VILLAGE OF BUFFALO GROVE, ILLINOIS

Management’s Discussion and Analysis (Unaudited)

December 31, 2022

The Village’s governmental funds for the year ended December 31, 2022, reflect a combined fund balance of $61.7 million on its balance sheet. This represents a $10.6 million dollar increase over the balance posted last year. Governmental revenues increased a total of $7.0 million. Sales taxes, both state shared and home rule, increased by $2.3 million dollars. The increase reflects a strong year in retail sales. State shared income taxes increased by $1.5 million and building permit revenues decreased by $224 thousand. Governmental expenditures increased over prior year by $26.5 million. Of this amount, $19 million can be attributed to an expenditure recorded in the Lake Cook Road TIF fund related to a TIF Revenue Note. The net decrease in fund balance for the Debt Service Fund in 2022 was $8.2 million compared to a combined increase in all other Governmental Funds of $18.8 million. This decrease resulted from transfers out to other funds as the remaining 2020 bond proceeds were spent during the year. The Capital Projects Facilities balance increase of $7.4 million can be attributed to bond proceeds and premium of $21.4 million, offset by capital expenditures utilizing bond money of $14.3 million. Of the total fund balance of $61.7 million, $17.7 million is unassigned indicating availability for future obligations

The 2022 unassigned fund balance decreased by $4.8 million. Nonspendable fund balance ($138 thousand) represents amounts set aside for inventory and deposits. Restricted fund balance ($13.0 million) relates to the remaining proceeds available on the 2022 General Obligation Bond, federal and state seizure funds, and nonmajor special revenue fund balances including the Motor Fuel Tax and Local Motor Fuel Tax funds Committed fund balance ($30.8 million) is to be used for future capital replacement.

The General Fund is the Village’s main operating fund and accounts for core municipal services including, public safety (police and fire), public works, community development, and general administration. As such, it’s useful to review the liquidity of the fund by comparing the unassigned fund balance against the General Fund operating budget. As of December 31, 2022, the unassigned fund balance represents 37.7 percent of the FY 2022 operating budget. The Fund Balance of the General Fund increased by $9.5 million for the fiscal year ended December 31, 2022.

General Fund revenues increased by $6.6 million in 2022

The most notable increases were in grants, state shared income tax, state shared sales tax and home rule sales tax of $1.7 million, $1.4 million, $1.2 million, and $1.2 million, respectively During the year, the Village recognized $2.7 million in American Rescue Plan Act (ARPA) grant money. As noted earlier, the increase in sales taxes was due to strong retail sales during the year Real estate transfer taxes increased by $0.40 million (25%). Local use tax increased $0.14 million (8.4 percent), while building permit revenue decreased by $0.22 million (10.3%). Other State of Illinois shared revenues increased $259,196 (72.7%).