Eland City Council has adopted a policy of aggressively pursuing grants and other resource inflows from other levels of government. Over the past several years, the proportion of total city revenues that comes from other levels of government has steadily increased. As a consequence of these increased revenues, the city has begun offering a number of new services to citizens. In assessing the financial condition of the city, an analyst would conclude which of the following?
A) The increasing reliance on intergovernmental revenues has increased the financial viability of the city.
B) The increasing reliance on intergovernmental revenues can be a negative fiscal characteristic.
C) The increasing reliance on intergovernmental revenues is irrelevant in assessing the financial condition of the city.
D) The increasing reliance on intergovernmental revenues is a sign of poor management on the part of the city council.

Question

Quizplus · Accepted Answer

Reliance on intergovernmental revenues can be risky because these funds may not be stable or guaranteed in the long term, potentially leading to financial instability if they decrease or are withdrawn.

Eland City Council Has Adopted a Policy of Aggressively Pursuing