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Hurley: Hot topics during budget season


The Recreation Centers of Sun City West budget for fiscal year 2023-24 is reaching its final stages as the budget assumptions get refined and as the various standing committees make their final recommendations to the governing board.

In an earlier article, I discussed the various concerns that are impacting the proposed budget. Briefly, the continuing high rate of inflation that has affected our energy costs, chemical and fertilizer costs does not look like it will have any relief in the short term. Minimum wage increases are scheduled again for next January as Arizona works its way to a minimum wage of $15 per hour. The RCSCW health and worker’s comp policies have seen very hefty increases. It remains difficult to recruit and retain people for the various jobs needed to keep our facilities open and up to our standards.

Several topics were being discussed as we worked our way to the May vote to approve the budget.

Any budget process looks at past performance and tries to predict future requirements. Without a reliable crystal ball to see the future, the budget is based on certain assumptions about what can be reasonably expected to happen next year.

The standing committees of the governing board have made recommendations in their areas, but it is up to the governing board directors to review the recommendations and provide the final approval. The governing board has challenged some of the budget assumptions and has made the general manager and his staff aware of those concerns.

Besides rejecting several new capital projects, the board has adopted a “plan for the worst, hope for the best” approach to next year’s budget. This means managing revenue expectations.

Starting with expenses, while there are areas of expenses that have increased beyond our control, the general manager has been tasked to employ cost saving measures wherever he can, without diminishing the level of services that our members expect.

There are three main revenue streams into the coffers of RCSCW — member dues, golf fees and the asset preservation fee assessed to home title changes.

APF funds are repair and replacement responsibilities, the activities that keep our facilities looking good and in good shape. On average, over the past several years we have recorded around 1,200 APFs per year. The past year is tracking about 20% lower in home sales due to the inflationary effect on mortgage rate. The Budget and Finance Committee recommended reducing the assumption of 1,200 APFs to just more than 1,000. This reduction, while reasonable given the market conditions, removes $400,000 from the projected revenue stream. A good portion of this deficit will be made up by an increase in the APF next year. On the upside, if we exceed the projected number of APFs next year, the money will go directly into the reserve fund.

Since COVID, our golf rounds have increased from an average of 285,000 per year to more than 320,000 in the last two years. Our golf rounds are off this year, so the Golf Committee has recommended reducing the projected number of golf rounds from 325,000 to around 310,000. Again, a smart recommendation, but it, too, has a negative effect on the golf revenue. The reduction of estimated rounds has a negative effect of more than $400,000 to the projected golf revenue. Some of this will be made up with an increase in golf rates for outside players during the peak October-April season.

While outside rates will increase, the Golf Committee was cautious about not pricing our courses out of their attractive pricing position and affecting the more than $2 million that outside play contributes to our revenue. If our numbers of golf rounds exceeds the reduced projection, that excess revenue also goes to the reserve fund to fund our upcoming irrigation projects.

The elephant in the room is the amount of dues increase that needs to be in effect for next year. Revenue from member dues mainly finances the day-to-day operation of the RCSCW. No one can argue with the effect that inflations has had on our pocketbooks.

The operations at RCSCW are impacted by those same dynamics. As we plan for the “worst,” we must all bear the burden of keeping RCSCW up to date and providing the services of which we can all be proud.

Post Script: The figures in this article are subject to change before the final budget is voted on by the governing board in May.

To address some of the concerns we are already hearing:

  • The governing board has not “rubber stamped” anything that the general manager has proposed.
  • This governing board has removed several million dollars of capital projects that were wants vs. needs.
  • The governing board approaches our fiduciary responsibilities seriously, with clear vision and level heads.

We’d like to invite our readers to submit their civil comments, pro or con, on this issue. Email AZOpinions@iniusa.org.