Guest View Mike Zinkin: The Ongoing Saga of the FY 2020/21 Budget

This article continues my review of the 126-page 2020-21 Town Manager’s Recommended Budget (TMRB). The “onion skin”, comparative line item detail by expense category, that I mentioned in that article was not in the submission. It will be forthcoming due to the action of some of our more responsible Council members. Until that happens, there are many more stories to be told with the information we have already.
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Town Manager Jacobs wants to remove restrictions on Bed Tax Revenues
On page iii of the Town Manager’s Recommended Budget (TMRB), Town Manager Mary Jacobs states that she will be asking the council to remove the restrictions on the Bed Tax revenues. Since bed tax is derived from hotel/motel stays, a certain percentage of the revenue is restricted to be spent on tourism projects (e.g. Visit Tucson). Bed tax should not be spent on general fund expenditures. It is a specific tax used for specific purposes.

Jacobs states: “This change results in the availability of $1.6 million of additional unassigned fund balance (above the $3 million mentioned earlier) that will strengthen even further the availability of reserves the Town can use to get through this crisis.”

Here’s an idea. How about responsible spending and reduced expenditures to get us through this “crisis?”

Paid employee health insurance for all town employees
On page iv of the TMRB, Jacobs recommends that since Town employees are not getting step/merit increases this year, that the Town should pay 100% of the premium for those employees who choose the high deductible health insurance plan. Page 18 of the TMRB shows that the plan is for the Town’s contribution to be $3.2 million and the employee’s share to be only $571,059. Question: How many employers in today’s world pay 85% of the employee’s health care? Answer: Very few.

Community Center upgrades take a backseat
On page 112 of the TMRB, she plans to spend $400,000 on the multi-use path around OV Marketplace. On page 114 she plans to spend $550,000 to restore the garage at Steam Pump ranch to be used as an employee office for the Recreation and Culture division. All this while not one penny is being spent to make the Community Center (a building we have owned for over 5 years) ADA compliant. Is it really more important to have more employee office space than it is to assist our handicapped citizens?

This is YOUR money. Shouldn’t your money be spent helping YOU?
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Guest View- Mike Zinkin: The "Devil Is In The Lack of Detail" in Town Manager's Recommended Budget

TMRB is incomplete and misleading
The Town Manager's Recommended Budget ("TMRB") is out for FY 2020/21. This document is incomplete and hardly gives enough information for the Council to make an informed decision.

I suspect that there are sitting Council members (the Hiremath holdovers) who have no idea that a lot of information is missing. The unfortunate thing is they probably don’t care or couldn’t be bothered with such details. After all, consider how many times we’ve heard them say that the staff gets paid to do this, they’re the experts, and we don’t need to get into the weeds.

The council needs to get into the weeds to understand this budget
In my years on council, I spent countless hours pouring through budget information. It was my job to do that for the people. You have to get into the weeds when it comes to understanding a budget, otherwise some spending will get a perpetual life. Some of these spending items were given life in the Hiremath years and really do need a hard look by the council majority.

Partial information
It's important that all areas be discussed completely. An example is the budget for amounts the town plans to contribute to other organizations.  "Page v" the TMRB states that the Town is budgeting $30,000 to give the UA for recruitment and support of new businesses, $275,000 (down from last year’s $300,000) to Visit Tucson, and $40,000 to the Greater Oro Valley Chamber of Commerce. All of this spending was ramped up under Hiremath.

But that is not the whole story. Because the town is actually planning to give away more.

It was only after I communicated with Town Manager Jacobs did I find out that: “The town manager message preface of the TMRB is intended to hit highlights and does not specify all expenditures. Additional details will be covered in the study session presentations."

So the TMRB didn't mention that a continued Children’s Museum contribution of $75K is included (General Admin), that continued membership in Sun Corridor for $10K is included (CED) or that  $25K is planned for the Southern Arizona Arts Council.

Why wouldn’t this be in writing in the document?  Was it an oversight, or was it that the Town Manager did not want the Council know about these additional expenditures?

 Detail Included In Prior TMRB Documents

"The devil is in the detail"
The TMRB has no pages indicating how each department is allocating their expenditures. In recent memory, all TMRB’s have included this kind of information; what I like to call “onion skin.” Onion skin details how much is spent on line items like travel, training, supplies, overtime, and vehicles.

When I questioned why this TMRB had no onion skin, the Town Manager replied: "We have a new CFO who is bringing new ideas, approaches and best practices to the budget development.  We look forward to hearing feedback from the Council on the new format.”

Ms. Jacobs, need I remind you that your new CFO works for you. Could it be you that does not want the decision makers (Council) to have all the information? Without this information, the Council cannot make an educated decision.

I could go on forever, regarding this TMRB
For example, Page 26 of the TMRB shows that there is a $3,000,000 bonding source for the Community Center. It wasn't even mentioned in the Town Manager's statement. Its just buried in a schedule. Seems to me that $3million in bonding for Community Center is something that should have been highlighted. Didn’t the Council mandate Community Center improvements were to be on a pay as you go basis. If so, just what is this for?

I have not completed my review of this 126-page document, but from what I have reviewed so far, this document is severely lacking. It appears to contain only the information that staff wants to present, but NOT the information needed for the Town Council to make an educated informed decision.

Jacobs: Town of Oro Valley In a "Very Good Position"

A very good position

Town Manager Mary Jacobs expressed optimism in her report to the Oro Valley Town Council last week.  She observed: "We're in a very good position in comparison to a lot of communities across the country." 

General Fund Reserves should exceed target level at year end

General fund cash reserves are projected to be $3million more than the target level set by town council. The target level is 25% of total 2020 general fund spending. 

This estimate does not include approximately $105,000 CARE Act funds that the town will receive from the US Treasury via Pima County.

General Fund revenues should finish the year 3% under budget

Total general fund revenues are projected to be 3% ($1.2 million) under the adopted budget for the fiscal year.  Included in this estimate are:

• Sales tax revenues will be 6% under budget for the year.  Sales tax revenues were 10% ahead of budget through February.      
• State share revenues are projected to be 5% over budget. This will somewhat mitigate the loss in sales tax revenue.
• Licensing and permit fees are projected to be 21% under budget. 

General Fund operating and maintenance spending are projected to be 10% under budget. 

Good positioning for town operations

In a LOVE follow up interview with Jacobs, we learned that no town employee has been diagnosed with Covid-19. In addition, the crisis has challenged the town to change the way some things happen, accelerating changes that were "in the works" and likely to stay. For example:

• The town announced new processes for public meetings
• The town launch an updated website
• The majority of town employees telework
• Permitting is done online
• Some inspections are done remotely
• Jacobs hosts "e-Town halls" for town employees to augment email communications, letting staff know what's going on and what the future may hold.

Still, she notes that there is no long term substitute for personal contact.  "I really miss the opportunity for that personal interaction. We get a lot of energy from each other."

It's not a good idea to bet against Oro Valley 

As Yogi Berra once said: "The future ain't what it used to be." Yogi was right.  Times are different. Not necessarily better or worse. Just different. We've never been in this place in our lifetime.

Wednesday, we will take a look at the future as we give a "quick peek" into the 2021 budget. See just how different things might be.

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