  582,189  292,924  1,230,658  4,115  -    185,240  -  
      Revenues:  250,000  175,000  339,490  367,578  47,503  -    638,737
      Expenditures:
      Personnel  128,410  64,206  -    -    47,503  -    72,437
      Operations and Maintenance  -    -    10,000  2,720  -    -    566,300
      Debt Service
       -    644,080  367,578  -    -    -  
      Capital  -    -    -    -    -    130,188  -  
      Total Expenditures:  128,410  64,206  654,080  370,298  47,503  130,188  638,737
      Change in Fund Balance:  121,590  110,794  (314,590)  (2,720)  -    (130,188)  -  
      Ending Fund Balance:  703,779  403,718  916,068  1,395  -    55,052  -  

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      Thursday, July 26, 2012

      Don't Need "No Stinkin' Study Sessions"

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      Once again, we're doing some downtime thinking while the Town Council and every one of the town's boards takes the summer off.
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      Council special sessions are open meetings where the council does the town's business. These meetings are in addition to the regular council meetings. Generally, they are "special purpose focused."  In the past two years, the Oro Valley Town Council has held just 7 special sessions, covering the following topics:
      • Fireworks Ordinance
      • Employee Benefits and Ancillary Benefits Providers
      • Appointment to Preservation Commission/Budget Discussion
      • Police Chief Contract/Budget Discussion
      • Economic Summit
      • Town Manager and Town Attorney Discussion/Air soft guns
      • Council Vacancy
      The last special council session that was held was more than a year ago, consistent with the Mayor''s "habit" of jamming as much as possible into each regularly scheduled council session.

      Council Study Sessions are used by Council to understand and discuss, as a group, important situations, such as the town budget.  By law, any meeting of four or more council members is a violation of "open meeting laws."   So, it would seem to us, that special study sessions are in order for so much of what we find in Oro Valley. For example, discussion of the town budget.

      In the past year, the council has had two study sessions; one in September regarding the Town Centre PAD; one in April for 2 hours 36 minutes to discuss the $96 million budget.  That's right.  Aside from when they passed the budget in May, that was the only public vetting of the budget. Every other discussion, if any,  was behind closed doors.  So much for "transparency."

      Why has the council met only twice for a total of 3 hours 51 minutes to study important  issues? Aren't there other important issues that the council should deliberate upon as a group? Do you think, for example, that a study session regarding the $5 million aquatic center reconstruction would have been a good idea?  We do.  Can you think of other situations where a study session would have been useful to the council... To the public?
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