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The combining and individual nonmajor fund financial statements, the schedule of expenditures offederal awards, and supporting schedules as identified in the table of contents are the responsibility ofmanagement and were derived from and relate directly to the underlying accounting and other recordsused to prepare the basic financial statements. Such information has been subjected to the auditingprocedures applied in the audit of the basic financial statements and certain additional procedures,including comparing and reconciling such information directly to the underlying accounting and otherrecords used to prepare the basic financial statements or to the basic financial statements themselves,and other additional procedures in accordance with auditing standards generally accepted in the UnitedStates of America. In our opinion, the combining and individual nonmajor fund financial statements, theschedule of expenditures of federal awards and supporting schedules as identified in the table ofcontents are fairly stated, in all material respects, in relation to the basic financial statements taken as awhole.The introductory section and other disclosures have not been subjected to the auditing proceduresapplied in the audit of the basic financial statements, and accordingly, we do not express an opinion orprovide any assurance on them.Other Reporting Required by Government Auditing StandardsIn accordance with Government Auditing Standards, we have also issued our report dated December 15,2021, on our consideration of the City’s internal control over financial reporting and on our tests of itscompliance with certain provisions of laws, regulations, contracts, and grant agreements and othermatters. The purpose of that report is solely to describe the scope of our testing of internal control overfinancial reporting and compliance and the results of that testing, and not to provide an opinion on theeffectiveness of the City’s internal control over financial reporting or on compliance. That report is anintegral part of an audit performed in accordance with Government Auditing Standards in consideringthe City’s internal control over financial reporting and compliance.Carr, Riggs & Ingram, LLCAlbuquerque, New MexicoDecember 15, 2021- 13 -

State of New MexicoCity of AlamogordoManagement’s Discussion and AnalysisJune 30, 2021As management of the City of Alamogordo (the “City”), we offer readers of the City’s financial statementsthis narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30,2021. We encourage readers to consider the information presented here in conjunction with the financialstatements of the City and additional information provided.Financial Highlights The assets and deferred outflows of resources of the City exceeded its liabilities and deferredinflows of resources at the close of the most recent fiscal year by 180,840,845 (net position).The City’s net position that is restricted for capital projects and other purposes is 39,166,005.The City’s net investment in capital assets is 151,698,806. The City has an overall deficit ofunrestricted net position as of June 30, 2021 of ( 10,023,966). Change in net position for the year ended June 30, 2021 was an increase of 12,434,469 as a resultof operations. The increase is primarily due to a reduction in expenses of 11.1%. At the end of the current fiscal year, unassigned fund balance for the general fund was 16,924,374 or 154.3% of total general fund expenditures. The City’s total debt outstanding at June 30, 2021 is 47,615,419.Overview of the Financial StatementsThis discussion and analysis is intended to serve as an introduction to the City’s basic financial statements.The City’s basic financial statements are comprised of three components: (1) government-wide financialstatements, (2) fund financial statements, and 3) notes to the financial statements. This report alsocontains other supplementary information in addition to the basic financial statements themselves.Government-wide financial statements. The government-wide financial statements are designed toprovide readers with a broad overview of the City’s finances, in a manner similar to a private-sectorbusiness.The statement of net position presents information on all of the City’s assets, deferred outflows ofresources, liabilities, and deferred inflows of resources, with the difference between the two reported asnet position. Over time, increases or decreases in net position may serve as a useful indicator of whetherthe financial position of the City is improving or deteriorating.The statement of activities presents information showing how the government’s net position changedduring the most recent fiscal year. All changes in net position are reported as soon as the underlying eventgiving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues andexpenses are reported in this statement for some items that will only result in cash flows in future fiscalperiods (e.g., uncollected taxes).- 14 -

State of New MexicoCity of AlamogordoManagement’s Discussion and AnalysisJune 30, 2021Both of the government-wide financial statements display functions of the City that are principallysupported by taxes and intergovernmental revenues (governmental activities) and those functions thatare provided by user fees (business-type activities). The governmental activities of the City include generalgovernment, public safety, public works, culture and recreation, and health and welfare. The businesstype activities of the City include the joint utility fund, which provides water and sewer; the solid wastefund; the bonito lake fund; the golf course fund; the airport fund; the low rent public housing fund; andthe home ownership fund.The government-wide financial statements can be found on pages 24 through 27 of this report.Fund financial statements. A fund is a grouping of related accounts that is used to maintain control overresources that have been segregated for specific activities or objectives. The City, like other state and localgovernments, uses fund accounting to ensure and demonstrate compliance with finance-related legalrequirements. All of the funds of the City can be divided into two categories: governmental funds andproprietary funds.Governmental Funds. Governmental funds are used to account for essentially the same functionsreported as governmental activities in the government-wide financial statements. However, unlike thegovernment-wide financial statements, governmental fund financial statements focus on near-terminflows and outflows of spendable resources, as well as on balances of spendable resources available atthe end of the fiscal year. Such information may be useful in evaluating a government’s near-termfinancing requirements.Because the focus of governmental funds is narrower than that of the government-wide financialstatements, it is useful to compare the information presented for governmental funds with similarinformation presented for governmental activities in the government-wide financial statements. By doingso, readers may better understand the long-term impact of the government’s near term financingdecisions. Both the governmental fund balance sheet and the governmental fund statement of revenues,expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison betweengovernmental funds and governmental activities.The City has five governmental fund types: the general fund, the special revenue funds, capital projectsfunds, the debt service funds, and permanent funds. Information is presented separately in thegovernmental fund balance sheet and statement of revenues, expenditures, and changes in fund balancesfor the general fund, and the leisure services special revenue fund, which are considered to be majorfunds. Data from the other nonmajor governmental funds are combined into a single, aggregatedpresentation. Individual fund data for each of these nonmajor governmental funds is provided in the formof combining statements elsewhere in this report.The City adopts an annual appropriated budget for all of its funds. A budgetary comparison schedule hasbeen provided for the general fund and the leisure services special revenue fund to demonstratecompliance with these budgets.The basic governmental fund financial statements can be found on pages 28 through 37 of this report.- 15 -

State of New MexicoCity of AlamogordoManagement’s Discussion and AnalysisJune 30, 2021Proprietary Funds. Proprietary Funds are accounted for using the economic resources measurement focusand the accrual basis of accounting. The accounting objectives are determinations of net income, financialposition and cash flow. All assets, deferred outflows of resources, liabilities, and deferred inflows ofresources are included on the Statement of Net Position. The City has presented one major proprietaryfund, the joint utility fund, presented within the financial statements. Data from the other nonmajorproprietary funds are combined into a single, aggregated presentation. Individual fund data for each ofthese nonmajor proprietary funds is provided in the form of combining statements elsewhere in thisreport.The basic proprietary fund financial statements can be found on pages 38 through 47 of this report.Notes to the financial statements. The notes provide additional information that is essential to a fullunderstanding of the data provided in the government-wide and fund financial statements. The notes tothe financial statements can be found on pages 50 through 104 of this report.Other information. The combining statements referred to earlier in connection with nonmajorgovernmental funds, nonmajor proprietary funds, internal service funds, component unit, and fiduciaryfunds are presented immediately following the Required Supplementary Information. The combiningnonmajor fund financial statements can be found on pages 120 through 165 of this report.Government-wide Financial AnalysisAs noted earlier, net position may serve over time as a useful indicator of a government’s financialposition. In the case of the City, assets and deferred outflows of resources exceeded liabilities anddeferred inflows of resources by 180,840,845 at the close of the most recent fiscal year. The City hadrevenues that exceeded expenditures during the year in the amount of 12,434,469 which increased netposition in the current year as a result of operations.The City net position reflects its investment in capital assets (e.g., land, buildings, other improvements,and furniture and equipment) less any related debt used to acquire those assets that is still outstanding.This net position category of 151,696,806 reflects that the City has more net cost value than debt relatedto its capital assets. The City uses these capital assets to provide services to citizens; consequently, theseassets are not available for future spending. Although the City’s investment in its capital assets is reportednet of related debt, it should be noted that the resources needed to repay this debt must be providedfrom other sources, since the capital assets themselves cannot be used to liquidate these liabilities.- 16 -

State of New MexicoCity of AlamogordoManagement’s Discussion and AnalysisJune 30, 2021City of Alamogordo's Net PositionGovernmental ActivitiesCurrent and other assetsNet capital assetsJune 30, 2021GovernmentalBusiness-typeActivitiesActivities 14,241,519122,931,569 ,07210,116,1242,195,65812,311,782 145,551,108 139,368,746 Total assetsDeferred outflows of resourcesTotal assets and deferred outflowsof resourcesCurrent liabilitiesLong-term liabilitiesTotal liabilitiesDeferred inflows of resourcesNet investment in capital assetsRestricted forCapital projectsOther purposesUnrestrictedTotal net positionTotal liabilities, deferred inflowsof resources, and net 254,729 TotalJune 30, 2020GovernmentalBusiness-typeActivitiesActivities ,257 ,9951.63%5,820,5891,276,7867,097,37573.47% 284,919,854 138,006,171 137,329,199 275,335,3703.48%6,153,31324,446,044 11,690,99385,163,093 7,564,56025,847,114 ,389,849 ,706,183168,406,3767.38% 145,551,108 139,368,746 284,919,854 138,006,171 137,329,199 275,335,3703.48%Changes in Net PositionThe City’s total revenues of 56,138,063 and expenses of 43,703,594 resulted in a change in net positionof 12,434,469 as a result of City operations. Comparative information for changes in net position is shownon the next page.- 17 -

State of New MexicoCity of AlamogordoManagement’s Discussion and AnalysisJune 30, 2021City of Alamogordo's Change in Net PositionJune 30, otalJune 30, otalPercentChangeRevenuesProgram revenuesCharges for services Operating grants and contributionsCapital grants and contributionsGeneral revenuesProperty taxesOther taxesInterest incomeTransfers in (out)Miscellaneous incomeGain from sale of assetsTotal revenuesExpensesGeneral governmentPublic safetyPublic worksHealth and welfareCulture and recreationInterest and other chargesWater and sewerSolid waste collectionBonito LakeDesert Lakes golf courseWhite Sands regional airportPublic housing - rental programPublic housing - home ownershipTotal expensesIncrease in net positionNet position - beginningNet position - ending 2,798,1751,845,292656,966 15,320,703884,355802,738 18,118,8782,729,6471,459,704 ,654,022565,1731,388,05313,78127,815,92315,887,671 14,017,521746,6565,174,739 406,37658,053,28298,488,784156,542,0668%73,281,493 107,559,352 180,840,84565,700,193 102,706,183 168,406,3767% Financial Analysis of the Government’s FundsAs noted earlier, the City uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements.The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, andbalances of spendable resources. Such information is useful in assessing the City’s financing requirements.In particular, unassigned fund balance may serve as a useful measure of a government’s net resourcesavailable for spending at the end of the fiscal year.- 18 -

State of New MexicoCity of AlamogordoManagement’s Discussion and AnalysisJune 30, 2021As of the end of the current fiscal year, the City’s governmental funds reported combined ending fundbalances of 55,886,662, an increase of 4,965,037 in comparison with the prior year. Approximately29.26 percent of this total amount, 16,352,431, constitutes unassigned fund balance, which is availablefor spending at the government’s discretion. The remainder of fund balance is restricted for otherpurposes to indicate that it is not available for new spending.The general fund is the chief operating fund of the County. The unassigned fund balance represents154.3% of the total general fund expenditures or approximately 18 months of operating equity.Budgetary HighlightsThe final budget for the general fund’s revenue increased by 3,621,191 from the original budget. Budgetamendments to expenditures decreased the budget ( 43,809) during the year within the general funddepartments. The actual expenditures were 3,079,650 less than the final budgeted amounts, and actualrevenues were 837,892 more than the final budgeted amounts. This resulted in a favorable budgetvariance of 3,917,542.The final budget for the leisure services special revenue fund’s revenue decreased by ( 161,617) from theoriginal budget. Budget amendments to expenditures decreased the budget ( 134,446) during the yearwithin the leisure services departments. The actual expenditures were 474,487 less than the finalbudgeted amounts, and actual revenues were 38,284 more than the final budgeted amounts. Thisresulted in a favorable budget variance of 512,771.Capital Asset and Debt AdministrationCapital AssetsThe City’s investment in capital assets for its governmental activities as of June 30, 2021, amounts to 75,711,783 for governmental activities and 122,931,569 for business-type activities (net ofaccumulated depreciation). This investment in capital assets includes land, construction in progress,buildings and improvements, mechanized equipment, unscheduled property, and infrastructure withinthe governmental activities and the same categories within the business-type activities. The tables belowshows the summarized capital assets of the City as of June 30, 2021.- 19 -

State of New MexicoCity of AlamogordoManagement’s Discussion and AnalysisJune 30, 2021Governmental ActivitiesAsset DescriptionCapital assets not being depreciatedLandConstruction in progressCarryingAmount 10,800,8348,840,046AccumulatedDepreciation- 10,800,8348,840,04619,640,880-19,640,880Capital assets being depreciatedBuildings and improvementsMechanized equipmentUnscheduled 311,727,5904,811,1281,163,74138,368,444Total capital assets being depreciated247,190,585191,119,68256,070,903 266,831,465 191,119,682 75,711,783CarryingAmountAccumulatedDepreciationNet PositionBalance7,003,43426,340,526 Total capital assets not being depreciatedTotal capital assetsBusiness-type ActivitiesAsset Description Net PositionBalanceCapital assets not being depreciatedLandConstruction in progress Total capital assets not being

Dusty Wright Commissioner Josh Rardin Commissioner Susan Payne Commissioner . Petria Bengoechea City Attorney Evelyn Huff Finance Director Rachel Hughs City Clerk Sue Ashe Accounting Manager State of New Mexico City of Alamogordo Official Roster June 30, 2021 . Accounting principles generally accepted in the United States of America require .