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Council reviews March financials showing 6.8% drop in local sales tax and adopts tentative FY2027 budget
Summary
Oro Valley staff reported a 6.8% year‑to‑date decline in local sales tax through March and a near‑50% drop in construction sales tax; council adopted the tentative FY2027 budget (Resolution R26‑31) totaling $127.99 million by a 7–0 vote.
Town finance staff presented the quarterly financial update and a tentative FY2027 budget at the June 3 meeting, highlighting a notable drop in key revenue sources.
Deputy Finance Director Ms. Gomez said total local sales tax through March was $21,347,000 compared with $22,901,000 a year earlier — a 6.8% decline year to date — and that construction sales tax is down nearly 50% year over year. "When you look at our construction sales tax in particular, it's down almost 50%, year over year," Ms. Gomez said, and added that local sales tax and state‑shared revenues represent about 86% of general‑fund revenues, making those declines significant.
Gomez said licenses and permits were up about 44% year over year and that transfers out rose largely because of a policy change to general‑fund reserves. She told council the town expects year‑end savings driven by personnel and O&M reductions and that the general fund may finish roughly $100,000 under total budget in the current fiscal year.
Chief Financial Officer Stephen Gephardt presented the tentative FY2027 budget: total tentative spending of $127,990,000, a $2.1 million decrease from the manager’s recommended budget and $23.5 million lower than the current year adopted budget. The general fund portion of the tentative budget is $55,000,000. Gephardt said CIP for the coming year totals about $24.2 million, with the water utility NERDS project comprising roughly 25% of that amount.
Council discussed timing of construction sales tax receipts, bed‑tax collections from a hotel (staff said partial payments through December had been received and collection work is ongoing with the Arizona Department of Revenue), and how use of fund balance on the tentative budget reflects carryover of multi‑year capital projects. Staff reported current‑year general‑fund ending balance expectations of roughly $16.7 million and that the town is meeting its 25% reserve policy.
The council adopted Resolution R26‑31 to approve the tentative budget on a 7–0 vote; final adoption is scheduled at the next council meeting.
