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Oro Valley staff: FY 2024–25 finances largely on track but construction sales tax lags
Summary
Town finance staff told the Budget and Finance Commission that through February revenues are down overall but year-end estimates are broadly on budget, driven by weaker construction sales tax offset by one‑time insurance rebate and stronger recreation and interest revenue.
Oro Valley finance staff reported to the Budget and Finance Commission on April 15 that the town’s fiscal year 2024–25 finances remain broadly on track but show weakness in construction-related sales tax.
Town finance staff walked commissioners through the town’s financial update through February 2025, saying total revenues through February were about $37.4 million — roughly 4% below the previous fiscal year — while year‑end estimates remain close to the adopted budget after several one‑time offsets.
The overview: the town’s local sales tax was down about 3% year over year and state shared revenues about 10% lower, driven by urban revenue sharing. “Charges for services is up about 5%, so that’s a positive sign,” said Mr. Gephardt, the town staff liaison presenting the report. He told commissioners the town received an AMRRP insurance rebate that should be regarded as a one‑time item helping the near‑term picture.
Why it matters: weaker construction sales tax is the primary driver of the variance from budget, and the town is monitoring March receipts for further adjustments. At the same time, other categories — including recreation program fees, some intergovernmental reimbursements and interest earnings — are performing better than budget and are expected to largely offset the decline.
Key figures and categories - Total revenues through February: about $37.4 million (down ~4% year over year). - General fund: year‑end estimate is now expected to use about $2.5 million of fund balance compared with a budgeted use of about $4.1 million; an ending fund balance just under $19.6 million, which the presenter said exceeds the town’s 30% reserve policy by about $4.5 million. - Local sales tax: down ~3% year over year; construction sales tax is the main driver of the negative variance and staff said March receipts may prompt further downward adjustments. - State shared revenues: down ~10% year over year (urban revenue sharing). - Charges for services: up ~5% year over year, with recreation fees and field/ramada rentals cited as contributors.
Fund‑by‑fund notes - Highway fund: revenues are tracking to budget; capital spending is expected to come in below budget, producing a larger than budgeted addition to fund balance. - Community center fund: revenues and contracted operating receipts are up; staff now expects to add to fund balance instead of using it, with an estimated year‑end fund balance of about $2.3 million. The presenter cited strong membership and successful programs as drivers. - Water utility fund: water sales are tracking slightly under budget (projected $17.8M vs. $18.0M budget for sales) and transfers reflect that 40% of certain project costs post to the water fund this year. Staff noted accelerated capital activity on the Northwest Recharge Recovery Delivery System impacts transfers and year‑end estimates. - Stormwater fund: two grant‑funded capital projects (Sierra Wash via Mandarina and Oro Valley Drive drainage/pavement) slipped into the next fiscal year; staff expects to add to fund balance by roughly $150,000.
Staff calendar and next steps Mr. Gephardt told the commission the town manager’s recommended budget will be released April 28 and the commission will receive that recommended budget at its May meeting. He also noted a council study session on the recommended budget and CIP is scheduled for May 5. He said the town hopes to finalize a parallel WIFA water loan at an upcoming council meeting related to the Northwest Recharge Recovery Delivery System project.
Votes at a glance - Approval of minutes (03/18/2025): Motion to approve carried by voice vote; all commissioners present voted in favor (unanimous). The motion was moved by Commissioner Mason and seconded (recorded as a second on the record); the minutes were approved.
Ending Staff said March financials will be presented next month and may contain small adjustments, particularly to construction sales tax and business license collections. Commissioners did not direct additional immediate action on the financial update and accepted staff’s recommendation to return with updated figures.
