Aggressively pursuing grants and other inflows of resources from other levels of government is the current policy of Grove City. As a result, the proportion of total city revenues that comes from other levels of government has steadily increased over the past several years. The city has able to begin offering a number of new services to citizens because of these revenues. When assessing the financial condition of the city, an analyst would conclude which of the following?

1. The increasing reliance on intergovernmental revenues has increased the financial viability of the city.
2. The increasing reliance on intergovernmental revenues can be a negative fiscal characteristic.
3. The increasing reliance on intergovernmental revenues is irrelevant in assessing the financial condition of the city.
4. The increasing reliance on intergovernmental revenues is a sign of poor management on the part of the city council.