A comparison of financial indicators between two case study communities, Littleton and Aurora, Colorado

Material Information

A comparison of financial indicators between two case study communities, Littleton and Aurora, Colorado and suggestions to optimize the future service capabilities of the two municipalities
Truby, Elizabeth Downing
Publication Date:
Physical Description:
135 leaves : charts, maps ; 28 cm

Thesis/Dissertation Information

Master's ( Master of Planning and Community Development)
Degree Grantor:
University of Colorado Denver
Degree Divisions:
College of Architecture and Planning, CU Denver
Degree Disciplines:
Planning and Community Development


Subjects / Keywords:
Finance, Public -- Case studies -- Colorado -- Aurora ( lcsh )
Finance, Public -- Case studies -- Colorado -- Littleton ( lcsh )
Finance, Public ( fast )
Colorado -- Aurora ( fast )
Colorado -- Littleton ( fast )
Case studies. ( fast )
theses ( marcgt )
non-fiction ( marcgt )
Case studies ( fast )


General Note:
Submitted in partial fulfillment of the requirements for the degree, Master of Planning and Community Development, College of Design and Planning.
General Note:
College of Architecture and Planning
Statement of Responsibility:
by Elizabeth Downing Truby.

Record Information

Source Institution:
University of Colorado Denver
Holding Location:
Auraria Library
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
15564025 ( OCLC )
LD1190.A78 1985 .T77 ( lcc )

Full Text

Elizabeth Downing Truby
n uiesxs presented
in partial fulfillment of the requirements
for the degree of Master of Planning and Community Development
of Colorado
August 15, 1985

The Nature of Public Goods and Services..................3
Growth of Government.....................................7
The History of Intergovernmental Aid....................11
The increasing reliance of local governments
on intergovernmental aid..............................12
Factors Contributing to Service Provision Growth........14
Increased service demand...............................15
Inefficiencies in service provision....................17
An increased supply of services........................18
The Growth in Government and the Suburbs................19
The move to the suburbs................................19
The problems of suburban government....................21
Growing suburbs........................................23
Case Study Communities..................................25
Developed land........................................27
Population growth.....................................27
Major employers.......................................28
Commercial data.......................................29
Population growth.....................................31
Major employers.............,.........................32
Commercial data...................................... 33
Demographics of the Case Study Communities.............33
Occupational and Industrial Categories.................35
Growth and Development of Aurora and Littleton.........36
II. FINANCIAL ANALYSIS......................................41
Determining the Potential for Excessive Municipal
Fiscal Burden..........................................41
The concept of fiscal strain...........................43
Financial Strain in the Case Study Communities..........44
Financial Indicators....................................45
Financial indicators #1 10 (Analysis).............53-89
Summary of Findings.....................................90

III. RECOMMENDATIONS.........................................92
General Expenditure Reduction Strategies................92
Decreasing service provision costs.....................93
Reducing service quality and quantity..................94
Altering service delivery strategies...................95
Specific Expenditure Reduction Strategies..............101
Public Works...........................................101
Public Safety..........................................108
Revenue Enhancement Strategies.........................110
Charges for Services...................................110
Sales Tax..............................................112
Central Business District Revitalization...............112
Cultural facilities as a means to revitalize
Other Retail...........................................117
Statewide Sales Tax....................................119

Table Page
Table 1. GOVERNMENT EXPENDITURES...............................9
Table 2. GOVERNMENT EMPLOYEES.................................10
Table 5. DEMOGRAPHIC CHARACTERISTICS..........................34
Table 6. INDUSTRY CLASSIFICATION BREAKDOWN....................35
Table 7. OCCUPATION...........................................36
Table 8. FINANCIAL INDICATORS SUMMARY.........................52
Table Financial Indicator 1. RE VENUES/POPULATION...........55
Table Financial Indicator 1A. REVENUES BY SOURCE AURORA...57
Table Financial Indicator IB. REVENUES BY SOURCE LITTLETON..58
Table Financial Indicator 2. INTERGOVERNMENTAL REVENUES.....60
Table Financial Indicator 3. ELASTIC TAX REVENUES...........63
Table Financial Indicator 4. DEBT SERVICE...................66
Table Financial Indicator 5. PROPERTY TAX REVENUES..........69
Table Financial Indicator 6. EXPENDITURES/POPULATION........72
Table Financial Indicator 6A. DISTRIBUTION OF MUNICIPAL
Table Financial Indicator 7. EMPLOYEES/POPULATION.............80
Table Financial Indicator 8. PROPERTY TAX AND MUNICIPAL
Table Financial Indicator 9. POPULATION GROWTH RATE.........85
Table Financial Indicator 10. PERSONAL INCOME...............88
Table 11. RECREATION COSTS PAID BY USER FEES.................106

Graph Page
Graph 1. REVENUES/POPULATION.................................56
Graph 2. INTERGOVERNMENTAL REVENUES..........................61
Graph 3. ELASTIC TAX REVENUES................................64
Graph 4. DEBT SERVICE........................................67
Graph 5. PROPERTY TAX REVENUES...............................70
Graph 6. EXPENDITURES/POPULATION.............................73
Graph 7. EMPLOYEES/POPULATION................................81
Graph 9. POPULATION GROWTH RATE..............................86
Graph 10. PERSONAL INCOME.....................................89
Figure Page
Figure 1. CITY OF AURORA......................................26
Figure 2. CITY OF LITTLETON AND SURROUNDINGS..................30

Introduction Municipalities frequently face severe budgetary
problems. More and more service delivery demands are placed on
local governments at the same time federal government assistance
is decreasing. Citizens want their taxes to remain low, yet
demand more and better services. Local government officials face
difficult decisions in trying to deliver adequate services to
existing and new residents. Alternative methods of providing
services must be explored by those responsible for providing them.
People living in a community atmosphere have recognized the need
for and have demanded more goods and services than the private
sector can or will provide. However, once a community begins
providing public goods and services, people develop expectations
about what government should provide for them. More and more
goods and services may be demanded to be added to the list of what
is a public good. Uncontrolled community growth may cause more
service demands to be placed on a local government than were
originally anticipated. Inefficiencies may result from long-term
service provision, overtaxing the community's ability to pay.
Revenues may not keep pace with expenditures. The growth of
government, the increasing demands placed upon municipalities for
service provision and the growing tendency for imbalance between a
municipality's revenues and expenditures all emphasize the need
for an exploration of alternative means to maximize
municipalities' service delivery abilities. The need to better

warn decision makers of a growing imbalance and impending
financial burden or stress is also clear. Then, sound fiscal
alternatives to adjust revenues and expenditures can be
determined through more efficient service delivery, reduction of
expenditures or increases in revenue generating capacity.
This paper will first explore the nature of public goods and
services, the growth of government and preliminary information on
two case study communities as background for the analysis and
recommendations sections. Next, in the heart of the paper, two
case study communities, Aurora and Littleton, will be analyzed
through the use of financial indicators to determine where fiscal
stress exists in terms of municipal expenditures, revenues and
community resources (e.g., level of personal income). Finally,
recommendations will be made concerning where service expenditures
can be trimmed or revenues increased to enable the municipalities
to continue adequate service provision to the community.
Therefore, the paper will be divided into three sections: 1)
background data on the nature of public goods and services and
documentation on the growth of government; 2) analysis of
financial indicators used to pinpoint fiscal strain in the case
study communities; and 3) recommendations on optimizing the future
service capabilities of the two case study communities, Aurora and

This section will cover a background discussion on the nature of
services, governmental growth, the move to the suburbs, and
preliminary information on the two case study communities, Aurora
and Littleton.
The Nature of Public Goods and Services
In a world with relatively scarce and limited resources, goods and
services must be allocated. Not every consumer can have every
possible good or service he or she may want. There would not be
enough resources, time or ability to supply everyone with
everything. As a result, goods are allocated in the marketplace.
In the United States' capitalist society, workers sell their goods
(labor) to the highest bidder (the employer) in order to earn
money. With these resources (wages) the worker allocates what
goods and services he will buy. In most cases he will not be able
to buy everything he wants so he will pick between the various
choices available to him in the marketplace, based on their price
and a personal choice of what goods and services are necessary or
desirable. With many buyers and sellers, the marketplace remains
The goods and services a consumer buys in the marketplace have an
important quality, the property of exclusion. Goods are available
in a store to anyone who is willing to pay the price for them.
The supplier will not give them to you until you pay for them, and

once that is done, no one else can use those same goods without
your permission (unless they steal them, of course). This
discussion implies another important characteristic of consumer
goods and services, individual consumption. Food can only be
eaten once and then it is gone, no one else can consume it.
However, people living in a community atmosphere, as we do in the
U.S., recognize the need for, and demand more goods and services
than can be individually supplied. Also, for smoother community
functioning, goods and services are demanded that are deemed
necessary and that cost money, but that people cannot be forced to
pay for even though they may benefit. National defense is a good
example of a non-exclusive, joint consumption good. The United
States, as a community, has deemed national defense a necessary
good. This service must be paid for out of collective taxes
because it is infeasible for nonpayers to be excluded from the
service. National defense protects a community, not individual
houses. Also, if an individual had to provide their own defense
it would be prohibitively expensive; the service can only be
feasibly provided on a joint consumption basis. National defense,
as a good/service can be consumed by many simultaneously, without
diminishing the quality or quantity available to other users.
As E.S. Savas discusses in Privatizing the Public Sector, (1) four
extremes exist when classifying the nature of goods and services:
o pure individually consumed goods for which exclusion is

completely feasible (private goods), this category includes
free market goods such as televisions, furniture, etc.;
o pure jointly consumed goods for which exclusion is
completely feasible (toll goods), examples here include
utilities, turnpikes and education;
o pure individually consumed goods for which exclusion is
completely infeasible (common-pool goods), these goods
include fish in the ocean, available to be taken, or air;
o pure jointly consumed goods for which exclusion is
completely infeasible (collective goods), such as air and
water pollution control or national defense.
In the first case (pure individually consumed goods for which
exclusion is completely feasible), the private sector will supply
these goods, if someone is willing to pay the cost of production.
There is a direct link between consumption and payment. The
public sector will probably not supply such goods. (An exception
might be health care for the indigent, a service that may be
deemed necessary by society but is prohibitively expensive for the
receiver.) These private goods are consumed individually and are
secured through transactions between buyers and sellers.
While private goods are most often supplied by the marketplace,
toll goods, common-pool goods and collective goods must frequently
be provided by the public sector if a community is to have them at
all. Frequently, these public goods cannot be provided through
the marketplace because there is no way of excluding nonpaying
customers. If a toll, common-pool or collective good can be
provided in such a way that nonpaying customers can be excluded,

it may still be provided by the private sector, for example, cable
television. However, those toll, common-pool and collective goods
that consumers cannot be excluded from for nonpayment and that are
deemed necessary by society must be provided by the public sector,
such as streets. Included on the list of public goods would be
those that consumers can be excluded from for nonpayment but
society has decided to provide them regardless, such as an
education through high school.
Public goods, such as national defense, the judicial system, air
and water pollution control and police protection cannot feasibly
be supplied by the private sector. Individual citizens could not
easily or reasonably be excluded from such services. The good or
service is consumed jointly and if made available to one person
must be made available to all. If consumers cannot be excluded,
they will tend not to pay their fair share. Your actions as an
individual consumer will not affect whether that service is
provided or not, so there is an incentive for you not to pay.
These goods must be public goods, provided by the public sector
and paid for out of public sector revenues, if a community deems
them necessary goods/services. Problems may arise, however, when
the list of publicly provided goods and services demanded expands
to a degree greater than a municipality's ability to pay.

Growth of Government
The increasing urbanization and suburbanization that has been
taking place in the United States in the past one hundred years
has been well-documented. A multiplication in the number of
local governmental entities began in the late nineteenth century
and continued through the next century. The "...division and
subdivision of the metropolis was made possible through a legal
structure, developed in the nineteenth century, that maximized the
opportunity for local self-rule. Local self-determination was
the rallying cry of Americans, and this meant that each fragment
of the metropolis would enjoy the right to govern itself and to
decide its destiny." (2) With the increase in immigration during
this same period and the rise of manufacturing and
industrialization, middle class residents wanted to escape
unwanted metropolitan traits. Many elements clamored for their
own rule because of the diversity of society and the desire for
different governmental policies by different segments. New
outlying fringe residents and industries wanted to escape what
they felt were excessive tax burdens, unwanted governmental
regulation or to create their own set of laws and rules. "Both
the legal means and the social and economic motives for
(government) fragmentation existed, and outlying residents thus
initiated an often chaotic dissection of the metropolis.
Throughout the nation, particularistic communities vied for
resources, wealth, and advantage as state legislatures abdicated
supervision over the creation of cities and villages." (3)

Cnee the plethora of fledgling governmental entities was
established, demand grew for the same range of municipal services
that had been provided by the central city. In fact,
"(t)hroughout the country outlying municipalities were developing
increasingly sophisticated public services. In 1890 only 29
percent of the outlying municipalities in Cook County, Illinois,
enjoyed a piped supply of water, whereas by 1915 45 percent of the
suburban cities and villages could claim this advantage." (4)
This increasing urbanization and suburbanization has fueled the
growth of local governments, municipalities as well as special
districts, and has continued throughout this century. Table 1
illustrates the dramatic growth in government expenditures that
has occurred from 1930 to 1980. During this period, federal,
state and local expenditures grew from 11.1 billion dollars in
1930 to 869 billion dollars in 1980.
As Table 1 shows, total government expenditures (in 1972 constant
dollars) increased 746% over the fifty year period. Per capita
expenditures grew 358% over the same period, or 7% per year.
Total government expenditures have grown from an eighth to a third
of Gross National Product.(5) The number of government employees
has exhibited the same high growth rates. Table 2 shows that
there have been large increases in the number of government
employees from 1929 through 1979. (6)

(Federal, State and Local)
Total As % of
Year (billions)__________GNP
In Constant
1972 Dollars
As Per Capita
In Constant
1972 Dollars
1930 $11.1 12.2% $45.1 $367
1940 18.4 18.4 75.5 572
1950 61.0 21.3 105.1 691
1960 136.4 27.0 146.7 810
1970 313.4 31.6 256.7 1,252
1980 $869.0 33.1% $381.8 $1,681
E.S. Savas, Privatizing the Public Sector, 1982

(Federal, State and Local)
Number in
Year Millions
As Percent of
As Percent of
All Employees
1929 2.92 2.4 8.2
1949 5.59 3.8 12.2
1970 11.35 5.5 16.6
1979 13.96 6.2 14.9

The number of government employees has increased from less than 10
percent of all employees to almost 15 percent in 1979. A good
portion of the dramatic increases in government expenditures and
number of employees is due to increases in the federal branch,
however, local governments have also been part of this trend.
Tables 1 and 2 illustrated the dramatic growth that has occurred
in government spending and staffing in the past 50 years. Cnee the
number of governments expands, the services demanded by the
population tends to increase also. The governmental service
categories of "income security, welfare, health, housing and
education have been the principle loci of large and rapid
government growth". (7)
The History of Intergovernmental Aid
In the past 10 years, the relationship between the federal, state
and local governments has been changing drastically. At first,
urban areas received large amounts of aid, such as revenue sharing
and other programs. Now these same entities must deal with the
drastic cutbacks that have been the norm in federal aid since the
election of President Reagan in 1981. In the 1960's, federal
money was distributed on a smaller scale to states, cities and
counties, in the 1970's funds were dispensed on a much larger
scale. "In fiscal year 1978 federal aid to states and localities
exceeded $80 billion, a tenfold increase from the $8.5 billion in
1963. Federal aid to states and localities represented 7.6
percent of the federal budget in 1960; in fiscal year 1977 it
topped 17 percent. (In 1979), federal aid amounted to more than
25 percent of the total state and local expenditures." (8) There

is also a more direct federal-local aid relationship than has been
evident in the past. For example, "federal aid 'passed through'
the states to localities increased 73 percent between 1972 and
1977 but direct aid to local governments increased 264 percent."
The increasing reliance of local governments on federal aid The
past twenty to thirty years has seen an increasing reliance of
state and local governments on federal aid. Federal assistance to
state and local governments combined averaged an increase of 15
percent per year between 1958 to 1978. (10) The municipalities
have received a good portion of this increased largesse while the
states have been bypassed in the distribution process. Between
1969 and 1979, federal aid directly given to city governments
increased from 5 percent to 15.4 percent of overall city general
revenues. Though municipalities can hardly be expected to turn
down money available to them, if and when federal money is
reduced, severe fiscal stress may result when expected revenues
are not forthcoming. This kind of problem has faced many
municipalities in the recent past.
The increase in municipalities' intergovernmental aid has been at
the expense of the states. In 1971-72, states received 85.4
percent of all federal aid and retained 62 percent for their own
use. By 1976-77, they received a smaller 73.4 percent of all
federal aid but passed through so much to local governments they
kept only 54 percent. (11) This type of shift represents a
significant change in the structure of aid to states and

localities that affects the type and amount of services each type
of entity is able to provide. Local governments have increased
their share of federal money received from 38 percent in 1971-72
to 46 percent in 1976-77. (12)
States also contribute heavily to their municipalities,
distributing more in dollars than the federal government does
although their share has declined. In 1971-72, 70 percent of
cities' intergovernmental aid was given by the states and 30
percent by the federal government. By 1976-77, the states
provided 62.5 percent while the federal governments share
increased to 37.5 percent. (13) Between 1970 and 1978, municipal
governments became much more dependent on intergovernmental aid.
While 30% of cities' general revenues came from intergovernmental
aid in 1968-69, that figure had increased to 39 percent ten years
later. (14)
The relative abundance of money available to local governments
began to dry up after 1978 however. That year marked a turning
point for local finance when federal aid began to slow down and
taxpayers began balking at their high taxes (for example, the
infamous Proposition 13 ballot issue in California). Two
extensive federal programs that had augmented municipal budgets
expired in 1978 the Local Public Works Program ($6 billion) and
the Anti-Recession Fiscal Assistance Program ($3.5 billion). This
latter program was passed during the 1975 recession to stimulate
local economies and provide "countercyclical" revenues. (15) The
federal branch is further paring funds formerly provided

municipalities. "The federal government is almost certain to cut
off revenue-sharing funds at the end of its current fiscal year,
October 1 (1985, and)... there will be other reductions in federal
funds." (16) Faced with increasing losses of state and federal aid
that will probably continue to decline in the future,
municipalities must expand their own self-raised revenues or
explore ways to decrease their expenditures.
Conclusion In the 1980's, increasing intergovernmental aid is no
longer a viable option to fund services. Federal funds are spread
very thin amongst the clamoring entities. State governments have
their own budgets to balance and usually cannot afford to take on
more fiscal responsibility in the form of aid to municipalities or
counties. Local governments have their own lobbyists now in order
to compete for what limited funds are available. Municipalities
must be prepared for further cuts in intergovernmental aid.
Citizens are reluctant to pay higher taxes. The costs of
providing services is increasing. Populations grow and demand
more services. To remain viable through the 1990's,
municipalities must be able to pinpoint potential areas of fiscal
stress in their budgets and to explore and utilize alternative
revenue producing and expenditure reducing avenues.
Factors Contributing to Service Provision Growth
Many factors have contributed to the growth in government and the
services provided by government. As E.S. Savas discusses in
Privatizing the Public Sector, the main reasons are an
increase in the demand for services by recipients, greater

inefficiencies in service provision/delivery and a desire to
supply more government services by producers of the services, i.e.
the bureaucracy. These forces have been working in the more
mature, established suburbs for a longer period of time and are
more entrenched than in a newer, growing suburb. This may make it
harder for a mature suburb to compete as effectively with a
growing suburb.
Increased service demand by many sectors of society has placed
added burdens on municipalities struggling to supply the community
with services. The baby boom generation has become affluent and
tends to demand more in the way of services. Some factors
contributing to the increased demand for services are:
o Demographic changes The character of the U.S. population
is constantly changing, and each interest group demands
services for their needs. The elderly require different
services than children. Poor people demand more attention
than middle income people. A growing elderly population may
need more health care services. The welfare "safety net"
concept is now well-established in our society and various
forms of aid have come to be considered a right to which
people feel they are entitled. Entitlements have become a
substantial portion of governmental expenditures.
Sometimes a higher level of government may require local
governmental entities to provide certain programs, such as
welfare, to citizens without appropriating funds.

o Increasing urbanization has also fueled service demand.
A more urban population tends to expect more services to
be provided. For example, a large city would probable have
a symphony, whereas the same population in several smaller
cities that are more dispersed would probably not support
such cultural institutions. Also, when people live in a
more urban environment, the local government must provide
services that, in a smaller, more personal community
setting, would be provided by neighbors, such as elderly
care or indigent aid.
o Income growth also encourages citizens to demand more
service provision. People tend to expect more cultural
institutions, more frequent service provision and additional
services such as greater environmental protection when
their incomes rise. They should be prepared to pay for these
expanded services, but they may not realize the true costs.
Also, not everyone in a community is able to pay for the
level of services that the average citizen is.
o The fact that some sectors of society advocate
redistribution of wealth has also increased the cost of
delivering services. As mentioned above, the "safety net"
concept is entrenched in society. In addition, politicians
attract votes by promising such benefits, contributing to
the upward spiral in the amount of services government
provides. Government is called upon to rectify societal
ills and inequities, a noble undertaking which nonetheless
costs scarce dollars.

Contributing to the above causes of service demand increase is the
population's perception of service provision. Often, people have
no idea of what is entailed for a municipality to supply a
service. They are unaware of what the actual costs are involved
in providing the expanded range of services that are demanded.
People will naturally expect more services if they do not fully
realize the actual costs they are paying for that service in the
form of taxes.
Inefficiencies in service provision also contribute to the
increase in the cost of government:
o Frequently, it costs more or takes more employees to
accomplish the same job than it did in the past. A
striking example is evident in New York City where "over
a 25 year period the number of police officers rose from
16,000 to 24,000, but the total annual hours worked by
the force actually declined slightly". (17)
o In older communities, the infrastructure may be aging
and not capable of delivering services as efficiently as
possible. For example, a water system installed fifty
years ago may not be able to handle the capacity neces-
sary to serve the present population or excessive leakage
may have impaired the pipeline capacity.
o The growth of suburbs and urban sprawl has increased the
cost of providing services. The large-lot suburban
development that is prevalent costs more to provide

services to per person than more dense types of development
such as apartments. This problem affects roads, water and
sewer, police and other distance-dependent services.
o Often, as discussed earlier, the nature of government is to
provide those services that the private sector will not;
therefore many government services are close to monopolies.
With a monopoly there are less incentives to keep costs
down and efficiency high. The services provided become
inflated in terms of the perceived need for those services.
An increased supply of services by producers has also contributed
to the increased scope of costs of government. This type of
pressure on government can arise due to politicians and
bureaucrats trying to protect their jobs or enhance their power.
Some aspects of this phenomenon are:
o Our political process encourages campaign promises and
special interests to proliferate; politicians will promise
more benefits to the electorate or to interest groups to
help ensure their election. In addition, government
employees will tend to vote for the candidate promising
more governmental services and thus ensuring them of job
o Once a governmental agency is established, the bureaucrats
running it will naturally try to increase their budget
allotment each year, claiming greater need and the
necessity for more service provision.

The Growth of Government and the Suburbs
Mature and growing suburbs have been subject to all the forces
associated with the growth of government and the problems related
to trying to supply a community with those goods and services
considered to be public goods. While the suburbs must deal with
the same realities and problems inherent in attempting to provide
services that were discussed in previous sections, they are often
overlooked when it comes to receiving assistance from state and
federal agencies. Frequently, suburbs do not have the severe
fiscal shortages that central cities or small communities with a
low tax base suffer from. These cities are more fiscally
distressed, and naturally receive more aid than a suburb which
might be relatively more affluent but still faces the problem of
managing governmental growth, possible fiscal distress and the
demands of servicing its population.
The move to the suburbs The suburban lifestyle can be very
attractive to central city residents. A more country setting,
within commuting distance of employment, appeals to many people.
With increasing affluence, people in the past in the United States
have tended to move to the suburbs. The relative ease of
transportation we enjoy in this country has enabled millions of
acres of land available outside of cities to be accessible for
residential development for people who work inside the cities.
After World War II, the availability of "accessible and affordable
cars, (the) buildup of interstate highways and pent-up housing
demand fueled a suburban explosion." (18)

The demand for housing after World War II was considerable, since
housing supply was not appreciably added to during the war. In
1946, it was estimated by the government that 3.5 million families
would be looking for homes in 1946, but that only 945,000 vacant
units would be available. (19) This shortage situation soon
changed, however, when "After the removal of wartime restrictions
on residential construction in late 1945, and emergency measures
to stimulate production of building materials and equipment, the
home-building/\ moved quickly to respond. The number of new
permanent dwellings during the first six months of 1946 increased
more rapidly than ever. Housing starts for this period were
greater than for all of 1945. Private housing construction was on
its way back and to record levels, surpassing in 1946 the previous
high year of 1925 and reaching almost 1.5 million units annually
by the end of the decade." (20) The institution of the Federal
Housing Administration's insured mortgage program and the Veterans
Administration's guaranteed mortgage programs spurred the
accelerated growth in housing and the move to the suburbs.
The term "suburban explosion" is no exaggeration. By 1930, almost
one-third of metropolitan residents lived outside central cities,
by 1960 metropolitan population was split between central and
outside central city residents. By 1970, suburbanites were in the
majority and by 1980, 60 percent of metropolitan residents were
suburbanites. (21) Although there has been discussion recently
about the fact that some people are moving back to the central
cities or are moving to more rural environments, the majority of
the population still resides in the suburbs.

The problems of suburban government As suburbs grow and mature,
they become increasingly urban in terms of their economy, the
social structure, fiscal problems and lifestyle. Growth is
frequently haphazard. Infrastructure improvements need to be
well-planned to help guide new growth since they are "... strong
determinants of growth within a region." (22) Haphazard growth may
be more inefficient and cost more than well-planned growth.
Unfortunately, "(m)ost communities today do not have a system for
equitably and rationally allocating the right to develop land in
the future..." (23) A suburb may frequently suffer from a myriad
of other problems as well. Urbanized or mature suburbs are
experiencing such financial hardship symptoms as "rising per
capita expenditures, rising tax rates, shortfalls in collecting
taxes, growing debt, and so on." (24)
The slowly-growing mature suburb has the same increasing demands
placed on its service delivery capacity that were discussed above.
Also, mature or older suburbs frequently have served as central
activity nodes for such important sectors of the local economy as
transportation, retail and entertainment, increasing their
expenditure burden. Frequently, the mature suburb had to provide
increasing amounts of services, while business sector vitality and
its resulting tax base declined. In the recent past, the mature
suburbs have often lost out on new retail growth to growing
suburban entities or even to outlying unincorporated areas. The
mature suburbs' retail establishments may be older and less
attractive to consumers than the newer establishments in a growing
suburb and therefore frequented less often by the buying public,
thereby accelerating the tax base decline.

Further compounding the problems of mature suburbs is the fact
that many are hemmed in with little growth potential and no
opportunity to annex commercial growth on the outskirts to
increase the tax base. Both residential and commercial growth may
be relatively stagnant.
The mature suburb often does not receive the large transfer
payments that the central cities do. Their revenues are largely
self-raised, and maximizing municipal services in a climate of
budget restraint is difficult. The service delivery systems of
the mature suburb may be aged, at capacity or outdated, thereby
reducing efficiency and probably increasing costs. In comparison
to growing suburbs, mature suburbs tend to have higher municipal
outlays and impose higher taxes. For example, "(h)eightened
spending for public safety, statutory and debt is a manifestation
of community aging, social change, growing public service overhead
and other danger signals." (25) In a study of New Jersey
communities, it was found that mature suburbs spent a third more
for total municipal operating expenses than the nearby growing
suburbs. This phenomenon was especially pronounced in such
functions as health and welfare. (26)
When a suburban government has been in existence for longer
periods of time, they will be likely to have higher employee costs
due to the greater numbers of more senior employees. In
addition, there will probably be a greater number of personnel per
capita as well as the tendency for proliferation of staff at
senior salary levels. (27) Higher per capita costs result due to
higher fixed and variable costs such as these. Despite some of

these problems associated with mature suburbs, they remain
important as well as viable with their established infrastructure,
moderately priced housing, activity centers and service delivery
Growing suburbs The growing suburbs are often better off
financially than the mature suburbs but still suffer from their
own problems. These suburbs are often growing rapidly. With
their later start in developing the bulk of their development, the
growing suburb is more adept at "making development pay its own
way." In addition, a growing suburb is often not as saddled with
the high personnel costs that a mature suburb is. The growing
suburb may have captured more of the new retail development in the
area and may have well-patronized, gleaming suburban malls. The
growing suburbs have often been more aware that they cannot only
be bedroom communities if they want to be fiscally sound, and have
been more aggressive in attracting businesses that will provide
employment. For example, in the New Jersey study, in the 1970's
the "newer suburbs increased their industrial job base by over 40
percent compared to a 20 percent loss in ...the older suburbs.
Newer suburbs almost doubled their commercial employment in the
1970's while ...the mature suburbs barely held their own."(28)
Despite the relatively rosy picture of the growing suburb, they
are subject to the same increased service demand costs and
government growth forces that have put a financial strain on their
mature suburban counterparts. Indeed, they may suffer severe
fiscal problems in trying to service their increasing population.

Excessive residential growth may strain service delivery capacity.
Water or sewer lines may have to be extended before economies of
scale allow for maximum service deliver efficiency. Commercial
growth should be encouraged. They must be sure to follow sound
fiscal practices now, before they become fiscally burdened. The
growing suburban government must monitor revenue and expenditure
patterns in anticipation of potential fiscal stress problems.
Beginning in Section II, two Denver metropolitan area suburban
communities will be analyzed to try to pinpoint where expenditures
are too high or where the revenue generating capacity of the
municipalities can be expanded.

Case Study Communities
Aurora and Littleton, Colorado will be used as case study communities
in the attempt to identify and analyze fiscal stress in
municipalities through the use of financial indicators. Aurora was
chosen as an example of a growing suburb while Littleton was picked as
an example of a mature suburb, although neither can be so neatly
classified. We would hypothesize that the more mature,
slow-growth suburb, Littleton, would be more prone to suffer from
financial burden than the growing suburb, Aurora. On the other hand,
Aurora has shown they want to take a competitive growth stance in
relation to the established central city, Denver. This may cause
Aurora to experience unexpected financial stress given this pro-growth
attitude. Growth costs money, in terms of infrastructure outlays such
as water and sewer lines and service outlays such as police and fire.
Both communities need to undergo a financial indicator analysis to
determine strengths and weaknesses. A discussion on the
characteristics and background of the two communities is below,
followed by the Financial Analysis section.
Aurora is a fast-growing community of approximately 200,000 people
located on the eastern edge of the Denver metropolitan area and is
shown in Figure 1. Aurora began in April of 1891 when it was
incorporated as the town of Fletcher. The name was changed to Aurora
in 1907. (46) It has been a home-rule city since 1961 and has an 8
member council (plus mayor) as well as an appointed city manager.

E 225

Developed land According to Aurora's January 1984 "Land Use Survey
Report", there were 39,056 acres of land within the city limits. The
survey also indicated that 54 percent of this land was developed. Out
of all the developed land in the city, the majority, 69 percent, was
residential and 12 percent commercial, (pi.)
Population growth Although Aurora is not experiencing as rapid a
population growth as it did in the 1950 to 1960 period or the 1970 to
1980 period, annual population growth was still a substantial 7.1
percent from 1980 to 1984. Table 3 details Aurora's historical
population growth since 1950 and the annual increases.
Year Number Annual Percent Increase
1984 203,200
> 7.1
1980 158,588
> 10.0
1970 79,450
> 6.2
1960 49,000
> 34.5
1950 11,000
SOURCE: 1984 figures from Aurora Planning Department, all others from
U.S. Department of Commerce, Bureau of the Census.

The average annual growth rate for the 1950-1984 period was 14.5
percent, indicating substantial growth has been occurring in the city.
From 1970 to 1980, Aurora grew by 79,138 people making it the
top-ranked city in the state for absolute population change during
that time period. (47) Although the city is in two counties, Adams and
Arapahoe, over 60 percent of the population is contained in Arapahoe
County (48)
Major employers Aurora has a substantial employment base in the city,
the following are Aurora's major employers that have over 500
Fitzsimmons Army Hospital
Aurora School District
City of Aurora
Buckley Air National Guard
AT&T Network Systems
Mountain Bell Yellow Pages
Associated Grocers
AT&T Information Systems
Aurora Presbyterian Hospit
Humana Aurora Hospital
Type of Facility
U.S. General Hospital
Municipal Government
Military Base
Adn inistration/Research
Advertising Service
Corporate Center
of Employees
SOURCE: "Community Profile 1985", City of Aurora.

This list represents a wide variety of industries and a diversified
economic base. Almost one-half of the list is government related,
attesting to the growth in government discussed earlier. Fitzsimmons
and Buckley employ large numbers yet few employees are from the local
population, due to the facilities' nature. However, both would still
inject dollars into the local economy through employees spending their
Commercial data Aurora's sales tax is 7.6 percent in the Adams
County portion and 6.6 percent in Arapahoe County (Adams County adds
an extra 1 percent). Aurora contains two regional shopping centers:
Buckingham Square at Havana Street and Mississippi Avenue and the
extensive Aurora Mall at East Alameda Avenue and Interstate 225.
These centers attract a great deal of retail spending and generate
valuable sales tax dollars for the city.
The city of Littleton is located in the southern portion of the Denver
metropolitan area and is shown by Figure 2. The foundation for the
town was formed in 1872 when "...Richard S. Little laid out part of
his land in building lots for employees of (his) Rough and Ready
Mill..." (49) Littleton was incorporated in 1890 and has been the
county seat of Arapahoe County since 1902. It is a home-rule city
(since 1959) and utilizes a 7 member council-manager form of
government. The city is 11.76 square miles in size. (50)

The City of Littleton and Surroundings
SOURCE: City of Littleton, "Profile

Population growth In terms of population growth, Littleton is a
relatively stable, mature suburb, especially in comparison to Aurora.
Table 4 shows historical population growth for the city.
Year Number
1984 31,020
1980 28,631
1970 27,364
1960 13,670
1950 3,376
Annual Percent Increase
> 2.1
> 0.5
> 10.0
> 30.5
SOURCE: 1984 figures from Littleton Planning Department, all others
from U.S. Department of Commerce, Bureau of the Census.
Although Littleton experienced rapid population growth from 1950 to
1970, annual growth since then has been negligible. Average growth
from 1950 to 1984 has been 10 percent annually, almost a third slower
than Aurora.

Major employers Being a much smaller community, Littleton naturally
has fewer businesses or government agencies employing over 500 people.
Littleton also has several establishments that are not in city limits
but are close to the city that employ large numbers of Littletonites,
e.g. the Manville Corporation (1,300 employees). Martin Marietta has a
large facility (approximately 7,000 employees) outside of Littleton
but some divisions are located in Littleton and are included in the
list of Littleton's major employers (over 500 employed):
Employer Type of Facility of Employees
Littleton School District Schools 1,700
Martin Marietta Aerospace 1,000
Honeywell Test Instruments Electronic Components Mnfg. 900
C.A. Norgren Pneumatic Valve Hdqtrs/Mnfg. 650
SOURCE: "Profile", City of Littleton, undated.
As this list demonstrates, Littleton can also boast a variety of
industrial types and employment opportunities. However, Littleton
does not enjoy the luxury of large federal facilities adding spendable
wages to the local economy, as Aurora now benefits from.

Commercial data Littleton's sales tax is presently 6.6 percent.
Littleton contains no regional shopping centers. The Southwest Plaza
and Southglenn Mall are located relatively close to the city, draining
potential retail sales tax dollars from city residents. As the
Financial Analysis section will demonstrate, Littleton's sales tax
collections have been stagnant since 1980, due in part to the lack of
any substantial or cohesive retail shopping areas within the city
limits. However, Littleton has taken a much more aggressive stance
recently to try to reverse this trend and several new retail complexes
are on the verge of opening. Some are convenience shopping centers
but one, the Riverfront Festival Center by the Writer Corporation,
should benefit the city by creating a quality, "up-scale" retail
facility and providing needed sales tax dollars. The city has
estimated that this facility will generate between $300,000 and
$500,000 in sales tax annually, almost doubling the present sales tax
Demographics of the Case Study Communities
Table 5 details the demographic characteristics of the case study
communities in comparison to each other and the Denver metropolitan
area. The figures are taken from 1980 Bureau of the Census data as
published in Denver Regional Council of Governments' June 1983 report,
"Changes in Local Demographics,1970-1980".

Aurora, Littleton and the Denver Metropolitan Area
Characteristic Aurora Littleton Metro
Median Age 28.0 31.0 28.9
Average Household Size 2.7 2.7 2.6
Percent Nonwhite 12% 3% 12%
Median Rent $256 $234 $241
Labor Force Participation 76.7% 69.8% 70.3%
Median Education 13.1 13.2 12.9
% Cwner Occupied out of Total Occupied Dwelling Units 68% 63% 63%
It is interesting to note where each community differs from the
metropolitan wide norm. Aurora has a younger population than average,
Littleton older. Both Aurora and Littleton have larger household
sizes than the Denver area as a whole. Littleton has a very small
percent of minorities, only 3 percent. This may reflect their more
mature nature. Surprisingly, Littleton has the lowest median rent of
the three and Aurora the highest. Aurora also has a much higher labor
force participation rate than the other two as well as the highest
percentage of owner occupied housing units.

Occupational and Industrial Categories
Aurora, Littleton and the Denver metropolitan area show similar
breakdowns in industry and occupational categories. Table 6 shows the
industry categories for the three:
Aurora, Littleton and the Denver Metropolitan Area
Industry Category Aurora Littleton Metro
Agriculture & Mining 2.8% 3.9% 3.5%
Construction 1.7 7.6 7.2
Manufacturing 11.7 17.1 15.5
Tran spor tation/Communication 11.5 5.8 8.7
Wholesale Trade 5.5 5.2 5.4
Retail Trade 18.1 18.5 16.7
Finance, Insurance and Real 9.8 8.9 7.8
Services 27.3 28.9 29.4
Public Administration 6.8% 4.2% 6.0%
SOURCE: "Changes in Local Demographics,1970-1980", Denver Regional
Council of Governments, June 1983, selected pages.
By far the largest industry category for each of the three areas is
services. Retail trade accounts for the second largest category for
each also. Littleton has a higher manufacturing share than the other
two areas, while Aurora excels in the Transportation and Communication
category. Aurora also shows a higher public administration share than
the other two, much higher than Littleton's as we would expect.

All of the three areas employ most of their workers in the managerial,
professional, technical and sales and administration occupational
category. Table 7 details this breakdown:
Aurora, Littleton and the Denver Metropolitan Area
Occupation Aurora Littleton Metro
Managerial, Professional, 65.4% 64.3% 62.1%
Technical, Sales & Admin.
Service Occupations 12.6 12.4 12.1
Fanning, Forestry, Fishing 0.6 0.8 1.0
Precision Production, Craft, Repair, Operators, Laborors Fabricators 24.8% 22.4% 24.8%
SOURCE: "Changes in Local Demographics,1970-1980"
Aurora shows the highest percent of managerial and professional
workers when compared to Littleton and the Metro area. The precision
production category is the second largest for each of the three,
followed by service occupations.
Growth and Development of Aurora and Littleton
Each community has developed differently in the past, thus determining
their differences in the present and future. In past Comprehensive
Plans adopted as late as 1983 by the City of Aurora, growth was to be
contained within the city's "Blue Line", a policy that has now been
rejected. Littleton, which in the past seemed to be content to be a

relatively sleepy community, now sports a successful economic
development program that has attracted new commercial development to
the city.
At the rate Aurora is growing, it will overtake Denver in population
early in the 21st century. This rapid growth, in the form of sales
tax, commercial, and government revenues, paid for infrastructure
development and service outlays. Aurora wants to continue growing,
and recently "...abolished its self-imposed 'blue line' boundary and
opened up a 117-square-mile area for annexation." (51) Early in July,
1985, Aurora annexed a 70 acre parcel to start "...what is expected to
be a patchwork of annexations this sunnier that will increase the
city's size by about 50 square miles." (52) Much of Aurora's new
annexations would depend on the development of the proposed E-470
highway. The city would probably only annex land in this area to
capture expected sales tax revenues.
In early July, the city also annexed 446 acres for the proposed Senac
Reservoir where "(c)ity planners envision...a family playground,
complete with reservoir-related recreation, a revitalized race track,
a fairgrounds and, if the issue is revived, a stadium." (53) This kind
of facility could be a very attractive development, not to mention the
substantial revenues that could be generated. Aurora is pursuing
aggressive water-acquisition and development policies through these
actions and through encouragement of such large-scale retail projects
as developer Bill Walters' proposed "...plan to build a giant retail
and office complex patterned after the 'Galleria' developments in
Dallas and Houston." (54)

Aurora is learning very well how to make growth pay for itself,
particularly through sales tax generation, and how to make it pay for
other services and facilities provision, for example, stadiums or
police service. Aurora, "...which has been blessed with a treasury
that seemed to fill effortlessly with revenues from rapid growth..."
is now "...a little bit concerned about the...listlessness in the
economy that is certainly being reflected in our current sales tax
collections...". (55) This city's "...sales tax has normally gone up
20 percent a year. This year (it's growing at a) rate of 10
percent...and federal revenue sharing has been all but eliminated and
community block grants will be tougher to get. Those factors have
prompted (the Aurora city manager) to order Aurora department heads to
spend 5 percent to 10 percent less than the 1985 budget allows...".
(56) For example, these "(s)erious shortages in Aurora tax revenues
have forced the city to scuttle plans to hire new police officers and
firefighters...". (57) With talk at the federal level of closing
Fitzsimmons, another substantial revenue source for the city will be
removed. The city also has an organization to help business locate in
the city, ECO Aurora. It is no wonder Aurora is aggressively seeking
to expand other potential revenue sources through the above growth
policy actions.
Littleton has come to realize the importance of sales tax revenues to
funding government and is pursuing these revenues but has not received
the headlines that Aurora has. Indeed, when Littleton is the subject
of newspaper articles it could very well be on their declining school
enrollments. Lower enrollments may cause some elementary schools to
be closed since "(s)chool records show there were 9,130 elementary

students in the district in 1972, while enrollment as of October 1,
1983, was 7,425." (58) This represents a decrease of 23 percent.
Charles Blosten, Littleton's director of public services, was quoted
on this problem as saying "The community needs to find ways to attract
families to Littleton. How do we keep Littleton viable and a lively
conmunity for younger families?" (59)
Littleton is experiencing symptoms of a mature suburb and has to work
to stem their possible decline. One way is through stimulation of
economic development and in 1978, the "...Littleton City Council
explored a number of financial alternatives within the context of a
Five Year Financial Policy for the City. Out of these deliberations,
Council decided that the most premising alternative to assure a
healthy economic base was...'to promote new industrial and commercial
tax base.' Active promotion, use of development incentives, and other
methods of attracting business were endorsed as general implementation
strategies. At the same time, City council approved formation of an
Economic Development Division and appointed an Economic Advisory
Committee made up of representatives from the private sector-banking,
development, industry, real estate, and finance sectors."
(59) This Economic Development Division works with developers and
industry to facilitate their location in Littleton and has promoted
six primary commercial areas in Littleton, notably the
soon-to-be-inaugurated Riverfront Festival Center which should do a
great deal to inject Littleton's ailing sales tax revenues with fresh
dollars, although bonds issued for the development must be repaid

Both municipalities seem to have a good grasp on where and how they
want to grow. Both need to be careful, however, not to let their
growth become uncontrollable or burdensome. With proper management of
fiscal resources,
fit and provide
each community should be able to grow as they see
a pleasant and acceptable quality of life for

With all the upward pressures on municipal government expenditures
discussed above, it is no wonder that a community may be
overburdened when it comes to paying for service provision.
Expenditures may be too high given the resources available to the
municipality and/or revenues flowing into the city coffers may be
inadequate, given the demands of the citizenry.
Determining the Potential for Excessive Municipal Fiscal Burden
Municipal finance problems usually do not develop suddenly.
Identifying a city's financial strengths and weaknesses before an
irreversible problem develops is necessary if local government
officials are to be able to manage their fiscal resources. Many
measures have been recognized and developed to try and pinpoint
where excessive municipal spending is taking place or where there
is potential for the municipality to be fiscally stressed. Mature
suburbs such as Littleton may often find themselves under a
greater financial burden because "(m)ature suburbs historically
had (sufficient local) resources as they were the traditional
commercial and other business sector hubs of the suburban
landscape. The whittling of the mature suburbs' regional
hegemony, however, has depleted their affluence, so much so that
they are beginning to feel the pinch of supporting generous
municipal outlays from their own means." (29) Those communities
losing population, retail vitality and intergovernmental aid are
the most vulnerable to fiscal problems.

Planners, political scientists and sociologists have attempted to
develop ways to quantify the level of fiscal burden that a city is
under in trying to provide services to the community. Many
studies have been done to try and identify urban
stress/distress/decline/hardship. Social and economic stress
measures have been developed, in addition to financial indicators.
Common analysis variables in the realm of financial indicators
include the levels of spending, local revenues, taxes as a percent
of local income, and intergovernmental aid. These measures may be
analyzed separately or combined into a single ranking for
comparative purposes. Several of these composite ranking systems
have been developed, for example, the Brookings Hardship Index or
the U.S. Treasury's Urban Fiscal Strain Index. As of 1980,
approximately 15 urban distress measures had been developed,
followed by comparable suburban distress measures in 1981-2. (30)
Different financial indicators and statistical procedures are used
to measure hardship but common themes emerge in these analyses.
Monetary figures are often analyzed in real dollars on a per
capita basis as this is useful for comparison purposes.
Differences in spending within a community over time and between
communities are frequently compared to have a profile of revenue
and expenditure patterns ov^r time. Usually, those municipalities
spending more are more prone to financial distress, but for a
complete picture, revenues must also be analyzed. This is
necessary because "...while spending is the driving force of
fiscal strain, there are certain mitigating factors. Two

important considerations are: 1) the share of local spending
which must be absorbed or paid for locally; and 2) local
affluence, both income and property, available to shoulder the net
local cost." (31) Therefore, local fiscal stress is dependent on
local spending in relation to local resources and the amount of
intergovernmental aid received.
The concept of fiscal strain encompasses both expenditure and
revenue considerations but expenditures are often focused on
because mature suburbs are usually affluent (e.g. by per capita
income or property value measures) and their financial stress is a
function of high municipal expenditures. Also, municipal reaction
to fiscal strain has frequently focused on reducing public
outlays, not on raising taxes, an extremely unpopular political
decision. The amount of municipal spending indicates the scope of
local services and the amount of revenues that need to be raised
to provide those services. Uncontrolled or haphazard growth
impacts expenditure profiles. In addition to the composition of
the tax base and other municipal revenue variables, variations in
local service costs have been correlated with municipal size,
growth rate, population size, degree of urbanism and similar
variables. Studies have shown that "...municipal outlays will be
higher in instances where the median voter is affluent and has a
relatively low property tax share rnd where the community ...has a
significant nonresidential sector, and receives reasonable levels
intergovernmental aid. (32) With a low property tax and high
intergovernmental aid, citizens may be unaware of the true costs
of service provision, as discussed previously.

Financial Strain in the Case Study Communities
Ten financial indicators will be utilized to analyze our case
study communities to determine their level of fiscal strain.
Both expenditure and revenue financial indicators will be used, as
well as community resource indicators (for example, personal
With the expenditure financial indicators, the focus is on the
level and direction of spending through per capita expenditure
outlays over time, as well as looking at how heavy the burden of
municipal spending is to the local taxpayers. This will be done
by studying the relationship of per capita expenditures to per
capita personal income and property tax burden to per capita
personal income. In addition, the level of spending in
"stress-indicative categories such as public safety, overhead and
debt" (33) will be compared between the two communities and over
In the revenue analysis, the source and amount of revenues will
be analyzed. The intergovernmental aid financial indicator is
intended to show how much the municipality will suffer if cutbacks
in the level of funding occur. To study the tax burden on
residents, the level of burden will be determined by looking at
per capita property tax burden and municipal tax burden (per
capita property taxes divided by per capita personal income).
Local affluence is gauged through per capita personal income.

Through a comparison of financial indicators over time and between
the two case study communities, we can try to pinpoint where
warning trends indicating potential future financial burden for
the municipality exist. Then steps could be taken to remedy
potential problems that might result. Since Littleton is an
example of a mature suburb and Aurora the example of a growing
suburb, we expect to find that Littleton is more fiscally stressed
than Aurora.
Potential fiscal stress/strain for the case study communities will
be determined from analysis of ten financial indicators and means
that the level of expenditures and/or revenues show a warning
trend in terms of potential financial burden. Each indicator has
a warning trend associated with it; that is, if the financial
indicator ratio increases or decreases in a certain direction,
this may indicate a potential fiscal burden for the municipality
in that category. A discussion of the components of each
financial indicator and its application to and implications for
Aurora and Littleton follows.
Financial Indicators
These indicators are similar to ones developed by the
International City Management Association and are intended to help
define potential problem areas and show their development over
time. The ten ratios that will be used for analysis are :

Financial Indicator #1
Revenues/Population This per
capita indicator is intended to show the stability of the income
of the municipality. If increasing service demands are placed on
the municipality, its revenues need to increase to keep pace with
expenditures. It is also important to be aware of the sources
from which revenues are being generated from to effectively
pinpoint revenue enhancement strategies. A warning trend would be
indicated if revenues per capita are decreasing over time.
Financial Indicator #2 = Intergovernmental Revenues/Operating
Revenues This indicator is important because it shows a
municipality's vulnerability to federal/state cutbacks. An urban
city and a suburb might spend the same amount per capita but if
the city received more intergovernmental aid the suburb would have
more of a tax burden on its residents. Conversely though, the
city might be more prone to fiscal hardship in the face of
decreased intergovernmental financial aid. Each entity would then
have to focus on different ameliorating strategies. Increasing
intergovernmental revenues as a percent of operating revenues or a
large reliance on such aid warrants a warning trend here.
Financial Indicator #3 = Elastic Revenues/Operating Revenues -
This indicator shows the trend in elastic revenues as a percent of
operating revenues. Elastic revenues here are considered to be
revenues that are responsive to changes in the econcmic base and
inflation. This is important because these types of revenues will

usually increase as costs increase and can therefore be relied
upon more than such revenues as intergovernmental aid. The amount
of sales tax collected was considered to be a good indicator for
elastic revenues and is used here. A warning trend is considered
to be decreasing elastic revenues as a percent of operating
Financial Indicator #4 = Debt Service/Operating Revenues -
The amount of debt service is an important indicator because a
large debt service can be symptomatic of community aging and
increasing resident demand. Even though debt service is not
usually repaid from operating revenues, this is a valid indicator
to see if debt service is too large. "If debt service on net
direct debt exceeds 20 percent of operating revenues, it is
considered a potential problem. Ten percent is considered good."
Financial Indicator #5 = Property Tax Revenues/Consumer Price
Index in Decimal Property tax revenues are included in the
analysis as this indicates the level of spending borne locally.
"Increasing property tax levies and rates, growing dependence on
intergovernmental transfers, and stagnant or decreasing local
property value and or resident income signal potential future
hardship." (35) A warning trend is indicated if property taxes
are decreasing over time, after inflation is taken into account
through the use of the Consumer Price Index, in comparison to the
corresponding annual population increase.

Financial Indicator #6 = Expenditures/Population This is
one of the most important determinants of excessive financial
burden since "...spending is the driving force of fiscal
strain...". (36) Differences in municipal service costs reflect
variations in service output and efficiency as well as fixed costs
and overhead. Excessive spending in "...stress-indicative
categories such as police, welfare, statutory and debt...signals
danger because it is symptomatic of community aging and growing
resident population demand and the need for certain, and often
quite expensive, public services. Thus, community maturity is
often accompanied by enhanced pressures on the police and fire
departments." (37) Increasing net operating expenditures per
capita constitutes a warning trend here. Spending in each service
category, e.g., general government, public works, public safety,
etc. will also be considered.
Financial Indicator #7 = Employee s/Popula tion This is a
useful indicator because personnel costs are usually a substantial
portion of a city's operating budget and because the number of
employees per capita indicates the extent of the scope and
efficiency of services. Increasing employees per capita indicates
a warning trend.
Financial Indicator #8 = Real Per Capita Property Tax Levy or
Municipal Expenditure/Real Per Capita Income An important
consideration when analyzing fiscal stress is the level of
financial burden to local residents, i.e., how heavily does paying

for expenditures weigh on the population's ability to pay. FI8
considers two measures of burden to the taxpayer. One measures the
relationship of per capita property tax to per capita personal
income and the other measures the relationship of per capita
municipal expenditures to per capita personal income. The
property tax to personal income ratio shows more fully the burden
to individuals since the amount of intergovernmental aid would be
a factor, thereby reducing the actual property tax burden. The
amount of property tax paid and municipal expenditure burden is
more meaningful when related to the communities' ability to pay so
it is useful to relate these measure to per capita income. A
warning trend is indicated by increasing or relatively high
property tax or municipal expenditure burden.
Financial Indicator #9 = Population Growth Rate The
population growth rate was included as an indicator since sudden
or dramatic increases or decreases in population indicate a
warning trend and can strain a municipality's service delivery
effectiveness and/or efficiency. In addition, "(c)hanges in
population can have a direct effect in revenues, employment,
income and property values." (38)
Financial Indicator #10 = Personal Income/Population Changes
in personal income reflect the level of affluence a community has
attained and the ability to pay for services demanded. If
expenditures remain stable and personal income declines, the

burden on the taxpayer's ability to pay taxes would increase. A
drop in per capita personal income would also result in a decrease
in consumer purchasing power and therefore a decrease in the level
of sales tax collected, thus impairing the municipality's revenue
generating capacity. A decrease in the growth rate of personal
income would be a warning trend.
All dollar figures have been deflated by the Consumer Price Index
to increase the validity of comparisons over time, since, with
inflation, expenditures and revenues will naturally increase. The
Consumer Price Index figures used are: 1970 116.3, 1980 246.8,
1984 323.0. (39) The base figures used for each financial
indicator were collected from each city's budgets for the
appropriate years used in the analysis. The years of 1970, 1980
and 1984 were used to ascertain and compare recent temporal
trends. The municipalities' revenue and expenditure figures used
for 1970, 1980 and 1984 were gleaned from that year's successive
budget in order to use actual, not projected revenues and
expenditures. Other data used, such as personal income figures,
were taken from census data or from local planning departments, as
in the case of population figures. All figures gathered and used
to calculate each financial indicator is included in Appendix A.

Table 8 summarizes the subjective rankings of whether a warning
trend is indicated for each of the financial indicators. After a
study of the data and graphs for each of the ten financial
indicators, they were ranked as to whether a low, moderate, high
or no warning trend existed for that indicator depending on
how substantial the increase or decrease of the ratio was and how
each community fared next to the other. Following the summary
chart are the data tables and graphs for each of the financial
indicators. Each data table indicates the direction of the
warning trend that signals potential fiscal stress. Included with
and preceding each of the data table/graph sets is an analysis
section discussing the implications of each of the financial
indicators. Included with two of the financial indicator
sections, revenues per capita and expenditures per capita, are
additional charts showing breakdowns of these items into more
discrete categories.
From Table 8, both Littleton and Aurora have a low to moderate
potential for future fiscal stress occurring although Littleton
appears to be in slightly better financial condition having
apparently taken steps to reduce expenditures since 1980,
according to the data. Five of the ten financial indicators for
Littleton show no warning trend. Fou/' of Aurora's financial
indicators show no warning trend. Neither city exhibits a high
warning trend on any financial indicator, therefore, neither is
considered to be excessively financially burdened. However,
expenditure functions that need to be trimmed and revenue
categories that should be enhanced will be identified.

Warning Trend Indicated?*
Financial Indicator Aurora Littleti
1 - Revenues/Population None None
2 - Intergovernmental Revenues None Moderate
3 - Elastic Tax Revenues None Low
4 - Debt Service Low Low
5 - Property Tax Revenues Low None
6 - Expendi tures/Population Moderate None/Low
7 - Employees/Population Moderate None
8 - Property Tax and Municipal Expenditure Burden Low Low
9 - Population Growth Rate None None
10 - Personal Income Low Moderate

None, Low, Moderate, High

FI1 In Table FI1, revenues/capita, both Aurora and Littleton
show steady growth from 1970 to 1980. However, from 1980 to 1984,
revenues per capita in both communities have been almost level,as
indicated by Graph 1. Neither municipality shows a warning trend
since revenues have not decreased,however, specific revenue
sources could use improvement which will be addressed further.
Aurora and Littleton both need to explore ways to continue
increasing their revenues per capita.
An examination of the adjunct Tables Financial Indicator 1A
and Financial Indicator IB, which show the breakdown of sources
of revenues for each community, indicates that each municipality
could enhance the revenue generating capacity of selected sources.
While Aurora has more than doubled their taxes in the 1970 to 1984
time period, they have also increased their charges for services
substantially from $1 per capita in 1970 to $6 per capita in 1984,
thereby encouraging citizens to be more aware of service costs. In
comparison, Littleton only received $3 per capita from charges for
services in 1984 and should improve on the revenue producing
capacity of this category. Littleton also relies too heavily on
intergovernmental aid, as FI2 discusses. This dependency should
be reduced. Littleton's tax revenues, of which sales tax is the
main component, has essentially stagnated since 1980 and could be
improved. The 1970 to 1980 growth rate was 6 percent annually
while the 1980 to 1984 annual increase was only 2 percent. The
city is apparently not capturing as much of the sales tax dollars
as it could with its older retail establishments. Aurora could
also improve on tax generation,

i.e., sales, since the annual increase in this category from 1980
to 1984 is less than from 1970 to 1980. In addition, the growth
rate of revenues per capita needs to be compared to the growth
rate of expenditures per capita to make sure expenditures are not
increasing faster than revenues. This will be done in the
findings portion of the Financial Analysis section. Although
Littleton generated more revenues per capita than Aurora in 1984,
if intergovernmental revenues were subtracted, Aurora would
exhibit more revenues per capita so the cities are in similar
condition in terms of Financial Indicator 1.

Table Financial Indicator 1. REVENUES/CAPITA
Equals Net Operating Revenues (constant $) / Population
WARNING TREND Decreasing net operating revenues per capita
Li ttleton
Year Operating Revenues Population FI 1
1970 $2,019,569 27,364 $73.80
1980 $3,693,464 28,631 $129.00
1984 $4,145,863 31,020 $133.65
1970 $4,038,964 79,450 $50.84
1980 $18,794,571 158,588 $118.51
1984 $24,444,917 203,300 $120.24
Littleton No warning trend
Aurora I^o warning trend

Uttle.tor T Aurora

Table Financial Indicator 1A. PER CAPITA REVENUES BY SOURCE
AURORA Adjusted for Inflation
SOURCE 1970 1980 1984
Taxes $40 $88 $96
Licenses and Permits $1 $3 $5
Intergovernmental Revenue $5 $11 $9
Charges for Services $1 $2 $6
Fines and Forfeits $2 $2 $2
Mi scellaneous $1 $14 $2
TOTAL $51 $119 $120

LITTLETON Adjusted for Inflation
Licenses and Permits
Intergovernmental Revenue
Charges for Services
Fines and Forfeits
1970 1980 1984
$47 $75 $80
$6 $2 $14
$17 $44 $29
$1 $1 $3
$2 $2 $2
$2 $5 $5
$74 $129 $134

FI2 Intergovernmental revenues as a percent of operating
revenues is shown in Table FI2 and Graph 2. Littleton shows a
moderate warning trend here. Although its share of
intergovernmental revenues has decreased slightly as a percent of
operating revenues, Littleton still relies heavily on
intergovernmental revenues at 22% of operating revenues. This
could be cause for concern. Aurora, in contrast, is in healthy
shape in terms of FI2 and shows no warning trend. The city has
decreased its reliance on intergovernmental revenues by almost 25%
since 1970 to a low 7.6% of operating revenues. This compares
very favorably next to Littleton's current 22%. Littleton's
fiscal strain warning trend is only moderate for FI2 because the
average contribution nationwide to a city's revenues by
intergovernmental aid was 39% in 1980, as noted earlier, although
this has probably decreased in the last several years under
President Reagan. As Tables FI1A and FI1B showed, per capita
intergovernmental revenues for Aurora and Littleton were $9 and
$29, respectively. This again shows the need for Littleton to
decrease reliance on intergovernmental aid, with such a high
relative figure. However, Littleton by no means relies as heavily
on this sort of revenue as other, more urban areas. In a study of
New Jersey communities published in 1983, the urban communities,
presumably much older than the relatively young Littleton, were
shown to receive $154 of intergovernmental aid per capita in 1980.
This accounted for nearly 41% of these communities' revenues. (40)
Littleton, while it needs to decrease its reliance on
intergovernmental revenues, is in nowhere near such dire straits.

Equals Intergovernmental Revenues / Operating Revenues
WARNING TREND Increasing intergovernmental revenues as % of gross
operating revenues or a heavy reliance on intergovernmental
Year Intergovernmental Revenues Operating Revenues FI 2
1970 $463,022 $2,019,569 22.9%
1980 $1,254,048 $3,693,464 34.0%
1984 $910,072 $4,145,863 22.0%
1970 $403,085 $4,038,964 10.0%
1980 $1,684,003 $18,794,571 9.0%
1984 $1,867,828 $24,444,917 7.6%
Littleton Moderate warning trend
Aurora No warning trend

!" *
a p 1'
As a Psfwtrvt of Dp-era tirpq R'nu;s
1/ .'I Lrti I eta n
|\ \J Aurora

FI3 Aurora's elastic tax revenues have increased at a steady rate
since 1970 and account for almost 60 percent of operating
revenues. This represents a sound economic base for the city that
can be relied upon. Littleton shows a low warning trend here
since elastic revenues decreased as a percent of operating
revenues from 1980 to 1984, from 45 percent to 43 percent. Also,
Littleton's 43 percent share is below Aurora's 58 percent share,
reducing Littleton's ability to rely on inflation adjusted
revenues. In addition, when sales tax collected per capita is
considered, Littleton shows stagnant revenues from 1980 to 1984,
after almost doubling the sales tax collected per capita from 1970
to 1980. Littleton definitely needs to increase their sales tax
collections per capita and as a percent of operating revenues.

Table Financial Indicator 3 ELASTIC TAX REVENUES
Equals Elastic Revenues / Operating Revenues
WARNING TREND Decreasing amount of elastic operating revenues as % of
operating revenues
Li ttleton
Year Sales Tax Operating Revenues FI 3
1970 $803
1980 $1,665
1984 $1,800
995 $2
316 $3
182 $4
019,569 39.8%
693,464 45.1%
145,863 43.4%
1970 $1,750,215
1980 $9,739,870
1984 $14,174,096
$4,038,964 43.3%
$18,794,571 51.8%
$24,444,917 58.0%
Littleton No warning trend
Aurora No warning trend

:i p h
i s>ar
+ Aurora

FI4 Neither Aurora nor Littleton suffers from too large a debt
service since neither exceeds the problem threshold of 20 percent
of operating revenues mentioned above. We can classify each,
however, in terms of FI4 as exhibiting a low warning trend because
Aurora's debt as a percent of operating revenues has increased
more than twofold from 1980 to 1984 to almost 5 percent. In
addition, although Littleton has decreased its debt service
between 1970 and 1984, their debt service as a percent of
operating revenues is still 47 percent larger than Aurora's and
will therefore be classified as exhibiting a warning trend even
though their percentage is decreasing. Neither city is suffering
from fiscal stress from a large debt service but each should
monitor the level of debt service in the future, as they are no
doubt doing. The cities need not take any action to try and
reduce debt service growth unless there is a danger of breaking
the threshold of debt service equalling more than 10 percent of
operating revenues.

Table Financial Indicator 4 DEBT SERVICE
Equals Debt Service / Operating Revenues
WARNING TREND Increasing amount of debt service as a % of operating
Li ttleton
Year Debt Service Operating Revenues FI 4
1970 $181,970 $2,019,569 9.0%
1980 $277,094 $3,693,464 7.5%
1984 $299,582 $4,145,863 7.2%
1970 $53,340 $4,038,964 1.3%
1980 $349,870 $18,794,571 1.9%
1984 $1,207,993 $24,444,917 4.9%
Littleton Low warning trend
Aurora Low warning trend

As a Percent of Qceratirvq Rc/em>es

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19 SO

FI5 Littleton exhibits no warning trend in terms of FI5. Between
1970 and 1980, as Table FI5 shows, Littleton's growth in property
tax revenues was less than the corresponding population increase.
This would normally be cause for concern, however, from 1980 to
1984, Littleton shows a greater increase in property tax revenues
than the corresponding population increase, a healthy indication
of fiscal stability in terms of property tax revenues and of
increasing ability to pay on the part of residents.
The figures for Aurora's property tax revenues indicate a low
warning trend exists, however. From 1970 to 1980, Aurora's
property tax revenues grew at a very healthy 16% annually,
compared to only a 10% annual increase in population. From 1980
to 1984 though, Aurora's annual property tax revenue increase grew
at only a 2% rate while the population increase was 7% yearly.
The probable causes for this large turnabout in property tax
revenues needs to be determined. If this drop in property tax
revenues is the result of a conscious decision to rely less
heavily on this sort of revenue and more heavily on the elastic
sales tax revenues there would be little cause for concern, but if
it was not a conscious decision the situation needs to be
monitored and perhaps ameliorated.

Table Financial Indicator 5 PROPERTY TAX REVENUES
Equals Property Tax Revenues / Consumer Price Index in Decimal
WARNING TREND Decline or negative growth in property
to the corresponding annual population
tax revenues in relation
Li ttleton
Annual Annual
Property Percent Population
Year Tax Revenues CPI in Decimal FI 5 Increase Increase
1970 $453,367 1.2 $389,825
1980 $988,151 2.5 $400,385 0.3% 0.5%
1984 $1,441,447 3.2 $446,213 2.9% 2.1%
1970 $1,404,872 * 1.2 $1,207,972
1980 $7,706,034 2.5 $3,122,380 15.8% 10.0%
1984 $10,948,964 3.2 $3,389,352 2.1% 7.0%
SOURCE: Figures from Arapahoe County Assessor's Office and Adams County
Treasurer's Office. Figure is from Aurora's Annual Budget.
Littleton No warning trend
Aurora Low warning trend

[/ /\ Lrttleian
E3 A!

FI6 Both cities have experienced substantial upward pressures in
terms of service demand. Littleton's expenditures per capita have
decreased since 1980, a healthy fiscal sign, after substantial
increases during the 1970's. Since 1980, Littleton seems to have
adopted a policy of greater fiscal restraint as indicated by FI6.
Before 1980, expenditures grew 12 percent annually, while after
1980 expenditures per capita dropped by 1 percent annually.
Littleton seems to be curbing costs well, since 1980. However,
Littleton was ranked as having None/Low warning trend here since
individual expenditure categories could stand reductions, as
discussed below in the section on Financial Indicator 6A.
Aurora's expenditure/capita have increased 260% since 1970.
Annual increases from 1970 to 1980 averaged 18%. Expenditures per
capita from 1980 to 1984 have not increased at nearly as fast an
annual rate (6.6%), but the increases are still large considering
that the figures are in real dollars. Aurora's expenditure per
capita need to be monitored and the growth rate decreased even
further, especially if tax burden to citizens is found to be high
(Financial Indicator 8). Aurora shows a moderate warning trend
here due to increasing expenditures per capita.

Table Financial Indicator 6 EXPENDITURES PER CAPITA
Equals Operating Expenditures / Population
WARNING TREND Increasing net operating expenditure/ capita
Littleton :
Year Expendi tures Population FI 6
1970 $1,723,396 27,364 $63
1980 $3,945,490 28,631 $138
1984 $4,128,775 31,020 $133
1970 $3,599,048 79,450 $45
1980 $20,225,022 158,588 $128
1984 $32,859,079 203,300 $162
Littleton Low warning trend
Aurora Moderate warning trend

1 70
U r o p hi 6, EX P E N DITU R E S PER (J APITA
Mure ro

Financial Indicator 6A The second financial indicator section on
expenditures breaks down expenditures into each service category.
From this, it is evident which expenditure categories cost the
most money. As Table FI6A shows, public safety accounts for the
largest percent of total operating revenues 33% for Aurora and a
substantial 47% for Littleton in 1984. Public safety is one of
the first places Littleton should look in any attempt to cut
expenditures, and especially the fire service component of public
safety. In 1980, the New Jersey study communities allocated
approximately one-third of their operating expenses to public
safety, (41) so again, Littleton seems to spend too much in this
category. Both Aurora and Littleton spent approximately 25% of
their operating revenues on general government services in 1984.
This category should also be considered for budget cutting,
especially since personnel costs undoubtedly make up a substantial
portion of this.
Aurora devotes 12% of their operating revenues to parks and
recreation while Littleton contributes nothing out of their
operating revenues to this service. This is due to the existence
of the self-supporting South Suburban Parks and Recreation
District. Perhaps such an arrangement for Aurora would be
beneficial to their fiscal health. Littleton expends 9 percent
of operating expenditures on their library while Aurora devotes
only 3.4 percent. Since Aurora has a fine library system that
seems to serve its residents well, perhaps Littleton could shave
costs in this category. Aurora supports a Central Library and
five branches while Littleton has only one library (however,

Littleton supports a small museum in this category also). Aurora
spends substantially more on public works than Littleton does.
Possibly Littleton has paid for the major part of their road
network in the past and therefore does not need to devote as much
to that as the fast growing Aurora does. Perhaps Aurora needs to
slow their growth or attempt to exact more developer
contributions, if that is feasible.

1970 1980 1984
MUNICIPAL ------------------------- ------------------------ ------------------
SERVICE Aurora Li ttleton Aurora Li ttleton Aurora Li ttleton
General Government 17.8% 23.3% 13.2% 27.5% 27.2% 25.3%
Public Safety 46.3% 44.1% 35.2% 43.9% 33.2% 46.6%
Fire 16.8% 25.5% 13.0% 26.9% 12.1% 27.5%
Pol ice 21.1% 18.0% 20.5% 17.0% 17.4% 19.2%
Public Works 18.0% 22.1% 37.7% 20.3% 24.5% 19.0%
Recreation & Culture 17.9% 10.6% 13.9% 8.3% 15.2% 9.1%
Parks & Recreation 14.0% 11.3% 11.8%
Library, etc. 3.9% 10.6% 2.6% 8.3% 3.4% 9.1%
Total Operating 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

GraDh FI6A1
i.;i a.2S)
y X
(24.SK) I
Public -Works

v\ I'27.2K)
\ General Government
' -x -x -y t; ~i
Public Safety

Graph FI6A2.

I.> i K)
/ \
( i 9.0Xj / \
Public Works /
i v
\ General Government
" Public Safety

FI7 Since 1980, Littleton seems to have done well in controlling
the number of employees. The number of employees per capita has
even been reduced by almost 10% from 1980 to 1984 after a 7%
annual increase from 1970 to 1980. Aurora's FI7 growth rate was
3.1% annually from 1970 to 1980 and 4.4% annually from 1980 to
1984. Although Aurora and Littleton have almost the same number
of employees per capita, Littleton has been decreasing their
number of employees since 1980 while Aurora's have continued to
increase, at an accelerating rate. These figures warrant a
moderate warning trend for Aurora and no warning trend for
Littleton. An attempt should be made by Aurora to reduce the
number of employees per capita, unless a conscious decision is
made that this level of employees/services is desirable and

Table Financial Indicator 7 EMPLOYEES/CAPITA
Equals Number of Municipal Employees / Population
WARNING TREND Increasing number of employees per capita
Li ttleton
Year Employees Population FI 7
1970 153 27,364 0.0056
1980 276 28,631 0.0096
1984 274 31,020 0.0088
1970 486 79,450 0.0061
1980 1,264 158,588 0.0080
1984 1,912 203,300 0.0094
Littleton No warning trend
Aurora Moderate warning trend

tmpi'?ywa per Lrapitu
G ra p h
Littleton 4 Aurora

FI8 Both cities exhibit low warning trends here. Littleton's
burden is higher than Aurora's but may have changed since their
apparent attempts at holding down costs since 1980. (1984
personal income figures are unavailable.) Both cities' burdens are
low, in relation to the urban New Jersey study communities
mentioned above, and roughly comparable to the suburban
communities in the study. According to Table FI8, the relative
municipal expenditure burden for Littleton and Aurora in 1980 was
3.6 and 3.5 percent respectively. This same statistic for the
urban New Jersey community in 1980 was a large 7.92 while the
mature suburbs averaged a relative municipal expenditure burden of
2.52 and the growing suburbs averaged 1.72. (*/?) Given these
comparisons, our case study communities could stand to decrease
their municipal expenditure burdens into the 2.52 range or below.
The growth rates of each are also high and need to be monitored.
For example, Aurora's municipal expenditure burden increased a
substantial 402 annually from 1970 to 1980 and Littleton's
increased almost 262 annually during the same period. The
municipal expenditure burden for residents needs to be decreased
for both communities, although these figures have surely changed
since 1980. Unfortunately, personal income figures were
unavailable for the two municipalities for 1984.
The relative property tax burden has not increased at nearly so
large a rate. Although Littleton's doubled during the time period
under question, from 0.22 to 0.42, and Aurora's nearly doubled,
from 0.32 to 0.52, this figures are still substantially below the
comparable figures for the New Jersey study communities, which
show property tax burdens of at least 42 or greater. (M3 ) This
suggests that property taxes could even potentially be raised.

Equals Real Per Capita Property Tax Levy or Municipal Expenditures / Real Per Capita Income
WARNING TREND Increasing or relatively high property tax or municipal expenditure burden
Li ttleton Year Real Per Capita Municipal Operating Expendi tures Real Per Capita Property Tax Levy Real Per Capita Income Relative Municipal Expendi ture Burden Relative Property Tax Burden
1970 $63 $14 $6,626 1.0% 0.2%
1980 $138 $14 $3,795 3.6% 0.4%
1970 $38 $15 $5,588 0.7% 0.3%
1980 $128 $20 $3,616 3.5% 0.5%
Littleton Low warning trend
Aurora Low warning trend

FI9 Littleton's moderate growth rate should enable it to plan
for service provision effectively. Although Aurora's growth rate
has decreased, it still exhibits a healthy percent increase yet
not so much of an increase that service demands would outstrip
service provision capability. Neither municipality exhibits a
warning trend here.

Table Financial Indicator 9 POPULATION
Li ttleton
- Decreasing level of growth
in population
Year Population
1970 27,364
1980 28,631
1984 31,020
1970 79,450
1980 158,588
1984 203,300
Growth Rate
Littleton No warning trend
Aurora No warning trend

G r o p h G. P U P U L AT IU N
_ T ea r
L-' /' I Littleton 1'\j Aurora

FI10 Both cities' per capita personal incomes have declined,
after inflation is taken into account, and therefore exhibit
warning trends. This reduces residents' ability to pay for
services. Care needs to be taken to assure that the property tax
and municipal expenditure burdens (FI8) do not rise too high,
given people's declining purchasing power. Since it was
determined in the analysis of FI8, expenditure and property tax
burden, that the growth rates of these two indicators was too
high, this could represent a substantial burden to residents.
"Cne consequence of high tax burden is growing property owner
reluctance to satisfy their municipal tax obligation." (44) This
burden could grow more severe since "(p)rojections of personal
income in the Denver metropolitan area indicate expected growth
less than that experienced during the past decade (the 1970's).
The ncminal income projections (by the Denver Regional Council
of Governments) reflect a continued erosion of real income
growth..." (emphasis added). (45) Extra care needs to be taken
by our case study communities to not unduly financially burden
residents when per capita personal incomes are declining.

Table Financial Indicator 10 PERSONAL INCOME
Equals Personal Income (constant dollars) / Population
WARNING TREND Decrease in level or or growth rate of personal income
per capita (in constant dollars)
Li ttleton
Year Personal Income Growth Rate
1970 $6,626
1980 $3,795 -4.3%
1970 $5,588
1980 $3,616 -3.5%
Littleton Moderate warning trend
Aurora Low warning trend

O Ci
c o
In Cansiont Dollars
vv // /./
/ / / / V//// r *r;"7 \ \ \ \ '* \ \ \ \
/ / / / / / y V / / / / / Jf WAN X\W
/'//// /' / / /' ////\ .' / / \\\v \\\v \ \ \s /7T .* y / / / /' ./ / '//// \\\\> \ \ \ \\
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/ y y y *///. A / / A A / A . A \ \\ \ \\\ ///// / / / / < / / / / / / / / ' \\.\\ \ N \\\V v \ \ *
1370 1360
I ,. \J Aurora

Summary of Findings
Both Aurora and Littleton are presently in relatively stable
financial condition. In terms of the indicators used for
analysis, neither is as fiscally stressed as the northeastern New
Jersey study communities mentioned above. However, as always,
there is room for improvement in each city's present fiscal
situation. To recap the categories for each city that need
improvement, as gleaned from the financial indicators analyses:
o Needs to increase revenues per capita in certain sources,
e.g., charges for services and sales tax collected.
o Dependency on intergovernmental aid must be decreased, or
Littleton at least needs to be prepared for potential
reductions in this category by state or federal sources.
o Expenditures per capita should be decreased in the
public safety, general government and library categories.
o The municipal expenditure burden should be decreased to the
2.52 of personal income range. This is especially a problem
since personal income was shown to be decreasing in real
dollars. If expenditures are reduced in the above
categories, this may alleviate the problem.

o Needs to increase revenues per capita in certain sources,
e.g., licenses and permits and sales tax collected.
o Expenditures per capita should be decreased in the
general government, public works and recreation categories.
o The municipal expenditure burden should be decreased to the
2.5% of personal income range. This is especially a problem
since personal income was shown to be decreasing in real
dollars. If expenditures are reduced in the above
categories, this may alleviate the problem to a degree.
o Property tax revenues have not kept pace with population
increases. This situation should be monitored and improved,
if possible. However, the city does not rely too heavily on
this revenue source so the decrease in the growth of
property tax revenues is not especially serious.
o The number of employees per capita should be reduced.
Now that areas needing financial improvement have been identified,
the next and final section will deal with the possibilities Aurora
and Littleton could utilize to increase revenues or decrease
expenditures in order to achieve financial stability.

This section will first discuss generic strategies available to
municipalities to help them reduce costs. These suggestions are
general and could apply to any department where expenditures need to
be cut. The particular departmental makeup needs to be analyzed in
terms of these suggestions. The section will end with specific
alternatives available to a municipality to enhance the revenue and
expenditure categories that were itemized in the Findings portion of
the Financial Analysis section. Both municipalities need to make
conscious decisions, based on citizen input and cost estimates, as to
the level of services the community desires and is willing to pay for.
Then various options can be utilized based on each individual
General Expenditure Reduction Strategies
A primary goal of a municipality seeking fiscal health along with the
ability to deliver adequate services to the corrmunity should be to
reduce municipal expenditures where feasible. Communities may not
be able to provide the same scope and quality of services that they
have in the past. Different entities may be able to provide services.
A municipality attempting to reduce costs can either decrease
service provision costs, reduce service quality or quantity, or alter
service delivery strategies.

To decrease service provision costs a municipality should:
o Reduce the number of employees, e.g. through hiring
freezes or through attrition. Each employee position
needs to be evaluated to determine if it is
necessary, or could the work be performed by an
existing employee.
o Reduce payroll costs, benefits and salary fringes.
Comparable salary and benefit package figures should
be collected to make sure employees are not receiving
more than is necessary.
o Limit non-personnel outlays, e.g., copying, travel,
etc., and monitor these outlays to ensure unnecessary
costs are not being incurred.
o Combine departments for economies of scale where
feasible and appropriate.
o Complete analyses measuring productivity of service
output (e.g. tons of garbage collected). This can be
used to pinpoint inefficiency. All departments
should be checked and monitored to ensure efficiency.
Departments should be expected to perform at a
certain service level. Standards need to be
developed to monitor this and managers should be well
aware of standards.

o Encourage employee productivity through such means as
merit pay for feasible cost reduction suggestions or
for increased output suggestions. Staff
suggestion programs could gamer many viable
strategies for expenditure reductions or efficiency
increases from the people most familiar with
operations. Aurora has such a program and should
encourage participation.
o Add more advanced equipment to enable employees to
achieve greater output or become more efficient at
their tasks.
To reduce service quality and quantity a municipality might change the
existing scope of services offered. Or planned capital improvement
projects could be postponed or scaled down. For example:
o Reduce the amount or scope of capital improvements
o Reduce the number of services offered the community,
for example, eliminating "non-book" lending in the
municipal library (e.g., films, records).
o Reduce the frequency of a provided service, e.g.,
less frequent garbage pick-up, or library closure one
day a week.

Alteration of service delivery strategies requires a rethinking of
established channels of service delivery. Possibilities here include:
o Political consolidation of local governmental
entities to larger entities for greater economies of
scale. This may be difficult to achieve, however,
and is not recommended.
o Intergovernmental agreements can be negotiated
between governmental entities to enable more
efficient service delivery. The original local
governmental body remains ultimately responsible for
the service, but another governmental body, e.g. a
neighboring municipality, may be able to provide the
service more cheaply. Both governmental bodies would
be able to benefit from such arrangements through
reciprocal agreements and economies of scale. Tabled
shows that the entity providing the service is
frequently the county that a municipality is in. Many
services could be provided this way, "services
commonly provided under intergovernmental agreements
include water supply, sewage treatment, jails, police
communications, libraries, animal control, resource
recovery plants and public health services." (60)