VILLAGE OF BUFFALO GROVE, ILLINOIS

Management’s Discussion and Analysis (Unaudited)

December

31, 2022

Normal Impacts

There are five basic (normal) transactions that will affect the comparability of the Statement of Net Position summary presentation.

Net Results of Activities – which will impact (increase/decrease) current assets and unrestricted net position.

Borrowing of Capital – which will increase current assets and long-term debt.

Spending Borrowed Proceeds on New Capital – which will reduce current assets and increase capital assets. There is a second impact, an increase in invested in capital assets and an increase in related net debt which will not change the net investment in capital assets.

Reduction of Capital Assets through Depreciation – which will reduce capital assets and net investment in capital assets.

Current Year Impacts

At the end of the current fiscal year, the Village reported positive balances in two of the three categories of net position for the government as a whole as well as for governmental activities; whereas all three categories of net position for business-type activities resulted in positive balances.

Within the governmental activities, the Village increase in “Current and Other Assets” of $20.0 million is primarily related to $12.8 million more in cash and investments and $2.5 million more in receivables. The Village experienced an increase of $0.2 million (3.4 percent) in service charge revenues, $2.0 million (62.5 percent) in operating grants/contributions, $2.5 million (14.2 percent) in sales and use taxes, $1.5 million (26.8 percent) in income taxes, $0.1 million (3.8 percent) in utility taxes, $0.4 million (25.0 percent) in property transfer taxes, and $0.4 million (11.8 percent) in other revenues. Property taxes and telecommunications taxes stayed consistent to the prior year. The Village experienced a decrease of $0.1 million (5.9 percent) in capital grants/contributions.

The Village maintained capital improvement and asset purchases in 2022. The Village has adopted a philosophy of funding capital improvements to a large extent on a pay-as-you-go basis, and retires debt obligations quickly, resulting in positive net position calculations. Declines in “Capital Assets” are primarily a result of depreciation.

Changes in Net Position

The Village’s total revenues and expenses for governmental and business-type activities are reflected in the following chart: