Town Manager Jerene Watson discussed the format for the evening and stated that staff had been working collaboratively with Council on the budget for FY2011/12. The town does not have a budget as of yet. Meeting with Council will provide information to help them formulate budget priorities which will be presented later in April.
Finance Director Stacey Lemos began the budget discussion and explained the $3 million dollar deficit.
Ms. Lemos explained what made up the deficit as projected for next year. The matrix given at the budget retreat listed three tiers. These tiers consisted of (1) mandates (2) Code’s and (3) non-mandate Code or law. A (3) may still be a core service area that didn’t fall into (1) or (2).
Ms. Lemos reviewed the budget schedule and forecast assumptions for the General Fund for FY2011/12. There were significant areas of revenue decline and limited construction projects. Ms. Lemos explained that they were forecasting a slight increase in retail and restaurant tax in the amount of $6 million dollars, and a continued drop in state shared income taxes. Ms. Lemos noted there will be $23.4 million dollars in revenues and $26.5 million dollars in expenditures totaling an estimated deficit of $3.1 million dollars.
Departments have cut almost $6 million dollars over the last two fiscal years (08/09 through 10/11.) Police have cut $2,107,527 dollars; General Administration has cut $1,685,064 dollars; DIS have cut $960,992; Parks and Recreation along with other departments have cut approximately a half of a million dollars each over the last several years. To cut another $3 million dollars would have a dramatic impact on the fabric of the community.
Ms. Lemos provided a pictorial of Town staff as a puzzle of how departments are inter-related. If you impact one piece of the puzzle then other departments are affected.
Police Chief Daniel Sharp stated that the Town exists as a symbiotic organization. The organization works with other departments. For example, recreation programs and the library provide crime prevention activities and offer a safe environment from predators who may do harm. If a recreation program that is a ’tier 3’ is cut, then it may have a direct impact on the police department’s ability to do the job. In a recent survey, Oro Valley was the best place to live, based on three criteria: education, median income and crime statistics. Town population is growing and traffic flow is increasing. The police department wants to provide quality service to the resident in Oro Valley.
Amanda Jacobs Economic Development Manager explained that Roche announced 500 jobs. Mayor Hiremath, Councilmember Gillaspie and Town Manager Ms. Watson were all part of the negotiation. One of the angles they presented to Roche was that Oro Valley is one of the safest places to live. If the Town continues to make cuts from the Police Department, then we will not be able to convince the business owners that the Town is still safe.
Judge George Dunscomb agreed with the Police Chief. Some officers who are leaving are trained specifically in writing trucker code tickets. Trucking violations are high dollar citations which cannot be given by an ordinary officer. Crimes that are rising consist of criminal citations such as shoplifting which is time intensive for the Court. The number of overall citations are down due to the low staffing levels of the Police Department.
Town Attorney Tobin Rosen stated that with the increase of property crimes, it increases the case load for town prosecutors. Staffing levels have remained the same since 2005 yet staffing levels have not increased with the workload.
Parks, Recreation, Cultural Resources and Library Director Ainsley Legner focused on recreation and how they had cut about $90,000 dollars in the past two years. Two years ago they had three sites for summer camps. They are now down to just one. With different programs being cut, there are consequences and children won’t have programs available. Recreation staff has shifted some resources with the elimination of the summer program. The recreational staff has also been utilized to help with the dramatic increase of special events.
Ms. Legner stated that the recreation room that the town leased located across the street from Town Hall is providing recreation programs for children, adults and seniors. There is about 1,200 people a month attending different programs.
Nancy Ellis handles all bicycle, pedestrian and trail issues and is responsible for a major amount of the grants for the Town.
Assistant to the Town Manager Kevin Burke stated that grant writing is a collabrative effort from different departments. The individuals who write the grants, actually bring in a lot more revenue.
Library Administrator Jane Peterson presented the importance of Library services. The Library budget has decreased $200,000 dollars in the last five years. The staffing levels have decreased from 19.4 to 18.1. The usage of the library has had a fifty percent increase. From what use to be 500 - 700 people a day, has increased to 700-1000 people a day. This is happening throughout the nation due to the economic down turn. People want free books, free c.d.’s, free DVD’s and Audio books. Ms. Peterson also stated how there are a large number of children who come to the library since it is a safe place. Schools also look for support for their curriculum. The library assists people in looking for jobs and have found work for twelve people. She discussed listing several other cuts to the Library. She also stated how the library rely’s heavily on volunteer help and also stated that the Library is the only community center and that more than two thirds of Oro Valley residents have library cards.
Development and Infrastructure Services Director Suzanne Smith focused on the Development portion. The three divisions that are inter-related are planning, permitting and inspections. A reduction to any one of these departments would impact all of them. Planning sets the standards and vision for the community. Permitting is the foundation which ensures our life safety to building. Inspections ensure that a structure is built to the approved plans and is up to Code.
Ms. Smith presented a chart and discussed how there has been an over all reduction in work force not only in DIS but town wide. With the overall reductions with personnel in the development department it has decreased the departments ability to provide a consistent level of service.
Ms. Smith stated that the Town needs to keep their eye on redevelopment since houses will degrade and thus neighborhoods will become unsafe and property values decrease. If further reduction occurs in Development staff, this would reduce the departments ability to meet performance goals. There are several areas in the department that have been neglected due to the decrease in staff.
Ms. Smith addressed tier 3 programs. The Conservation and Sustainability program was established in 2009 which resulted in savings for this year in the amount of over $400,000 dollars and an additional $200,000 dollars that will be saved due to the energy efficiency. Other positions were restructured. There would be potential delays for development projects and public notifications. Facilities maintenace has two employees for all of the town facilities, including emergency repairs for after hours as well as the municipal center and Calle Concordia with a budget of $330,000 dollars. Over $200,000 dollars has already contracted out of which $120,000 dollars has for custodial services.
Ms. Smith emphasized the economical difference of having large corporations built and how they may equate rather than having custom or model homes built.
Mayor Hiremath recessed the meeting at 6:27 PM.
Mayor Hiremath reconvened the meeting at 6:45 PM.
Finance Director Stacey Lemos requested direction from the Council regarding the budget.
Councilmember Waters thanked everyone who made presentations. He talked about the budget retreat and stated that the Town either needs to tax or grow to recover from structural problems. The Town has to deal with the fact that it is a structural deficit.
Councilmember Gillaspie requested the total percent decrease in the last 3-5 years including the percentage of total budget that each department would cut. He agreed that there is a structural deficit and when Oro Valley was founded, they never adopted a property tax. What is required is a way to balance income with expenditures and deal with political realities. If the Town asks citizens for more revenue, then it is our responsibility to present a balanced portfolio.
Ms. Lemos addressed Councilmember Gillaspie and stated that the total percentage drop was 20% from where the Town was three years ago. It is about a 33% budget cut of where they were three years ago.
Vice Mayor Snider stated the she would like to see a figure that eliminates the 12% health insurance increase, the transit fund for $300,000, and the $666,000 for CIP. Ms. Lemos stated that she will be able to provide that information later in the evening.
Councilmember Solomon recognized the committment and contribution that staff has put forth. He presented a chart which consisted of a list of his priorities.
Councilmember Garner stated that departments listed things that can be cut but are now defending the tier 3 and tier 2. It comes down to efficiencies. When staff presented a tier 3 item, staff should have already figured out how they were going to deal with it. He gave an example of when DIS was consolidated into one department to be efficient but what he heard was people defending the tier 3 position. He continued on stating that the Town Manager should bring back a new budget that doesn’t bring any increased taxes. Councilmember Garner is not convinced with the present budget cuts.
Town Manager Jerene Watson stated there was no budget presented tonight due to the fact that staff wanted the Town Council priorities. Ms. Watson stated they could present a budget but were trying to do this in a collaborative effort with the Town Council.
Vice Mayor Snider had a different understanding. She did not see any services that were offered up on the table to cut. Revenue enhancements in the budget will need to be looked at.
Councilmember Hornat appreciated what staff presented and understood the responsibility of the Town Council. He stated it was important to show the people of Oro Valley that the Town was fiscally responsible and examined what services may be removed before starting to ask for revenue increases.
Mayor Hiremath stated that the town had an overage in the contingency fund and the timing for these discussions was good. The Town had revenue sources which need to be looked at. Mayor Hiremath stated that the Town Council was elected to make decisions for the residents and maintain a level of quality of life the Council wants for the residents. Council must first look at the expenditures and then come to a mutual agreement on how to generate revenue.
Vice Mayor Snider asked Jane Peterson from the Library if there were charges for computer classes.
Ms. Peterson stated there was no charge for computer classes.
Vice Mayor Snider asked DIS Director Suzanne Smith if the reductions she mentioned regarding the tier 3 utilities were reflected in the $3 million dollar budget deficit.
Ms. Smith directed the question to Finance Director Stacey Lemos who replied that they were offset by the Krebs Bond step service and by next year, the town will be able to evaluate the energy savings.
Vice Mayor Snider needed clarification from Ms. Smith as to why personnel costs were rising. She also stated that she has met with the General Manager’s from the Hilton El Conquistador Resort and the Wingate and that occupancy has increased.
Ms. Lemos explained that the increase for DIS personnel were due to the Health Insurance percentage increase.
Vice Mayor Snider explained that she attended a health benefit presentation and explained that the consultants were going out to bid as to not have an increase in costs and that the Town should receive a response by the following week.
Councilmember Garner asked Ms. Lemos for the figure of dental benefits.
Ms. Lemos stated that the costs for Dental services were $158,000 for all fees.
Councilmember Garner asked Ms. Lemos if the figures in the budget reflected the bed tax expiration.
Ms. Lemos explained that the figures do reflect the bed tax due to the fact that it expires in September 2011.
Ms. Lemos explained that there has not been an overall increase in bed tax revenue.
Councilmember Garner requested a breakdown from each department for the current budget and stated once the town receive’s the figures for the State shared revenues, another budget session should be conducted.
Mayor Hiremath confirmed that May 18 was when departments were required to submit their final budgets.
Councilmember Hornat asked if the 12% increase was to the Town or to the employees.
Ms. Lemos explained it was 12% or $240,000 overall which is shared between the Town as well as to the employee.
Councilmember Hornat needed clarification on the bed tax fund.
Ms. Lemos gave a brief overview of how the bed tax was allocated.
Councilmember Hornat stated that he would like to see the Town use those funds.
Councilmember Solomon stated that the Town Council needs to prioritize so that they can give direction to staff. The area that has not been discussed so that the Council can justify increases and revenue was the administration and management.
Councilmember Waters stated that the town is in good shape by not having the general fund decline and the Town Council needs to evaluate the importance of Economic Development and investments for future growth.
Vice Mayor Snider stated that economic development was on the uptick and has heard of more support for revenue enhancement than opposed and stressed how important it is to lead and develop the community.
Councilmember Garner wanted to clarify that there was $250,000 dollars available that was donated for the Naranja project should the town need it for other uses. He would like to see the partnership with Marana in the economic development department continue. He would like all the director’s of departments to look at possibly having a partnership with other jurisdictions for fleet maintenance and also extending into different services that the town may provide or retrieve from. This could bring in some revenue enhancements to the Town. He stated taxes should not be the focus but rather focus on partnerships with different municipalities.
Vice Mayor Snider was in agreement with Councilmember Garner and was pleased to report that department heads were already in discussion with other jurisdictions such as Chief Sharp has had conversations with the Marana Police Chief Rozema.
Mayor Hiremath inquired as to why the budget of $110,000 dollars was set for election costs.
Town Clerk Julie Bower stated there are two elections, the primary and the general which is coordinated with Pima County. The $110,000 dollars was budgeted to cover all activities for both elections.
Mayor Hiremath requested Ms. Lemos to figure in a one time 2% bonus to give as an increase for employees exclusive of upper management. He would like the Council to come to an agreement toward giving staff some direction to assist in what Council would like to see in the budget.
Vice Mayor Snider stated that she agreed with Councilmember Solomon’s priority 1’s and would like to tell staff what her priorities were in the budget. Public works, public safety, parks and development are critical. She requested Ms. Lemos to bring back revised figures of a budget that removed the following:
- 12% Health Insurance Increase
- $47,000 Phone System
- $220,000 Transit Fund
- $666,000 CIP Asset Replacement
Councilmember Hornat stated the Town does not have $100,000 dollars for a new phone system and would rather see a reserve where the town could place the $47,000 dollars should the town need to replace any parts of the old system. He would like to review the replacement of computers budget portion as well as the potential expenditure for this year or next year of the bed tax surplus.
Councilmember Gillaspie asked IT Director Kevin Verville what the replacement cycle was for the computers.
Mr. Verville stated that it was four years for computers and five years for servers. This year the Town has replaced 80 computers which is 20% of the computers that are five years old.
Councilmember Gillaspie suggested a five year replacement schedule for computers.
Councilmember Garner requested the Economic Development Manager to re-evaluate the funding and to look at opportunities to partner with Marana to offset some of the cost and to look at the bed tax since the town is at 2%.
He agreed with the capital replacement program and would like the Chief of Police to look at the take home vehicle policy and efficiencies that may or may not be born out with a concept of a motor pool or a way to eliminate the amount of vehicles that the town is replacing on a frequent basis. With capitol expenditures looming and having to replace vehicles, the town could cut down the exposure of how many vehicles would be replaced. The policy needs to be re-evaluated.
Councilmember Waters inquired at to what the fuel situation was and if the town has their own tank. He asked if the town contracts out to get a certain amount of fuel and what the price was.
Procurement Manager Brian Garrity stated that the town utilized a cooperative contract that was based with the City of Tucson which allows the town to purchase fuel from Western refinery. The town has two fuel tanks and purchases fuel based on the national fuel index at around an average of $3.25 per gallon.
Mr. Garrity said they will use the figure of $3.25 per gallon as the average for the year.
Police Chief Sharp added that in 2002 the police department started an evaluation since fuel costs were rising and in 2003 decided to purchase only fuel efficient vehicles.
Mayor Hiremath stated the important roles that Metropolitan Tucson Convention and Visitors Bureau and Tuson Regional Economic Opportunities, Inc. (TREO), has with the town’s economic development in the town specifically regarding Roche. Without the involvement of TREO, the town would not have landed the Roche development.
Councilmember Solomon stated that he does not want to lose the current level of service to the community and that Council has to make policy decisions.
Mayor Hiremath stated that if staff presents a budget with a cut of $3 million dollars, it was fair to assume the level of services that have been provided will be the same with no decline. His concern was if the $3 million dollar gap was filled, would that put the town back to a level that can be maintained.
Councilmember Solomon discussed how the Town was losing ground in different areas and if the town refuses to lose anymore, expenditures need to be increased to reverse the trend. He stated it is obvious we have to raise more revenue.
Ms. Lemos stated that if a budget was presented at a $26 million dollar level, it would not have merit increases for staff, step plan increases for police officers, as well as several existing vacancies that would be carried forward.
Mayor Hiremath stated that a decision needs to be made by Council to give staff some direction of what Councils priorities are.
Vice Mayor Snider stated that she thought the priorities were already given and Vice Mayor Snider agreed to give staff direction.
Councilmember Garner stated the importance of not focusing only on top priorities but also on the efficiencies.
Mayor Hiremath concurred with Councilmember Garner and stated that any efficiencies that are realized will only allow revenues to be re-allocated.
Councilmember Solomon stated that for three years staff has made cuts. They have made things more efficient, reorganized and are now barely existing with the service levels with the current $26 million dollars. Council has to set the metric and be specific and work with the department heads about what our expectations are.
Councilmember Hornat stated that Council and staff need to review the cuts and determine how it can narrow the gap.
Mayor Hiremath directed staff to come back with the numbers realizing the efficiencies and present them to the Town Council. Mayor Hiremath thanked staff and the members of the audience for their hard work.
FUTURE AGENDA ITEMS (The Council may bring forth general topics for future meeting agendas. Council may not discuss, deliberate or take any action on the topics presented pursuant to ARS 38-431.02H)