2027 TMRB: Personnel Spending Mirrors Overall Town Spending, Essential Services Take Priority

This is the third LOVE’s article on the Town Manager’s Recommended Budget. First,  we focused on six key revenue and forecasting variables that could determine whether the budget succeeds financially during the coming year. Last week, we focus on spending, identify spending by service provided by the town. Our coverage today is about personnel.

Personnel costs account for one third of the budget
Personnel costs are planned to be approximately $44.7 million in FY 2026/27. That represents about 34% of the Town’s total $130 million budget. It also represents roughly one half of Town operating spending after removing capital improvement spending, contingency, and debt service from the total budget.

No new full time positions are proposed
This year, the Town plans to maintain personnel levels at essentially prior year levels, with no new full time positions proposed. In addition, total personnel spending is expected to remain essentially flat despite police pay increases required under the MOU approved in February, a 3% increase for eligible non-sworn employees, higher healthcare costs resulting from increased claims experience, and the Town maintaining current PSPRS employer contribution rates even though actuaries recommended lower contribution levels. Staff stated that maintaining contribution rates at current levels will allow the Town to continue its policy of fully funding its police pension liability.

Lower police pension payments help offset pay and benefit increases
A logical question is how the Town can absorb pay raises and higher healthcare costs while keeping overall personnel spending flat. One factor is an approximately $1.5 million reduction in excess PSPRS pension contributions compared with the current year budget. In addition, several vacant or temporary positions are being eliminated or left unfunded, turnover in some departments is lowering salary costs, and no new full time staffing is being added.

👉

Staff noted that actuarial recommendations would have allowed the Town to lower its PSPRS contribution rates next year, but the Town instead chose to hold contribution rates steady to continue fully funding its police pension obligations.

Essential services account for most staffing and personnel spending
In LOVE’s operating cost budget analysis last week, we noted that 57% of operations spending is concentrated in essential services: Public Safety, Public Works, and Water. One would expect personnel staffing and personnel costs to follow the same pattern. They do. Essential services account for approximately 65% of all Town staffing and about 71% of projected personnel spending in the proposed FY 2026/27 budget. All other departments combined account for the remaining 35% of staffing and 29% of personnel costs.

Parks and Recreation staffing has nearly tripled in ten years
As we noted last week, Parks and Recreation spending has grown substantially over the past ten years. Staffing growth has been equally significant, and that does not include golf course personnel employed by the Town’s golf operator. In FY 2016/17, Parks and Recreation had about 24 employees, representing roughly 6% of all Town staffing. The proposed FY 2026/27 budget includes 69 employees in Parks and Recreation, about 16% of all Town staffing. That is an increase of nearly 190% over ten years, while overall Town staffing grew only modestly during the same period.

Personnel spending reflects current service priorities
Overall, the proposed FY 2026/27 personnel budget reflects a continuation of the Town’s recent approach of limiting staffing growth while maintaining existing service levels. The budget concentrates most staffing and personnel spending in core operational services such as public safety, public works, and water operations, while also reflecting the Town’s expanded role over the past decade in parks, recreation, golf, and community facility operations.

- - -

Next Up: Tomorrow.. Read what council candidates think of the budget!

- - -

Council Approves OVPath Forward General For November Vote

Residents strongly supported the process
Last week, the Oro Valley Town Council voted unanimously to place the Oro Valley Path Forward General Plan on the November ballot. The vote followed a public hearing, staff presentation, and nearly 42 minutes of council discussion. Most resident speakers supported both the process and the final draft. Several praised Principal Planner Milini Sims, Bayer Vella, and Rene Olvera for managing what staff described as the Town’s largest public engagement effort for any project.

More than 10,700 resident comments shaped the plan
Staff said the plan was based on more than 10,700 resident comments gathered over roughly three years. Input came through surveys, meetings, working groups, online discussions, and public events. Sims told council the final version remained very similar to the previously reviewed 60 percent and 90 percent drafts. She said there were no significant directional changes from earlier versions reviewed by council and residents.

Speaker recalled earlier General Plan controversy
Resident Shirl Lamona contrasted the current process with the Town’s earlier General Plan effort in the early 2000s. The 2001 General Plan update failed because significant land use changes were included in the plan. There was inadequate public vetting. It took several years, through the efforts of Oro Valley resident Bill Adler, to get it right. Lamona told council the current process was different because residents remained directly involved throughout development of the draft plan.

Council focused on wording and implementation timing
Much of the council discussion involved wording refinements and clarification of intent. Mayor Joe Winfield led much of the discussion, proposing edits intended to make portions of the document more action-oriented. Councilmember Josh Nicolson also successfully requested moving the proposed Vistoso Trails Nature Preserve restoration planning action from the three-to-six-year category into the one-to-two-year category. The change advances the timeline for a project that has already undergone years of planning, debate, redesign, and council review before reaching the current restoration phase.

Rooney Ranch amendment will update the land use map
One discussion late in the meeting clarified that the Path Forward land use map will automatically reflect the Rooney Ranch and Town Center General Plan amendment approved later that evening. Staff explained that the Path Forward map mirrors the current General Plan map, so the approved amendment will be incorporated into the version voters see in November.

Next phase focuses on voter outreach
The council approved Resolution (R)26-20 on a 6-0 vote, placing the Path Forward General Plan on the November ballot. Later this summer, staff plans to begin the “Residents Decide” phase of the process. That public information effort is expected to include roadway signs, postcards, newsletters, videos, and social media outreach. And, of course, more LOVE coverage!

- - -

2027 TMRB: Where $130 Million Is Going To Be Spent...$74 Million On Essential Operations

This is the second of LOVE’s articles on the Town Manager’s Recommended Budget. Last week, we focused on six key revenue and forecasting variables that could determine whether the budget succeeds financially during the coming year. This week, we focus on spending: Where does the Town plan to spend the approximately $130 million budget next year?

Capital spending is the largest budget item: $26.6 million
The Town plans to spend about $26.6 million on capital projects next year, about 20% of the total budget. Finance Director David Gephart told Council the focus this year is on “established needs for the community… not a list of wants.” Much of the spending reflects projects already approved and underway. The capital plan is significantly smaller than in recent years because several major projects have already been completed.

Most capital spending is focused on water and roads
According to Finance Director Gephart, about 31% ($8.2 million) of the Town’s $26.6 million capital budget is planned for water infrastructure and another 31% ($8.2 million) for streets and roads. Parks and Recreation accounts for about 13% ($3.5 million) of planned capital spending, public facilities another 13% ($3.5 million), public safety projects about 9% ($2.4 million), and stormwater projects about 3% ($800,000).

Public safety functions total about $23.3 million

The Police Department, Town Court, and Town Attorney’s Office report directly to Council. Together, they account for about 18% of the budget. Police spending alone totals about $21.2 million. Police Chief Kara Riley told Council the proposed budget maintains current service levels and was prepared with a fiscally conservative approach. Chief Magistrate Hazel stated confidence that the court can continue operating within its proposed funding. The Town Attorney’s approximately $1 million budget was not reviewed during the study session.

The water utility represents another 13% of spending
The Water Utility operating budget totals about $17 million, roughly 13% of total spending. Unlike most Town operations, the utility is financially separate and supported through water rates and fees rather than general taxes. Water debt, including borrowing for the Northwest Recharge Recovery Delivery System project (NWRRDS), is repaid through water revenues. Those costs are not included in the operating budget. Instead, debt payments are included in Debt Service and NWRRDS construction spending is included in the CIP budget.

Public Works and Highway Operations account for about 12% of spending
Public Works and Highway Operations total about $15 million and include streets, drainage, transit, fleet maintenance, and related operations.

👉

Most residents consider public safety, water, and roads to be high priority essentials. This year's budget reflects that. Together, these three areas represent about 71% ($18.8 million) of the Town’s capital program and about 43% ($55.4 million) of the Town’s total planned spending next year. Combined, spending on essential services in this year's budget is $74.2 million. That's 57% of the budget.

Parks and Recreation accounts for about 13% of spending
One of the things that stands out in this budget, and in reviewing earlier Town budgets, is how much Parks and Recreation spending has grown over the past decade. Ten years ago, Parks and Recreation spending was about $2 million, accounting for roughly 2% of the Town’s approximately $92 million budget. Today, Parks and Recreation operating expenditures total about $16 million. This includes parks maintenance, recreation programming, aquatics, the Community Center, and tennis and golf operations. About $9 million of these costs are offset by user fees and related revenue, much of it from golf operations. That leaves net spending of roughly $7 million. Compared to ten years ago, that represents an increase of about 350%, equal to a compound annual growth rate of approximately 16%. (Note: Ten years ago, some park maintenance functions and related expenses were budgeted in Community Development and Public Works rather than Parks and Recreation.)

Other departments account for about 11% of spending
The remaining spending is spread among other Town functions. Information Technology totals about $5.9 million, Community and Economic Development about $4.2 million, and Town administration and other departments about $4.2 million. The balance includes Finance, Human Resources, Town Clerk functions, elections, insurance, and other support activities needed to operate the Town.

Debt service and contingency total more than $16 million
The Town plans approximately $8.7 million in debt service payments next year, along with about $7.7 million in contingency funding. Combined, those two items total more than $16 million, or approximately 13% of the total budget.  

Budget categories overlap in some areas

Exact budget by department is are is challenging because the Town budget includes fourteen separate funds. Transfers among those funds, totaling more than $14 million, make the budget difficult to follow. However, the departmental spending categories as we have presented them appear to be reasonable approximations of where the Town plans to spend its money next year. As a result, our analysis could not identify $3.3 million in spending of the $130 million total.

Next week, LOVE will take a closer look at 2027 TMRB personnel spending and staffing levels.

- - -

Note: A Town budget chart included in the staff presentation to Council and LOVE’s chart categorize debt repayment differently. LOVE shows total debt service as a single category. The Town, however, allocated some debt repayment to the operations that incurred the debt, such as the Water Utility and Parks and Recreation. While that may be technically correct from an accounting standpoint, we believe it understates the amount being spent on debt repayment and overstates the amount that will be spent on Town operations.

- - -

Town Council Approves "Town Center" Amendment...Limited Housing...Lots Of Open Space

Council approves two related actions
The Oro Valley Town Council voted Wednesday to approve two related actions for the Town-owned portions of the Oro Valley Town Center property near Oracle Road and Pushview Lane. Council approved a general plan amendment for part of Area 4 and a PAD rezoning amendment for portions of the former Rooney Ranch property. 

Provides for significant opens space...
According to Town staff, the approved plan increases permanent open space from 69 acres to about 88 acres, about 78 percent of the subject area. It also eliminates 77 previously approved single-family lots in Area 4 and increases the buffer to nearby El Conquistador patio homes from about 100 feet to 350 feet. Staff also said the plan reduces building heights on the Town-owned portions of the property, including removal of a previously allowed 75-foot hotel entitlement.

... and a more restricted residential housing plan
The general plan amendment was approved unanimously as presented. The PAD rezoning amendment, however, was changed during the Council meeting. It was passed 5-1. Mayor Joe Winfield amended the motion to restrict Area 3 to one- and two-story ownership townhomes. That removed the apartment option from the plan. The motion also limited linear commercial height in Area 2B to 30 feet, including architectural features.

...which means that the council left "money on the table" in order to accommodate residents
That change highlighted an issue also raised the previous night during Planning and Zoning Commission discussion. They discussed this. It was their conclusion that limiting the residential use to just town homes  could reduce the future value or marketability of the property. They also felt it was too restrictive of future council options.  Council Member Josh Nicholson echoed their thoughts regarding reducing market value. Nicolson, who owns and operates apartments, said apartments could potentially generate greater land-sale value for the Town than townhomes. He said an apartment project could produce about $5 million in taxpayer revenue, compared with “just a couple million” from townhomes.  Council Member Nicolson, however, did not agree. He was the lone no vote.

Mayor Winfield felt that trade-off was a good one...
Winfield, however, said staff had spoken with developers who expressed support for ownership townhomes. He did not address the value issue. He also said he believed that type of housing would be supported by a majority of residents. His motion made clear that he wanted a more limited residential product than the one staff had brought forward; that he placed more value on lower intensity development. 

...as most on council agreed
Though there was disagreement on this, council, nevertheless, voted unanimously to approve the motion. One member told us that "The only reason I did not push back (on Winfield's motion) what that it was a reasonable compromise. I was very happy with the fact that we were able to get almost 80% open space." 

Residents got what they wanted...lots of open space... restricted residential housing
Residents who spoke at the public hearing offered differing views. Some urged the Town to preserve the property as open space because of its scenic location and importance to the character of the area. Others supported the revised concept because it increases open space, reduces building heights, and removes the previously approved single-family lots. In the end, their views were clearly considered. Council moved the project forward, but with a more restrictive residential limit than originally proposed.
- - -
Want to learn more? Read previously LOVE reports.

Bits and Pieces

Catalina Foothills group opposes Oro Valley annexation efforts

During the public hearing on Oro Valley’s Path Forward General Plan, this past Wednesday, Tom Pugh, speaking on behalf of the Catalina Foothills Association, urged Oro Valley officials to stop pursuing annexation efforts involving nearby unincorporated areas. Pugh said the association represents more than 1,700 homes and does not want to become part of Oro Valley. He stated that letters expressing those concerns had previously been sent to the Town and asked Council to respect the wishes of residents living in the Catalina Foothills area.

Unused Preserve funds redirected to pond irrigation and ADA trails
The Oro Valley Town Council voted Wednesday to use about $150,000 in unspent fiscal 2025-26 Vistoso Trails Nature Preserve funds, plus $50,000 from next year’s allotment, for plant and turf irrigation in the pond area as part of the pond restoration project. Council also approved use of a $136,210 Arizona State Parks grant for ADA trails in the same area. Supporters said doing the irrigation work now, while the pond is being built, would be more cost effective and would make it easier to complete other improvements later. 

Council approves Stonegarden Grant funds for police night vision equipment
Wednesday, the Oro Valley Town Council unanimously approved participation in the Operation Stonegarden grant program, authorizing the Police Chief to enter into an agreement with the Arizona Department of Homeland Security to receive up to $38,808 for equipment. The funding will be used by the Oro Valley Police Department to purchase night vision goggles to support regional law enforcement efforts, including coordinated deployments with U.S. Border Patrol aimed at reducing human trafficking, smuggling, and related criminal activity. The grant is reimbursable and tied to specific federal requirements, with the equipment intended to enhance officer effectiveness in targeted operations.

Town extends agreement with Pima County for animal control services

Also Wednesday, the Oro Valley Town Council approved a one year extension of its intergovernmental agreement with Pima County for animal control services, continuing the current arrangement from July 1, 2026 through June 30, 2027. The agreement does not include a direct contract payment amount. The service model is based on Pima County retaining licensing fee revenues and covering remaining costs through its own general fund, with no change to the existing terms. The extension allows Pima County to continue enforcing local animal control ordinances and providing sheltering and care services within Oro Valley. During public comment, one resident urged the Town to seek stronger enforcement response provisions for neighborhood complaints involving pet waste and animal control issues.

Town terminates contract legal services to consolidate under Town Attorney 

The Oro Valley Town Council approved termination of its contract with Mesch Clark Rothschild for Town Attorney services, following the establishment of an in house Town Attorney position, currently held by Steven Zraick. The change reflects a shift to consolidate legal services under a single office that reports directly to Council. According to the staff report, maintaining both a contract attorney and an in house Town Attorney created potential confusion over roles, raised ethical concerns about who provides legal advice, and could result in unnecessary costs. The contract termination was made by mutual consent and allows the Town to streamline how legal services are delivered going forward.

- - -

What Council's Approval Of The Trails Connect Study Means To You

Eighteen months in the making
On April 22, the Town Council voted 7–0 to adopt the OV Trails Connect Trails and Paths Master Plan, completing a year and a half planning effort. The plan reflects input from residents, trail users, and stakeholder groups gathered through surveys, trailside meetings, and workshops. The Council’s action adopts the plan as a guide for trails improvement and development for the next ten years. Funding will be considered over time as part of the town's annual budget process. (See LOVE previous reports)

Focuses on improving what residents already use
The plan covers a system that includes more than 100 miles of paved and unpaved routes. It focuses on maintaining these trails, not on building new ones. For example, it addresses pavement issues on multi use paths along roads like Tangerine, La Cañada, and Naranja, improves safety at crossings, and fixes problem areas such as erosion, washouts, and blind corners on both paved and unpaved routes. It also introduces better ways for users to report issues so they can be tracked and resolved more consistently.

Closes gaps and extending key routes
The plan identifies several connectivity improvements. These include extending multi use paths along major corridors, most notably a continuous path along Rancho Vistoso Boulevard, and working with regional partners on a new northern extension of The Loop. The previous route was found not viable, so a new alignment will need to be determined. The goal is to make it easier to travel across Town by bike or on foot without using streets.

Changes include Vistoso Trails Nature Preserve
At the Vistoso Trails Nature Preserve, the plan calls for improving the existing paved path system, increasing access for users of all abilities, and adding clearer wayfinding and etiquette signage. These are the types of changes that would affect how residents move through and use one of the Town’s most heavily used trail areas.

Recognizes and manages well used dirt trails
The plan specifically addresses unpaved trails in areas such as Big Wash, Honey Bee Canyon, and Panorama Trails. Many of these routes have been used for years but are not formally designated. The plan proposes formally recognizing these routes, improving access, and adding signage to define trailheads and connections, while coordinating with State Land and regional partners where they extend beyond Town boundaries.

Creates better signage and navigation throughout town
Residents will see more consistent signage across the system, including directional signs, trailhead markers, and maps. The plan also calls for digital maps and tools that allow users to locate routes, understand connections, and even report maintenance issues. These changes are intended to make the entire system easier to use, especially for new or occasional users.

Watch for changes over time
The impact of this plan depends on what the Council funds each year. Early changes are likely to be smaller, such as improved signage, better trail access, and maintenance of existing paths. Larger projects, like extending multi use paths or adding connections to The Loop, will take more time and coordination with other agencies. Many improvements, especially on unpaved trails, will depend on partnerships and volunteer support. Over time, the plan provides a way to make steady improvements, with each year’s budget determining what residents see next.

- - -

2027 TMRB: Six Key Variables To Watch

Six key variables will determine whether the budget is met
Last night, Town Manager Jeff Wilkins’ reviewed his recommended budget for fiscal year 2026/27 with the Town Council. It was the first of two study sessions. The second will be tomorrow.  According to Wilkins, the budget is balanced and reflects a  conservative outlook. The plan maintains current service levels and aligns spending with revised revenue expectations. Based on our review of the budget,  success will depend on six variables, items should be followed throughout the year. 

1. Sales tax performance will be the primary driver
Sales tax remains the Town’s largest revenue source. The budget assumes a low growth rate based on recent collections. Because of its size, even small changes in sales tax performance can have a significant impact on total revenue. If collections fall below the budget, the budget will face pressure. If collections meet or exceed expectations, the Town will remain on track. 

2.  Construction-related revenue needs to be tracked
The budget assumes reduced residential permit activity and lower construction-related sales tax. This year’s estimate is significantly more conservative than last year’s projection, which, according to recent staff reports, is expected to fall short by about $4 million. This category has historically been one of the most variable sources of revenue and is difficult to predict. As a result, it should be closely monitored throughout the year.

3. Capital spending discipline...watching project specific contingencies
Capital spending is a key factor because of its size and flexibility. In this budget, capital and other expenditures total about $26 million, making it a significant portion of overall spending. Unlike operating costs, which are relatively fixed, capital projects can be changed, delayed, or expanded based on circumstances after the budget is adopted. Most capital projects include contingency funding to address unforeseen conditions, sometimes up to 20% of the project cost. As a result, it is important for the Council to monitor not only total spending, but also whether contingencies are used. Unused contingencies will increase fund balances.

4. And also keep track of the "general' contingency budget... its a big number

The budget includes a general contingency appropriation of about $7.7 million to address unanticipated costs and needs that may arise during the year. These funds are not project specific. They can only be used with Town Council approval, making them a direct policy decision rather than an automatic spend. How much of this contingency is used will have a meaningful impact on year-end results. 

5. Operating costs control imperative
Departments are expected to manage spending within current levels, with no new full-time staff added. The budget plans to control operating costs, Staying within these limits will be necessary to maintain balance.

6. State-shared revenue... an uncontrollable external factor
The budget also assumes modest growth in state-shared revenue, reflecting broader statewide changes. While this source is more predictable than local sales tax, it remains outside the Town’s control and should be monitored as part of overall revenue performance.

Monitoring these variables during the year will be a must
These six variables can be tracked throughout the year through regular financial reporting. Monthly revenue and expenditure reports, along with clear dashboard-style summaries, would allow the Town Council and residents to see how actual results compare to budget assumptions. Ongoing monitoring will help council identify emerging gaps early so that the town will have the time to make corrections if needed.

Next week: 2027 TMRB: Where $130million Is Going To Be Spent

- - -