Management’s Discussion and Analysis

(In thousands) balance of $0.8 million as funds were spent for continued improvements to trail connectivity, plus an unrealized loss associated with long-term investments affected all governmental funds. A decrease in unassigned fund balance of $9.2 million also contributes to the overall decrease in general fund balance.

Proprietary Funds

At the end of FY 2022, net position in proprietary funds increased by $53.0 million, with most of the increase occurring in Airport $31.7 million and Water Renewal $19.8 million. After the pandemic began in March 2020, the Airport saw a large decrease in air traffic, which corresponded with large revenue decreases for airline fees, rental cars, parking, and concessions. In FY 2022 these revenues recovered and exceeded pre-pandemic levels. Grants and contributions revenue increased by $10.6 million due to continued FAA pandemic-related grant funding, and an increase in passenger facility charges (PFCs) and customer facility charges (CFCs) revenues. Water Renewal added customers and increased its utility rates as part of long-term plans to expand and improve water renewal facilities. The Airport’s net investments in capital assets increased by $78.2 million as part of its expansion plans. Investment in additional capital assets will continue given expansion plans, including funding from the issuance of two series of revenue bonds in FY 2021 totaling $71.3 million. Unrestricted net position at the Airport decreased by $31.8 million due to the higher level of capital expenditure. Similarly, the Water Renewal fund’s net investment in capital assets increased by $8.4 million in FY 2022, and unrestricted net position decreased by $60.2 million. Water Renewal also has issued revenue and refunding bonds and can take advantage of federal loan/bond funding through an Environmental Protection Agency program. Water renewal’s increase in capital assets is expected to continue as significant investments are made at both the Lander Street and West Boise water renewal treatment facilities. Voter authorization is in place for bonds of up to $570 million over a ten-year period, which will allow funding for projects in the recently adopted Water Renewal Utility Plan to continue.

General Fund Budgetary Highlights

General Fund revenues outperformed the budget in FY 2022 by a small amount, $0.2 million. The largest portion of this was $6.6 million from charges for services, but this overage was offset by unrealized losses on fixed-income investments of $6.1 million. Revenues above budget included parks user fees and development fees. Sales tax also was significantly over budget, by 23.1%, due to the city unexpectedly receiving full growth instead of being limited to 1.0% growth in all four fiscal quarters. Total actual revenues were $39.9 million below revised budget since prior year resources, reserved on the balance sheet, are in the budget but not recognized on the income statement. Adjusting for prior year resources, net revenues were $0.2 million or 0.1% above the revised budget amount. Comparing revenues to FY 2021, net of prior year resources for both years, FY 2022 revenue was $38.4 million higher. Much of the variance is due to the Governor’s Public Safety Grant Initiative (GPSGI), which reduced FY 2021 property tax by $27.9 million. For FY 2022, sales tax revenue exceeded budget by $4.9 million, along with development fee revenue $3.4 million and department revenues $5.1 million, particularly in parks user fees. The other revenue category was far below budget $11.4 million, due primarily to two factors: federal pandemic grant revenue being $4.8 million below budget and a $6.1 million unrealized accounting loss on the market value of General Fund fixed-income investments due to rising interest rates. General Fund operating expenditures were $32.8 million below budget. This significant variance was due to underspend in M&O, personnel, and miscellaneous expenses. The largest M&O expense savings occurred in contingency accounts, contract and miscellaneous costs, and professional services. Personnel expense savings resulted from a continued higher than normal staff vacancy level. Grant expenses also were below budget, due to timing of State Street improvements by Valley Regional Transit. Comparing the major expense categories to budget and the prior year, personnel of $173.8 million was $5.3 million or 3.0% below budget and increased $12.8 million or 7.9% over FY 2021. M&O of $44.9 million was $20.0 million or 30.8% below budget and increased $4.1 million or 10.0% over FY 2021. Miscellaneous expenses of $10.0 million was $6.8 million or 40.7% below budget and increased $1.8 million or 21.7% over FY 2021.

Capital Asset and Debt Administration Capital Assets

The City’s investment in capital assets for its governmental and business-type activities as of September 30, 2022, amounted to $931.0 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements, service lines, vehicles and equipment, streetlights and public art. Most sidewalks, bridges, and roads located within the City of Boise belong to the Ada County Highway District. For September 30, 2022, the City’s investment in capital assets increased by 8.2% in comparison to the prior year. Of this percentage, business-type activities accounted for $59.0 million netted with a governmental increase by $11.9 million, for a total increase of $70.9 million in capital assets. Additional information on the City’s capital assets can be found in note 3 to the financial statements. The Airport and Water Renewal programs continue to invest the most in capital assets, with the Airport in the midst of an expansion program, and Water Renewal continuing the capital improvement