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The five major trends and example indicators measured by this program are: <br />A. Economic Vitality <br />1. Population: Is there an increase or decrease in population? <br />2. Real estate: Is the taxable valuation of real estate growing too <br />slowly? <br />3. Retail sales: Does the growth or decline in the number of <br />businesses and retail sales reflect an overall economic recession <br />or an erosion of local economic vitality? <br />4. Social welfare: Is unemployment placing greater demands on health, <br />welfare, and social service programs? <br />B. Revenue Trends <br />1. Levy limit: Is the actual current levy rate at or approaching the <br />legal levy limit? <br />2. Earnings on investments: Is the percent of revenues derived from <br />earnings on investments changing? <br />3. Tax collection rate: Is the trend in property tax collection rates <br />declining? <br />4. Revenue /expenditure comparisons: Is there a consistent pattern of <br />revenue shortfalls? <br />C. Expenditure Trends <br />1. Expenditures: Are the overall expenditures or expenditures by <br />function in line with the current rate of inflation? <br />2. Per capita expenditures: Are the municipal expenditures per capita <br />growing at a faster rate than the change in population? <br />3. Interest and fiscal charges: Is the cost for interest and fiscal <br />charges escalating as a percent of total expenditures? <br />D. Future Solvency <br />1. Debt: Is future financial flexibility being lost due to a growing <br />debt burden? <br />2. Bond rating: Is there a change in the bond rating? <br />3. Debt service payments: Are debt service payments becoming a larger <br />percentage of total revenues? <br />4. Fund balance: Is there a decline in the general fund balance? <br />E. Management Practices <br />1. Auditor's opinion: Is there a consistent failure to obtain an <br />unqualified opinion on financial statements from independent <br />auditors? <br />2. Municipal employees: Is the number of municipal employees <br />consistent with current population trends? <br />3. Fringe benefits: Will growth in fringe benefits and employer -paid <br />contributions place undue demands on future revenues? <br />4. Municipal enterprises: Are the municipal enterprises incurring <br />unplanned for losses or gains? <br />The MFHP was developed as an index of economic indicators to help elected <br />municipal officials determine fiscal trends. Identifying a negative trend does <br />not automatically spell fiscal decay. Rather, the answers to these and other <br />questions tell municipalities whether or not a sound fiscal course lies ahead. <br />5/90 <br />