Staff: Town finished year in strong financial condition
Town Finance Budget Director Gomez painted a rosy picture of Oro Valley financial results through June at last Wednesday's town council meeting. “We ended the fiscal year in strong financial condition.” According to Town Manager Wilkins: "...financial performance across all funds has exceeded expectations."
Financial condition means fund balances
The town has sixteen separate funds. These funds totaled $99.7 million at the beginning of the year. The end of year total was $90.3 million. All Funds were budgeted at a year end total of $68.6 million (per the town's published 2023 approved budget)
“Strong” means fund balances in relation to budget
Gomez based her assessment by contrasting the actual cash holdings in the Town's funds with the predetermined figures. These fund balances are determined by the income received (revenues) and the money expended (expenditures). While the Town has limited sway over its incoming revenue, it exercises full authority over its expenditure decisions. Importantly, the expenditures do not encompass outstanding debts.
The sole "negative" observation made by Gomez pertained to local sales tax revenues. The primary fund responsible for covering town operations is the General Fund, which derives nearly half of its revenue from local sales taxes. Although local sales tax revenue appeared to remain relatively stable when compared to the previous year, it actually decreased by 10% when adjusted for inflation.
Gomez noted that all segments of local sales tax revenues exhibited growth, with the exception of construction-related sales taxes, which experienced a substantial 20% decline compared to the prior year. In 2023, construction sales taxes accounted for 20% of total local sales tax revenues, down from 24% in 2022.
The decrease in construction revenue aligns with a nationwide trend of declining housing starts. Economists have attributed this phenomenon to the rise in interest rates and the unprecedented levels of inflation. In simpler terms, potential buyers are finding it increasingly challenging to afford housing. On a more positive note, the higher interest rates have significantly boosted the interest income earned by the town in 2023.
Two major projects not completed..deferred to this fiscal year
One contributing factor to the "strong performance" is the allocation of budgeted funds that were not used. Two specific instances of this allocation can be found in this year's budget:
Westward Look Roadway Improvement
First, there were funds designated for the revitalization of the Westward Look roadway, in accordance with the town's annexation agreement. The Town agreed to make these improvements when it annexed Westwood look. Once again, it has taken forever to get these done. Maybe this will be the year!
Elevator at the Community Center
Second, there are funds earmarked for the installation of an elevator and necessary structural modifications to render the Community Center compliant with ADA (Americans with Disabilities Act) standards. According to Oro Valley's Public Works Director, Paul Keesler, the ADA improvement project is expected to commence by November. This improvement is long overdue.
Second, there are funds earmarked for the installation of an elevator and necessary structural modifications to render the Community Center compliant with ADA (Americans with Disabilities Act) standards. According to Oro Valley's Public Works Director, Paul Keesler, the ADA improvement project is expected to commence by November. This improvement is long overdue.
For years, the Town asserted that the service entrance on the right side of the community center, accessible from the parking lot, was ADA-compliant because it provided direct access to the second floor. However, this path involved struggling up a hill. Town activist Jim Horn raised this issue with the Town Council, prompting them to take action. They would never have done so otherwise. It has taken some time for Mr. Keesler to reach this point, but it appears that significant progress will be made by the end of this year. One day, there will be an elevator.
