Thanks largely to a conservative, "pay-as-you-go" approach to financing, Bountiful City's budget is in good shape, according to an independent auditor.

"In my opinion, the city is very financially sound, very healthy," said Barry Erickson, of Deloitte & Touche, a Salt Lake auditing firm hired to do the city's annual audit, as required by law.The city lists $78.8 million in assets, including almost $21 million in cash and investments.

Liabilities total $5.9 million, including a "very low" $2.4 million in bonds payable, Erickson noted. By law, debts cannot exceed 8 percent of total assets. Bountiful's debts, however, are only 3 percent the amount of its assets.

Bountiful has been able to avoid going into major debt largely because of its "pay-as-you-go" philosophy of financing capital projects, said City Manager Tom Hardy. About $13.6 million is currently in reserve funds.

"The city of Bountiful does not plan to issue any new bonds in the near future," said Hardy and City Recorder Arden Jenson in a letter accompanying the audit.

In addition to the city's budget, the community's economic condition continues to be sound, according to the officials, who note:

- Davis County has one of the lowest unemployment rates (4.2 percent) in the state.

- Per capita income in Bountiful rose 6 percent in 1989, and sales tax collections increased 10 percent.

- Single-family home permits continue to be issued regularly, or about 100 per year.

- The population on April 1, 1990, was 36,553, 3,676 more than in 1980, or an annual growth rate of 1.1 percent.

- A major automobile dealership - Willey Honda - opened in 1990, boosting the city's sales tax revenue.

- A joint shopping center development agreement with West Bountiful will result in 250,000 square feet of commercial-retail-office space on 500 West.

The city manager and recorder's report says the future health of the city's economy will be largely dependent not only on the growth of businesses that generate sales tax but also on the continued employment of the residents in the defense, mining, electronics and transportation sectors, all of which appear to be sound, although Hill Air Force Base recently reduced its work force by 10 percent.

The Persian Gulf crisis is already being felt on the city's budget, the letter states.

"The increase in oil prices resulting from the invasion of Kuwait has created a severe economic impact on the city," which may have to spend an additional $100,000 in fuel costs in 1991.

The results could be "major stress to the budget and possible reductions in some programs."