The fundamental problem is that municipalities and other government bodies do not use accounting consistent with Generally Accepted Accounting Principles.
They have no balance sheets showing the value of assets and liabilities. Thus, they do not take depreciation expense.
Generally, they only run based on year-by-year income and expenses, unconcerned that their asset base is deteriorating.
They just do what the voters want them to do. Voters don’t care about this stuff.
But even if they did have depreciation expense, they still might not have money in the bank to pay for repairs to the infrastructure which they were depreciating.
Interesting that they don’t use generally accepted accounting principles. Sounds to me like it sets the stage for financial irregularities.
I get that some municipalities may not follow GAAP guidelines. However, as elected stewards of the people's community infrastructure assets, it doesn't exempt them from following Generally Accepted Accounting Common Sense Principles. Those common sense principles state that all mechanical and infrastructure assets are gonna wear out at some point and you better be setting aside public money every year for when they do.
Accounting is racist.
I am stunned you did not know that!
;-)
I once read that if GAAP were scrupulously applied to all businesses in the US that 90% of them would be “technically” bankrupt. As it is, most companies operate and stay in business by using up their cash flow and ignoring reality.
Cities need to have a WRITTEN TEST for ANY City Council person to be in office and that test needs to be prepared by mid level management people from all over the US. Upper management is too political.