[RP TownTalk] Fw: balancing the budget by letting the infrastructuredecay

[Hyattsville CDC]

Sarah's post makes no sense without the following, which i sent to her alone by error.  sorry

stuart

----- Original Message ----- 
From: Hyattsville CDC 
To: Sarah Wayland 
Sent: Friday, May 25, 2007 9:03 AM
Subject: Re: [RP TownTalk] balancing the budget by letting the infrastructuredecay


Sarah,

Nice discussion on GASB 34 standards, but technically the statement: 

"So even if the Town of Riverdale Park *wanted* to balance the budget
by letting the current infrastructure improvements decay for 30 years,
the policies of the GASB no longer allow them to do so".

is not accurate. 

GASB 34 is an accounting standard for recording information, not a policy dictat for performance.

A municipality can opt to let its infrastructure decay: it need only publicly report that it is doing so.

In other words, GASB 34  reporting standards make governments more accountable for recording infrastructure management decisions and funding levels on an annual basis: 
but elected officials, in tandem with their administrative staff, make the policy choices to fund or not fund infrastructure sustainably.  

The electorate, having been informed of the governments' policy choices regarding infrastructure maintenance and its funding, is still the final arbiter of 
who makes theses choices in the future: but now and hereafter that decision is partially based upon better information, as required under the GASB 34 standards.:


Stuart Eisenberg



----- Original Message ----- 
From: "Sarah Wayland" <sarah.wayland at gmail.com>
To: <towntalk at riverdale-park.org>
Sent: Friday, May 25, 2007 7:10 AM
Subject: [RP TownTalk] balancing the budget by letting the infrastructuredecay


> It has been a common practice for governments to balance their budgets
> by letting their infrastructure decay.
> 
> In response to this, in 1999, the Governmental Accounting Standards
> Board (GASB) adopted new accounting standards (GASB No. 34) that
> discourage this practice. You can read a summary at:
> 
> http://www.gasb.org/st/summary/gstsm34.html
> 
> Below are selected relevant quotes:
> 
> "Most governmental utilities and private-sector companies use accrual
> accounting. It measures not just current assets and liabilities but
> also long-term assets and liabilities (such as capital assets,
> including infrastructure, and general obligation debt). It also
> reports all revenues and all costs of providing services each year,
> not just those received or paid in the current year or soon after
> year-end."
> 
> [Translation: We can't pave the roads now, and then let them decay for
> 30 years. We must instead include the long-term cost of maintaining
> those roads in the annual budget.]
> 
> "Governments should report all capital assets, including
> infrastructure assets, in the government-wide statement of net assets
> and generally should report depreciation expense in the statement of
> activities. Infrastructure assets that are part of a network or
> subsystem of a network are not required to be depreciated as long as
> the government manages those assets using an asset management system
> that has certain characteristics and the government can document that
> the assets are being preserved approximately at (or above) a condition
> level established and disclosed by the government."
> 
> [Translation: We have to document that our roads are being preserved.]
> 
> "Governments with less than $10 million in revenues (phase 3) should
> apply this Statement for periods beginning after June 15, 2003."
> 
> [Translation not required.]
> 
> Furthermore, another article on the GASB website
> (http://www.gasb.org/repmodel/IMGgasb34.pdf) states that "all
> infrastructure assets acquired, renovated, restored, or improved after
> the effective date of GASB 34 are to be reported on a prospective
> basis."
> 
> So even if the Town of Riverdale Park *wanted* to balance the budget
> by letting the current infrastructure improvements decay for 30 years,
> the policies of the GASB no longer allow them to do so.
> 
> -Sarah
> 
> -- 
> Sarah Wayland
> Maryland - USA
> sarah.wayland at gmail.com
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