Oro Valley finance update: General fund stronger, highway fund hits small revenue headwind

A town finance presenter told the Oro Valley Budget and Finance Commission on June 18 that the town’s general fund is performing better than expected through April, but that the highway fund faces pressure from lower-than-anticipated HEERF (state gas-tax) receipts.

“The fund is performing much better than expected, with an expected decrease in fund balance of 2,600,000.0, which is up about 50% from the budgeted decrease of 5,300,000.0,” the presenter said, summarizing the general fund outlook and noting a planned $10,000,000 transfer to the capital improvement program (CIP).

Why it matters: the general fund’s improved performance reflects stronger local sales tax, permit revenue and interest income, plus a one-time AMRP rebate, but staff cautioned some federal grant reimbursements have shifted into the next fiscal year and will not be available in FY24.

Commissioner Garland pressed staff on whether overtime tied to federal grants had occurred or whether the timing of grant awards pushed reimbursable overtime into the next fiscal year. The presenter replied the issue was timing of the grant award and that some grant reimbursements budgeted for FY24 will instead fall in FY25.

On the highway fund, staff said revenues are up year-over-year but are tracking slightly below budget because HEERF receipts—driven by gas-tax flows from the state—are variable. “It’s 98% there,” the presenter said, but noted any swing in that revenue would be visible in the highway fund and would likely require modest use of fund balance despite small expenditure savings.

Community center operations are outperforming expectations: staff reported community center revenues are up 11.4% year-over-year and the fund is projected to finish the year about $1,000,000 above budgeted expectations, driven largely by golf operations. Staff said some community center capital carryovers include a flat-roof replacement and freezer/cooler modernization.

Commissioners also sought clarification on several items: the State Department of Transportation does not revise the HEERF estimate midyear (staff said the state provides a figure up front), a one-time taxpayer adjustment explained an apparent decline in bed-tax receipts year-to-date, and the elevator project will carry into the next fiscal year. Staff noted a prior council direction to cap certain community center fund transfers does not apply to this fiscal year and no transfer out was currently directed.

The commission took no formal action on budget policy during the update; staff said they will continue to monitor revenue timing and year-end adjustments.