$148,489,391

Town Council likely to approve record  $148.5 million budget tomorrow night
The Oro Valley Town Council will hold the second public hearing on the 2023-24 Town Manager Recommended Budget (TMRB) tomorrow night. The budget calls for $148.6 million in spending. It is the largest budget in Oro Valley history. The budget includes spending for ongoing town operations and for capital items.

2023-24 Budget is more than recommended by Interim Town Manager Cornelison
The budget that the Council will consider is $600,000 more than recommended by Interim Town Manager Cornelison. There are a more than thirty adjustments that are proposed. Most of these are changes in estimates or the movement of costs to another year. It is $785,000 more than this year’s budget.

Our previous reports have detailed TRMB spending
LOVE has previously reported on the 2023-24 TMRB spending budgets:

• TMRB Budget Overview 
• Capital Projects 
• Operations and Maintenance 
• Staffing 

These four areas comprise the bulk of budget spending. There is also spending to service debt and contingency reserves, which are funds to be designated at a later time.  LOVE also reported on learnings from the Council’s two study sessions.

Funding comes from multiple sources
Funding for this spending comes from nine sources (chart right). The main source this year is a reduction in fund balances. This reflects the drawdown of Parks Bonds Funds ($17.1million) and the use of Federal ARPA funds ($10.5 million). That means that $16.9 million is coming from funds earned by the town from “normal” sources.

Unless something dramatic happens tomorrow night, this is our final report on the Town of Oro Valley 2023-24 Budget.

- - 

Note: The town council voted 6-0 (Nicolson absent) to approve this budget.

Guest View-Don Cox: Council Inaction on Growth-“Lean Years Are Coming”

A friend forwarded a copy of a recent post on this blog. After reading it, I felt compelled to submit some thoughts of my own about the post and the Town of Oro Valley in general.

That post was penned by Mike Zinkin. If you have been around the Oro Valley for 20+ years, you probably know that Mike and I have had a few differences over the years. What may surprise you is that in the past couple of years, we have discovered that we agree on many issues. In fact, he and I have been featured jointly on the Jim Horn’s Oro Valley Podcast” in recent weeks. So at this time, I want to ‘dovetail’ on some of his commentary.

In the past 5 years, the governance of Oro Valley has taken a well oiled financial machine, the envy of the vast majority of the municipalities in the United States and placed it on the road to financial failure. Unfortunately we have now moved into the fast lane of that road.

The current Town Manager’s proposed FY 2023/2024 budget is nothing more than documenting the stated desires of the Town Council in writing, and then assigning a cost to it. It does not address the needs of the town. Rather, it reflects the personal desires of the town council members. A “splash pad” did not come from the residents. it came from Vice Mayor Melanie Barrett. A “Pump Track” did not come from the Town residents. It came from, Councilman Josh Nicholson. 

About 3 or 4 months ago you were given a clear ‘red flag message’ when the Director of Public Works, Paul Kessler, announced at a Town Meeting that the estimated cost of the ‘projects’ on the Town Council wish list, which was to be paid for by that $50 million non-resident approved bond, was closer to $100 million. How does Winfield and crew, make a $50 million error on a $50 million bond? The answer to that question is simple. It’s fiscal irresponsibility!!

I have spent a great deal of time examining the Oro Valley proposed FY 2023/2024 revenue budget. It’s available on the Town website for all to see.

Here are some direct quotes from the Revenue Summary: 

“Local sales tax is expected to show gains over the FY 22/23budget, but a slight decline when compared to with the FY 22/23 actual revenue.”
Translation: Our sales tax revenue is going down

“This is largely attributable to construction sales tax, as permitting activity has slowed from the highs we saw during the COVID -19 pandemic.”
Translation: We are building fewer homes. Where have you heard that before? Yours truly!!! 

“The Town is projecting 119 single family residential (SFR) permits for FY 23/24 compared to the 171 SFR permits budgeted for FY 22/23. Commercial development revenues are expected to decrease based on projected building activity.”

Translation: “Commercial follows residential.” We have no residential growth therefore we have no commercial growth.  

Now my friends, is the 1600 hundred pound elephant in the room

The current Town Council majority has not approved a single residential development in Oro Valley (with the exception of a 64 +/- project that was already approved by Pima County before it was annexed)! No new commercial development has been approved in the same period. The exception to the latter statement is the Marketplace re-development which they gutted for no logical reason. The 2018 campaign promise of a “Moratorium on Growth”, which was later denied by Melanie Barrett, has become a reality.

From the time of Council approval, it takes an average of 3 years for projects to start generating construction sales tax. Construction sales tax is currently running about $6,000,000 a year. Translation: This Town Council majority has created an eight year void in the Construction Sales Tax pipeline. That’s $6 million a year that is going away for a minimum of 8 years. And that money is not replaceable.

Prepare yourselves for some very lean years in our immediate future if we don’t come up with a way to generate more income for the Town.

- - -

Don Cox moved to Oro Valley in 1997.  He has served on various town committees including an extended stint as a chair and vice chair of the Planning and Zoning Commission.  He is a member of the Oro Valley Optimist Club and the Arizona Youth Partnership.

This and That From The TMRB Study Sessions

No change in what we previously reported on the TMRB

The Oro Valley Town Council held 8 hours of a study session on the 2023-24 Town Manager’s Recommended Budget (TMRB). Nothing new regarding the TMRB emerged. What we previously reported stands.  However, there were a few things that we did learn from the sessions that are worth sharing.

Town considers "Winfield Special" fifth tier for water billing

The town’s water department is studying adding a fifth tier to the water billing structure. That tier would be for users, like the Winfield family, of less than 3,000 gallons of .water.  The town’s current structure, in which users are penalized for water use, will continue. Staff did not announce a timetable for this new tier.  Interestingly, the brain child of this tier was offered up some months ago by Mayor Winfield on the guise of encouraging less water use. Could it be that he just wants he wants to lower his water bill? One could reasonably question how a family of six can survive on 3,000 gallons of water a month.

Homeowner insurance may cover scams

We hope that you are never scammed. Some of the latest scams are discussed on the Oro Valley Police web site.  If you are, we learned at the special session that Homeowners insurance may cover the damage. Check your policy or ask your agent to see if you are covered.

Whether municipal golf makes a profit is a matter of accounting

There is no agreement among councilmembers or among town staff on how to determine if municipal golf is making a profit. Staff says it is but one has no idea if that interpretation includes sales tax support.  And there are differences in understanding what revenues and what costs should be charged to golf operations. For example, when town staff says that municipal golf is profitable that are not including the millions that are being spent on replacing the irrigation system, enlarging the community center parking, or making the area more challenged accessible.

Grants and outside funds play a huge role in public works funding

The town seeks federal, state or local funds for just about every road project they do.  The La Canada Bridge needs repairs so staff is seeking federal funding. Naranja Drive needs a multi-user path. Staff is seeking PAG and RTA funds for this. Much of the remaining roads program is funded by state highway funds.

Councilmembers want to measure the results of economic development efforts but…

Every council member asked how the Economic Development Department measures its results. None of them got an answer. That’s because, try as he may, Mr. Melcher, the department head, has very little to show in his three years in on the job. Much of this is because the town's target businesses, high tech and medical tech, are hard to find. So, Melcher is focusing on bringing events to town. This will bring outsiders in to use the town's retail and hotel services. Melcher will report to council on the result of one such event, the Tucson Bicycle Classic, at this Wednesday's meeting. Read our April analysis of why economic development efforts have produced limited results.

The town is getting software to help them identify those who do not register their short term rentals

The software scans the various short term rental website. The program gathers information on rentals offered in Oro Valley, summarizes the results, and develops a report of activity by the owner.  Staff will then compare that list to the list of those who have registered to determine those who have not.  Staff claims that this will be "evidence" sufficient to press forward. Here's one example of the kind of software that can do this.

Fee Payers should pay credit card fee

The town budgets a $57,000 credit card fee cost incurred when people pay fees using their credit cards. Why doesn't the town add this fee to the cost when the person is paying? This is a common practice when paying bills online to public entities.

Councilmembers "fall over backwards" to complement staff on the job staff is doing

It was difficult to listen to eight hours of a study session. Much of the session is consumed by councilmembers telling staff what a great job the town staff person is doing; and if they are addressing a supervisor, telling them what a great job their staff is doing. "Thank you for your services and the great work you do" is heard over and over again.  There's nothing wrong with that. But when you do to every one every time, the compliment becomes gratuitous. One suggestion: Mayor Winfield should thank staff for their great work at the start of every meeting. That way, the same praise does not have to be repeated ad nauseam. 

- - -

Water and Parks Dominate $37 Million of TMRB Operations and Maintenance Spending

Operations and maintenance costs are one-quarter of TMRB spending

Spending on operations and maintenance (O&M) is 25% of the 2023-24 Town Manager’s Recommended Budget (TMRB). The total amount is $36.6 million.

O&M up 6%

The TMRB O&M budget is up 6% because of inflation, according to the TMRB document. “In FY 22/23, the Town experienced considerable cost inflation in areas such as gasoline, public safety equipment, field supplies, technology, professional services and more across the organization. The Town has yet to see any measurable relief of inflationary pressures.”

Looking at the O&M budget “areas of further increase include software and technology, medical claims costs and Central Arizona Project water costs. Revenue increases due to inflation have helped to relieve some of this pressure, but nonetheless, it does place strain on resource allocation during the budget process.”

TMRB department budgets reflect most, but not all O&M spending
Detail department operating budgets contained in the TMRB show a total of $31.5 million in O&M cost. That's about $5 million less of the total that is $36.6 million in TMRB O&M spendings. The largest portion of this is the estimated $4.3 million payment to the town’s Benefit Self Insurance Fund.

More than half of the spending is in two departments

The Water Department O&M budget is 35% of the total. 

The budget amount is an increase over prior year for three reasons: 

• Increases in the amount of money the town is charging the utility for providing support services
  The town has substantially increased the cost of providing administrative support services to the water utility. The "actual" charge for this fiscal year is $993,268, The TMRB amount is $1,605,500. Thus, that cost goes into computing water rates, so it is a way for the town to get added revenues for its other services. This is not an independently, market-based alternative so there is no way to determine if the charge is "fair"
• Increase of CAP water wheeling and water delivery charges 
• Increase of cost of equipment repair and maintenance 

Detailed line item spending plans are not included in the TMRB. These are provided in a report which is called: “MUNIS”.  That document shows O&M cost increases in most areas. Water customers will pay for these costs through ever increasing water rates.

Parks (including the Community Center) O&M budget is 22% of the total

The TMRB lists five major reasons for the Parks and Recreation O&M increase:

• Planned use of outside professionals to develop the trails master plan 
• Cost increase of field supplies, water, and sewage
• Increased cost of call maintenance services
• Cost increase of special events
• Increase cost of utilities, supplies and building maintenance 

The MUNIS for this department shows other increases. For example, there is a doubling of the cost of using outside professionals in the recreation and culture program; increased maintenance cost of the Aquatic Center; and increased water and sewage cost increases for Parks.

We have included the Community Center as part of Parks and Recreation because it is! Community Center O&M costs are $5.3 million. That is more than three quarters of the Parks total O&M budget. Much of this spending is for the third-party management of the golf courses.

All other

The largest items of spending in all other departments is for fleet management (Public Works), telecommunications (Innovation and Technology), and advertising and marketing (Town Manager).

- - -

TMRB Seeks Added Staffing for 2023-24... No Reductions Planned

Six new positions... Total of 424 Town of Oro Valley Employees

The 2023 town manager recommended budget includes an increase of five new full-time and two part-time positions. This will bring the total number of people employed by the Town to 424. 

Where are they?

We see many of them on the roads because they are employed by the Police Department. We see other town employees on the roads because they are part of the Public Works Department. We know that many work in the Water Department because they provide beautifully clear fresh water every day. When we go to our Parks, we see them maintaining the facility that we are visiting that day. Indeed, more than three quarters of the town's employees are in these four departments (see chart below, right).

Police: 140 personnel, including 1 new position, $18.7 million cost
Half of the personnel in the Department are deployed in Field Services. Field Services is responsible for the uniformed patrol functions of the Department, including 24-hour response to the initial investigation of crimes and incidents, traffic enforcement and control, crash investigations, community policing programs and specialized operations such as SWAT and K-9.

Most of the remaining staff is involved in support services. The includes the Criminal Investigations Unit, Crime Analyst, Task Force Operations, Property and I.D., School Resource Officers, Community Resources, Citizen Volunteer Assistants Program, Records, and the Communications Bureau. Support Services focuses on and analyzes crime trends, efficient resource allocation and technological solutions. 

Public Works: 78 personnel, 1 new position, $6.4 million cost
This department wants to add a full-time transit supervisor to assist in driver management and review, service scheduling, and operations and program compliance, ensuring we continue meeting the needs of our community for this critical service.

Parks and Recreation: 69 personnel, 1.5 new positions, $4 million cost
Two-thirds of this department’s personnel are employed at the Community Center (23) and the Aquatic Center (22). This department wants to add a full-time parks maintenance worker to accommodate the addition of the Vistoso Trails Nature Preserve and a part-time park monitor to accommodate new acreage and facilities coming online with the completion of the latest phase of the Naranja Park improvements.

Water Department: 40 personnel, no new positions, $3.9 million cost

Two thirds of the water department staff are deployed in field operations. "The Operations Division oversees the operation and maintenance of all potable and reclaimed water production and distribution facilities, to include wells, boosters, reservoirs, metering stations, water mains, fire hydrants and valves. Additional responsibilities include meter installations, commercial meter testing, water quality testing, backflow prevention, construction of minor water main projects and oversight of the Advanced Metering Infrastructure system, disinfection systems and security systems."

 
All other Departments: 97 personnel, 2.5 new positions, $10.1 million

There are ten other departments. The fastest growing of these is the Information and Technology Department, which seeks a complement of nineteen staff.  "The Recommended Budget includes two new full-time positions in the Innovation & Technology Department. An additional business systems analyst is necessary to support the growing use of technology in Town operations, with special emphasis on the needs of the Police Department. A security and compliance administrator will protect the organization by implementing and managing cybersecurity tools, as well as respond to and remediate cybersecurity incidents and threats. This position will also ensure the Town’s IT systems are compliant with recommended best practices and that action plans are completed for all regulatory agencies."

No cuts anywhere...even in places where position should be eliminated...for example

Somewhat of a surprise is that the Community and Economic Development Department continues its current complement of almost 29 staff. That department ought to be examined as a candidate to reduce staff. This is because there is a long-term continuing decline in permitting activity and of economic activity. 

Town Manager Recommended 2023 Budget: $147.9 Million

Cornelison: Budget is a prudent allocation of resources

Interim Town Manager Chris Cornelison issued his recommended town budget for fiscal year 2023 (starts July 1). 

"This budget reflects the priorities of the current and upcoming Council Strategic Plans. Notable items in the budget include funding for roads, water and Town assets, land use design, and financial stability and sustainability for an inflationary economy. The budget process involves the prudent allocation of resources across Town operations to continue and improve the high service levels Oro Valley residents expect in order to live, work, play and prosper in our community." (Source: Town of Oro Valley Media Release)

"The budget is structurally balanced, according to Finance Director David Gephart. Gephart addressed his remarks to the town's Budget and Finance Commission this past Tuesday. The budget uses ongoing revenues to finance ongoing operations; and one-time revenues to finance one-time expenditures. "That's really critical. That's a policy of the town."

Budget includes $47.7 million in capital spending

Capital spending is 32% of total spending. "During this budget year, the Town will be completing significant additional recreational amenities that expand the offerings provided to both residents and visitors." Most of the spending is on Naranja Park, two of the town's golf courses, and the community center. The source of much of this funding is the Parks Bonds Funds the town borrowed in September of 2021 for "Implementing a continued, robust capital investment strategy utilizing the remaining Parks and Recreation $25 million bond proceeds and other one-time revenues." (Source: 2023 TMRB Page i)

A few new staff positions

"The Town continues to maintain a conservative approach to adding new personnel, but workload increases have necessitated the addition of five new full-time and two part-time positions." The budget recommends positions in the following areas: Technology, public safety,

parks and recreation, public works, and magistrate court. 

Three funds are 70% of spending

Spending on town operations (the General Fund0, on capital investments, and on water department operations are 70% of total recommended spending. LOVE will discuss these and other areas in future postings.

"Conservative budget"

Gephart noted that the TMRB is conservative in its estimates. The TMRB anticipates a mild recession, higher interest rates, and a "malaise in the development of single family housing."

Next Steps

Residents will have several opportunities to get involved. "The public is invited to stay informed and participate in the process:

• May 10 at 5 p.m. – Council Budget Study Session #1 
• May 11 at 5 p.m. – Council Budget Study Session #2 
• June 7 at 6 p.m. – Public Hearing and tentative budget adoption 
• June 21 at 6 p.m. – Public Hearing and final budget adoption

This can be done in person or via Zoom.

 - - -

Parks and Recreation Projects Dominate Initial Cut At Oro Valley 2023-24 Capital Improvement Program

2023-24 Oro Valley Capital Budget-first cut- is almost $47 million

This Wednesday, the Oro Valley Town Council will study a $46.9 million capital budget for fiscal 2024. It is the largest capital budget (CIP) in Oro Valley history. Significant capital spending is being driven by the requirement to spend Parks Bond Funds and Government ARPA funds within the next few years. The result is that much of the spending is on parks and recreation and on water projects.

Parks projects are almost half of all spending

There are twenty-one proposed parks and recreation type projects that total $22.9 million. Two-thirds ($15.1m) of this spending is for continuing the buildout of Naranja Park. Even with this investment, future year capital investment plans call for continuing to add to and improve this facility with two additional fields, restrooms, and an asphalt roadway.  Other proposed parks projects for 2024 include doing the LaCanada Golf Course irrigation at a cost of $2million and adding a $1.7million elevator to the Community Center.

$12 million in proposed water related projects to add efficiency and operating flexibility

There are fifteen proposed water projects that focus on the operations and maintenance of the water utility. These are investments in the the storage and distribution of water. Generally, the cost of each project ranges from $100,000 to $200,000. These estimated total cost of these projects is $2.2 million. Generally, this cost stays the same for each of subsequent nine years. 

There is an added $10million in capital investment that appears to be for one-time projects such as the expansion of the booster station on La Canada ($3.7 million) and continued spending to bring water directly from Avra Valley to Oro Valley (NWRRDS). This will allow the town to reduce its dependence on Tucson Water for getting the town's CAP water allocation. We are guessing that the $5.4 million in ARPA funds are being used for the NWRRDS project.

Proposed spending to keep Oro Valley's roads the best in the county

Oro Valley's roads are the best in the County.. probably in the State. The proposed capital budget would spend $6.2 million on roads. A third of this is spending on the town's pavement preservation program. Also, there are several proposed pavement overlay projects, one road reconstruction and "annexation promised" road improvements at Westward Look.  There is also a budget item of $750,000 for "something" to be done at the very busy Rancho Vistoso and Woodburne Ave intersection  (perhaps a traffic light?).

Remaining capital improvement spending is primarily for public safety

There are two other areas of proposed capital spending. One area is public safety. There is proposed capital spend on an expansion of the town court office ($1.5 million) and on vehicle replacement ($1.9 million). The town court project is proposed to continue into 2025 for the same amount.  The vehicle replacement program also continues at about $2million annually for all of ten years included in the proposed CIP plan.

- - -