VILLAGE OF BUFFALO GROVE, ILLINOIS

Management’s Discussion and Analysis (Unaudited)

December 31, 2022

The total per capita general obligation (GO) debt for the community stands at $1,231.33 and represents 1.00 percent of the equalized assessed valuation of the Village.

The Village, under its home rule authority, does not have a legal debt limit.

Detailed information on the Village’s long-term debt can be found in Note 3.

Economic Factors and Next Year’s Budgets and Rates

The Village entered 2023 with a balanced operating budget. The budget for the fiscal year beginning January 1, 2023, is $126,164,748 a 6.1 percent increase from the previous year. The general fund operating budget totals $60,549,697 resulting in a 13.9 percent increase over the previous year.

Total capital spending during the year is estimated to be $25.5 million. Continued emphasis will remain on developing innovative ways to deliver services and reduce costs while actively working to improve sales tax collections through economic development. In 2023, the Village enters year 3 of a five-year capital program to address the community’s water and sanitary sewer system infrastructure replacement and street resurfacing and reconstructions projects. The additional funding that increases in water and sewer utility rates as well as the new fixed facility fees bring in are allocated entirely to capital projects and used to offset debt service exposure in the property tax levy.

Property taxes remain the Village’s most stable revenue although the total assessed value of all taxable property was not expected to increase for the 2022 tax levy (extended and collected in 2023). A tax levy was adopted for the 2023 budget at the same level as the prior year for an increase of 0.0 percent. The Village mitigated an additional $4.42 million in levied taxes through full abatements of the 2020 and 2022 bonds, as well as a partial abatement of the 2012 and 2016 bonds. If these amounts were not abated the levy increase would have been 20.5 percent. The Village will use operating funds to pay the bond payable amount not covered by the tax levy.

A Storm Water Management User Fee introduced in the FY 2016 budget offsets the costs related to maintaining, repairing and developing an infrastructure reserve for future system needs. This revenue stream has resulted in an additional $1.1 million to the General Fund that is funding new and replacement storm sewer infrastructure.

Budgeted expenditures include general wage adjustments for non-represented employees and contractual salary adjustments which are part of labor agreements. The Village currently has two represented employee groups (police and fire).

Health insurance increases are minimized by the economies of scale provided by the Village’s membership in the Intergovernmental Personnel Benefits Cooperative (IPBC). In 2023, included in the budget are monies to restore additional positions eliminated as part of the 2021 Budget due to Covid-19 and its economic impact.