Accounting for infrastructure: State and local governments begin to assess cost of deferred maintenance.

Our state’s infrastructure shortcomings were recently highlighted in reports from the American Society of Civil Engineers, which gave Washington a ‘C’ grade and a national Business Roundtable report calling for substantial new infrastructure investment from the federal government to spur economic growth. 

So we were intrigued by this Governing magazine commentary reporting that some state and local governments are taking serious steps to account for their infrastructure shortfalls.

All agree that the case for serious investment has been made. But while federal policymakers prepare to debate how they might provide more funding for new or improved infrastructure, state and local governments are beginning to tackle the long-neglected issue of deferred maintenance with money, muscle and spreadsheets.

This is an important development after decades of postponing scheduled upkeep and routine repairs on roads, schools, bridges and water lines as pleas for additional funding to maintain these critical workhorse assets were drowned out by the allure of new shiny-pony assets. More and more, public finance officials are taking stock of their existing assets, their condition and the costs to address the consequences of deferred maintenance.

Keeping these costs off the books can make governments’ financial conditions look unrealistically rosy. In her commentary, Jill Eicher of the Bipartisan Policy Center likens the situation to the underreporting of pension obligations.

Like pension debt before, the cost of deferred maintenance has largely gone unmeasured and unreported, with staggering multi-trillion-dollar estimates repeated again and again. No one really knows, though, because there is no standard practice for defining, measuring and reporting deferred maintenance. This led credit ratings agencies to announce last summer that they would begin to focus on deferred maintenance in reviews of municipal debt levels.

Some state and local governments aren’t waiting. She cites Alaska, California, Hawaii, Tennessee and Utah as examples of governments that have

developed asset inventories and condition-assessment practices — the building blocks for tracking deferred maintenance needs — to make regular calculation of the costs they face in repairing and replacing the assets they own.  

Sounds like a good idea. Read the short commentary for examples of how it’s working.