Things that rot, rust, or crumble - GASB 34 Requirements

[council3_rubal]

Fellow Council Members,
When we reviewed last year's audit, I mentioned that the audit report was a snapshot in time and that it did not (nor was its under-reporting standards required to) report the long-term cost of our infrastructure debt.

There is a standard that has been in effect since 1980's that applies to municipalities that would help to reconcile differences between the depreciation of things like city buildings and vehicles and align more with the overall depreciation of core assets within our City, to include our infrastructure.

GASB 34 Requirements: https://www.gasb.org/page/PageConte...e/pronouncements/summary-statement-no-34.html

History: AI-generated.

"Most cities in the U.S. follow standards set by the Governmental Accounting Standards Board (GASB) Statement No. 34. This rule requires governments to report depreciation on their capital assets.

Before this rule, many cities only tracked cash in and out. Now, they must show the value of their infrastructure (roads, water systems, etc.) and how much of it has "worn out." This prevents politicians from ignoring maintenance to make a budget look better than it actually is.


Under GASB Statement No. 34, state and local governments are required to report the value of their infrastructure assets—such as roads, bridges, sewer systems, and water mains—on their government-wide financial statements. Prior to this standard, these assets were often omitted from balance sheets. Now, they must be recorded using full accrual accounting, which reflects the long-term economic reality of owning and maintaining public works."

 

[council4_vaughan]

The city is following GASB34 and has infrastructure on the books. The challenge is that the standard was implemented in 2004-ish. For existing cities with infrastructure prior to that date, the implementation was messy. Some cities estimated infrastructure in existence and some took just a prospective approach (adding new infrastructure when it was worked on/improved). Thus you will find a mix of rough estimates (which are probably more rough than good) and partial listings of only new stuff out there.

Either way, the numbers reported in the audit are only historical cost with depreciation applied. It's only good for spreading the cost of those assets over their estimated useful life. It's unfortunately not very helpful in evaluating current condition or concluding on infrastructure overall. The only thing you can really get from it is some consideration of how much has been spent in the recent past.

The only real way to conclude on the infrastructure is with an assessment like we had done in 2009 that takes an inventory of the streets and assigns grades to them.

 

[council3_rubal]

Thank you for your reply. I had not seen any document in this regard, and to my knowledge, there has been no staff report in recent years. I will follow-up with an email to our City manager. There does appear to be an infrastructure disconnect in long-term City planning, but I would like to see what the City Manager can provide regarding GASB34. This is a particularly important framework for the Comprehensive Plan workshop. It is of interest that the CP Vision 35 focuses on what we want to build for the future, with little consideration of the magnitude of the cost to fix what is broken. GASB focuses on fixing problems that currently exist. Both impact our City's future. Of interest, but are defined by statutes: Vision 35 by TX local Gov code Ch 213 and GASP 34 standards. Thanks again.

 

[council3_rubal]

The City Manager confirms your statement, but indicated that it is not specifically identified in the audit as GASB. Hope to get further clarification this evening.