Oro Valley staff reports FY24–25 close with $21 million general fund balance, sales-tax shortfall

Dave Gephardt, staff liaison for the Oro Valley Budget and Finance Commission, presented the town’s fiscal year 2024–25 financial update at the commission’s Sept. 16 meeting.

Gephardt said total revenues were about $2.5 million lower than the prior fiscal year, primarily because local sales tax and state-shared revenues declined. He told commissioners the town ended the year about 99% of budgeted revenues, representing a shortfall of roughly $432,000, and that the change in the general fund balance decreased by about $1,070,000.

The report showed an estimated ending general fund balance of $21,000,000, which Gephardt said exceeds the town’s 30% reserve policy by roughly $6,400,000. He cautioned the presentation was not final while auditors complete their review: "this report, even though it does encapsulate the entire fiscal year, there still may be some additional adjustments made, so it should not be considered final at this point," he said.

Gephardt reviewed major revenue drivers. Local sales tax collections underperformed budget (about 93% of budget for that category), with construction sales tax performing much worse than fiscal 2024; retail, bed tax and restaurant collections generally performed well. State-shared revenues were worse than the prior year but came in about 101% of budgeted expectations.

Permit and development-related revenues finished the year above budget overall, the presentation noted: staff issued 112 single-family residential permits versus 95 budgeted, and residential permit revenues helped that category finish at about 107% of budget despite lower dollar collections compared with fiscal 2024.

On the expenditure side, general fund outlays were about 94% of budget, producing roughly $3.27 million in expenditure savings that Gephardt attributed to vacancy savings and departments constraining O&M spending. He said personnel spending decreased roughly $104,000 from the prior year while operations and maintenance exceeded the prior year by about $585,000.

Fund-by-fund highlights included: - Highway fund: sources roughly matched budget; expenditures came in at about 92% of budget, producing approximately $647,000 in savings and an ending balance near $1,590,000. - Community center (CRC) and related enterprise activity: revenues outperformed budget, producing a roughly $1.09 million surplus versus a budgeted deficit; higher utilization (programs and memberships) accounted for much of the revenue gain, offsetting higher operating costs. Gephardt credited strong golf operations, noting rounds played increased more than 8% versus the prior year. - Capital fund: timing of projects caused planned fund-balance draws to carry into the new fiscal year; sources slightly exceeded uses, increasing the ending capital fund balance by about $109,000 to roughly $16,800,000. - Water utility: water sales were about $1,960,000 (12%) higher than the prior year because of a dry year and higher consumption; total sources ended about 104% of budget. Total uses were higher than the prior year but below some budgeted categories; Gephardt said capital spending and O&M increased, and the ending fund balance was about $7,300,000. - Stormwater utility: revenues were about $238,000 higher than the prior year, driven by approximately $211,000 in grants; projected ending fund balance rose to about $1,280,000.

Gephardt closed by reminding commissioners that the town had submitted its adopted budget to the Government Finance Officers Association for the Distinguished Budget Presentation Award and that auditors are scheduled to begin their field work later in September. He and staff remained available for questions.

Commissioners had no substantive questions following the presentation and moved to other agenda items.