Page 100 - CityofSouthlakeFY26AdoptedBudget

Environmental factors affect localities in two ways. Firstly, they create demand. Secondly, they provide
resources. The question most associated with the analysis of this category regarding its impact on
financial condition is, “Do these factors provide enough resources to pay for the demands they create?”

Organizational factors are the government’s response to changes in environmental factors. Theory
assumes that any government can maintain its strong financial condition if it makes an appropriate
organizational response to adverse conditions by reducing services, increasing efficiency, raising taxes,
or taking some other appropriate action. It also assumes that public officials have perfect information
about the problem, understand the gravity of the situation, and know how to act in response.
City Profile
The question most associated with the analysis of this category regarding its impact on financial
condition is, “Do legislative policies and management practices provide the opportunity to make the
appropriate response to changes in the environment?”

Financial factors reflect the condition of the government’s internal finances. They are, in some regards,
a result of the influence of environmental and organizational factors. Financial factors will eventually
show signs of cash or budgetary problems if there is a problem regarding the previous two factors. The
question most associated with the analysis of this category regarding its impact on financial condition
is, “Is the government paying the full cost of operating without postponing costs to a future period
when revenues may not be available to pay these costs?”

Tools of the Financial Trend Monitoring System
The primary tools of the FTMS are the financial indicators. They represent a way to quantify changes
in the FTMS factors. Many aspects of financial condition cannot be measured explicitly; however,
quantifying the indicators and plotting them over a period of years can allow decision-makers to
monitor and evaluate the City’s financial performance. These indicators do not provide answers as to
why a problem occurs or how to solve it, but do allow for an informed response. The following pages
include several charts displaying indicator data that is designed to track the financial condition of the
City across a period of time. These charts examine data ranging from population growth to the use
of revenues and expenditures per capita, all of which help to identify warning signs in the City’s fiscal
health that could lead to future trouble. By keeping an eye on these important indicators, the City can
carefully monitor the financial trends and make any necessary adjustments in long-range planning to
ensure future economic stability.

How is the Financial Trend Monitoring System Used?
The City maintains a database of monitored trends that are updated and reviewed annually as a part of
the budget process. By reviewing historical actuals over an extensive period of time, long-ago forgotten
financial impacts may be reviewed for validity to current economic conditions and variables. Department
staff also utilize FTMS data to inform their departmental business plans.

100 FY 2026 City of Southlake | Budget Book FY 2026 City of Southlake | Budget Book 101