Abstract
This chapter discusses the three of many possible tools to analyze fiscal health, the ten-point test of fiscal condition, the financial trend monitoring system, and fiscal capacity analysis given the relative simplicity and ease of implementation of the three tools. In addition, the three tools have fairly modest data requirements for conducting the analysis of fiscal health. Periodic application of these tools can help a local government maintain a clear perspective on current or impending distortions in fiscal condition. Given the relative ease in conducting such an analysis, the burden for maintaining an ongoing review of fiscal health should be minimal. It is expected that this ability to monitor fiscal condition, preferably on an annual basis, will prove to be a cost-effective method of proactively maintaining fiscal health and fiscal direction long into the future. As with any type of fiscal analysis, extraordinary circumstances unique to the local government can easily explain what at first glance may seem to be an alarming analytical result.
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