Analysis of current financial condition and trends A jurisdiction’s financial condition depends on its revenues,spending,fund balances and other reserves, and debt. Financial practices also underlie a jurisdiction’s financial condition and prospects. Annual or operating revenues support all spending,including expenditures for capital projects.Such revenues provide resources to pay operating spending and pay-as-you-go capital financing and to pay debt service on bonds or other debt issued in the past to finance capital projects.The growth or change in major local revenue sources, such as the property tax or sales or excise taxes,should be tracked over a period of recent years.Such growth or change should be compared with growth or change in a jurisdiction’s population,overall operating spending,spending for debt service,and other relevant spending purposes.The analysis ofspecific revenues should distinguish among growth or change in the tax or revenue base caused by economic expansion or change,redefinitions ofthe base,and changes in the tax or revenue rate.If some revenue sources are not growing or growing slowly, the causes should be identified. Expenditures for salaries, wages, and fringe benefits account for the largest share of operating spending for most government services. Growth or change in spending for such purposes in recent years should be tracked. Analysis should identify the reasons for growth or change and compare them with growth or change in major revenue sources. Expenditures for other major recurring operating budget items,perhaps public assistance payments or certain contractual services,should be similarly tracked and analyzed. Available general and other operating fund balances are very important to a jurisdiction’s financial condition. They provide the working capital to fund cash flow shortfalls during the year,and they serve as “rainy day”funds to cover unanticipated or emergency spending.Their role in capital financing