Town Talk with Mary Jacobs
Published on May 27, 2020
Town Manager Mary Jacobs, Special to Tucson Local Media - 05/27/20
The COVID-19 pandemic has impacted nearly every facet of our lives, including the Town of Oro Valley’s annual budget process. While we’ve certainly had to make some adjustments, I am pleased to report that the Town of Oro Valley is strongly positioned to close out the current fiscal year on budget, and weather the projected national and state economic downturn with minimal expected impacts on services to the community.
The Town’s fiscal year begins July 1, and our sales tax collections had been very strong this year. In fact, had the trajectory of sales tax collections gone as projected in February, we were expecting a 10% increase in that revenue category by fiscal year-end. Up until the pandemic, Oro Valley was having a very good year. But then, like so many communities across the country, we had to make some adjustments. For example, in preparation for a COVID-related economic downturn, I instituted a hiring freeze in mid-March, affecting seven vacant positions. An additional two positions will become vacant before fiscal year end. All of those positions have been projected vacant through December 31, 2020, in the FY 20/21 Town Manager’s Recommended Budget, which was presented to Council on May 20, 2020 and is available on the Town’s website.
With strong financial preparation, a collaborative leadership team, and targeted and responsible expenditure reductions, this balanced budget represents the allocation of resources expected to be available next fiscal year in this era of COVID-19 crisis. The allocated funds are first focused on achieving the goals and objectives outlined in the Town Council’s adopted FY 2019/20 – FY 2020/21 Strategic Leadership Plan, wherever possible.
Overall, we are projecting the revenues in the Town’s largest fund, the General Fund, to decrease 3% or $1.2M from the adopted FY 19/20 budget. This reflects a 6% decrease in sales taxes to correspond with the spending reductions consumers are making in this downturn. State shared revenues will actually increase by 5%, but that is because of strong income tax collections two years ago, which is the basis for the state’s calculation of that portion of our shared revenues. This is helping mitigate our projected losses. We are budgeting a 21% decrease in licenses and permits due to the expected slowdown in construction.
Operations and Maintenance (O&M) costs have been reduced 11.5% overall from the FY 19/20 Adopted Budget, amounting to $1.2 million. Department directors worked with their management teams to identify budget reductions that would be supportable and minimize service impacts to the community.
I know that areas such as public safety, parks and recreation and roads are of particular interest to many of our residents, so I am happy to report that the FY 20/21 Recommended Budget includes funding of all positions in the Police Department and replacement all of the department’s emergency communications/911 center consoles, which are 17 years old. The budget also includes funding for several roadway projects (in addition to the $1.5 million in the HURF Fund for pavement preservation); funding to continue the Parks and Recreation Master Plan process; and $550,000 for the renovation of the former garage at Steam Pump Ranch, which will allow the Town to permanently assign staff to this location so that this very popular historic amenity can be open to the public daily.
The Recommended Budget again includes the planned use of excess reserves in the amount of $2.3 million, of which $900,000 will be applied to capital projects, and the balance used to mitigate the need for additional operating cuts in the General Fund.
The Town has built up a healthy cash reserve in the General Fund above the 25% Council policy, and projects $4.7 million available for next fiscal year to leave unassigned as part of a $5 million contingency. This allocation will help enable the Town to weather economic impacts greater than those projected in the budget, address unplanned expenditures in an otherwise tight budget, or preserve for use the following fiscal year.
One of the many ways we tightened our belts was by eliminating step/merit increases for employees, and not proceeding with a planned market adjustment. These cuts will free up the need to cut an additional $500,000+ in the General Fund for FY 20/21, and more importantly, mitigates the compounding effect on future budgets as we look ahead and forecast future budgets. I am hopeful that as the economy recovers, employee merit increases and adjustments can be included down the road. In the meantime, our belt tightening means we do not have to institute layoffs or employee furloughs, and that’s good news for everyone.
The Town of Oro Valley’s FY 20/21 Town Manager’s Recommended Budget represents a responsible, cohesive document that aligns with the expectations of our residents, and the priorities of our Town Council, and you can find the full document on the Town’s website; however, this isn’t the end of the budget process. Council will hold study sessions to further discuss the budget, and there are two opportunities for public input prior to Council adoption. Public Hearings will be held on June 17 and again on July 15 at 6 p.m. via Zoom video conferencing. Please visit www.orovalleyaz.gov for details on how to participate.
And as always, you are welcome to send any questions or comments to the Town through our AskOV service. There are three easy ways to contact us. Visit the Town’s website and click on the blue Ask Oro Valley button, email us at ask@orovalleyaz.gov, or give us a call at 520-229-4711. Your input will be shared with Town Council and leadership staff.
Mary Jacobs is the Oro Valley Town Manager