Oro Valley manager recommends a belt‑tightening FY 2025‑26 budget, highlights NERDS as major CIP driver

Town finance staff presented the Town Manager's recommended budget for fiscal year 2025–26 to the Budget and Finance Commission on May 20, describing it as a "belt tightening" budget that holds most service levels steady while prioritizing capital needs.

Why it matters: The recommended budget reduces total townwide spending to about $147.1 million (down from the adopted $150 million), trims capital spending, maintains a 30 percent general fund reserve policy and highlights the Northwest Recharge Recovery Delivery System (NERDS) as the single largest capital project in the plan.

Presentation highlights: Town staff said personnel costs increase modestly, with one additional police officer proposed for next year and two temporary CIP project managers removed from the base budget. The recommended budget keeps medical insurance costs roughly flat and proposes an "excess PSPRS payment" of about $1.7 million to keep total pension payments consistent with current levels.

The manager's recommended budget shows a projected five‑year forecast imbalance in capital in year five and therefore recommends new revenue categories (discussed in a separate agenda item) or other strategies to address long‑term capital needs. Staff said the recommended budget reduces capital spending by nearly 14 percent from the current adopted budget, while debt service increases slightly because of new water utility loans.

Water and CIP: The water utility remains the largest single fund in the budget; staff said the Northwest Recharge Recovery Delivery System (NERDS) is driving most water fund capital outlays and that water impact fees will fund a large share of those projects. The recommended CIP totals nearly $46 million, with the water system, pavement preservation and public facilities among the largest program areas. The presentation lists planned projects (meters, wells, booster stations, SCADA upgrades) and includes $2 million in contingency within the capital fund.

Community center and parks: Staff said the community center fund is healthy and requires no general fund augmentation in the recommended budget. Parks and Recreation increases are largely tied to community center operations and golf activity; staff noted that certain parks capital items (for example, additional shade structures at Noronha Park) were moved from contingency to the CIP for the tentative budget and would be funded with parks impact fees.

Highway and stormwater: Staff described the highway fund as challenging and said it will continue to require transfers from the capital fund; pavement preservation inflation has eased but the fund may need additional augmentation in future years. The stormwater utility fund drew down reserves and staff said the department is evaluating a stormwater rate increase following standard public notice and hearing procedures similar to the water utility's.

Next steps: The manager's recommended budget will be refined before the tentative budget; staff said council may consider changes at the tentative stage, including outcomes of the police MOU negotiations. Staff also flagged that several projects will carry over into the next fiscal year because of timing.

Ending: Commissioners asked specific follow‑up questions about administratively tracked line items, changes between adopted and recommended numbers, the capacity to dedicate new revenues to capital without worsening future operating costs for new facilities and the timeline for tentative budget adjustments. Staff said several tentative‑stage adjustments remain possible and will be reported back to the commission.