Reporting of Infrastructure Assets by State Governments

In 1999, the Governmental Accounting Standards Board (GASB) adopted GASB Statement No. 34. This standard requires that governments capitalize their infrastructure assets. The standard allows a government to choose either to depreciate its infrastructure assets or to report them according to the “modified approach.” Under the modified approach, a government must preserve its infrastructure at its adopted condition. For governments that are in a weakened financial or political position, this requirement may be too taxing, so they may opt to depreciate their infrastructure assets. The results of this study suggest that the decision to select the modified approach is related to factors that imply a stronger financial and political system—specifically, higher population growth, a higher grade for the management of infrastructure assets from The Government Performance Project, no use of revenue bonds backed by fuel and motor vehicle taxes, lower lane miles per capita of the state’s highway system, and higher voter support for the current state governor.