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CITY OF LAKE ELMO, MINNESOTA
<br />MANAGEMENT’S DISCUSSION AND ANALYSIS
<br />DECEMBER 31, 2023
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<br />THE CITY AS A WHOLE (Continued)
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<br />Governmental Activities
<br />Revenue for the City’s governmental activities increased by $6,624,612 (41.47 percent). This increase in revenue is primarily
<br />due to an increase in revenues from capital grants and contributions, resulting from significant contributions of infrastructure
<br />from developers during 2023. Total expenses increased $462,479 (4.64 percent), primarily due to increased expenses for public
<br />safety along with a decrease in public works costs. Such changes in expenses have been reviewed in greater detail below.
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<br />Table 3 presents the cost of each of the City’s programs - general government, public safety, public works, parks and recreation,
<br />and Interest and Other Charges - as well as each program’s net cost (total cost less revenues generated by the activities). The
<br />net cost shows the financial burden that was placed on the City’s taxpayers by each of these functions. Activities (net of capital
<br />outlay which is excluded from Table 3) were generally comparable to the prior year as operations remained fairly consistent
<br />with the prior year, with the exception of:
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<br />• Public works net cost of services decreased $5,268,818, due to decreases in maintenance project costs, in conjunction
<br />with an increase in revenues from contributed infrastructure previously discussed.
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<br />• Public safety net cost of services increased $326,777 primarily due to four firefighters transitioning to full time service,
<br />along with an increase in contracted law enforcement expenses.
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<br />Business-type Activities
<br />Revenues of the City’s business-type activities (see Table 2) decreased by $5,022,857 (24.71 percent) and program expenses
<br />increased by $1,258,097 (19.95 percent). The decrease in revenues is due primarily to a decrease in MPCA grant revenues
<br />recognized in 2023 as compared to 2022. The increase in expenses is due largely to an increase in depreciation expense being
<br />recognized in 2023, due to various projects being finalized and placed into service. Additionally, the City incurred additional
<br />costs related to professional service fees, water meters, and supplies.
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<br />THE CITY’S FUNDS
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<br />Governmental Funds
<br />As the City completed the year, its governmental funds (as presented in the balance sheet on page 28) reported a combined
<br />fund balance of $20,685,436. This is a decrease of $3,750,158 from the prior year. Operations were comparable to the prior
<br />year, with the exception of an increase in investment earnings of $1,072,572 in 2023 as compared to unrealized investment
<br />losses of $419,853 incurred in 2022. Additionally, the City incurred fewer expenditures related to the City Hall and Fire Station
<br />building project as the project neared completion at the end of 2023. Financial information specific to the governmental funds
<br />is detailed on the following page. Such information was derived from the fund financials.
<br />Table 3
<br />Governmental Activities
<br />Total Cost Net Cost
<br />of Services of Services
<br />2023 2022 2023 2022
<br />General Government 1,220,552$ 1,055,405$ 672,353$ 620,275$
<br />Public Safety 3,228,801 2,939,066 962,514 635,737
<br />Public Works 4,627,872 4,831,584 (5,551,896) (283,078)
<br />Parks and Recreation 526,835 415,377 241,578 204,253
<br />Economic Development - - - (24)
<br />Interest and Other Charges 815,944 716,093 815,944 716,093
<br />Totals 10,420,004$ 9,957,525$ (2,859,507)$ 1,893,256$
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