Accounting and Financial Reporting, Capital Planning and Asset Management

Deferred Maintenance and Pensions—Is One Like the Other?

Some believe this shift from national to local funding is long overdue. After all, localized projects produce mostly localized benefits, so why not pay for them with local dollars? Others worry that states and localities don’t have the right taxes and fees to cover large-scale infrastructure projects, which is why federal help was vital. But either way, IIJA’s broader message is clear: State and local infrastructure will now be paid for mostly or entirely with state and local dollars.

In that case, we’re forced to confront some important follow-up questions. If “traditional” infrastructure is now a state/local obligation, is their failure to maintain it a liability? If it is, should we estimate and report the size of it, just like we do with pensions, other postemployment benefits liabilities (OPEB) like retiree healthcare obligations, and other measurable long-term liabilities? In other words, should we treat deferred maintenance like pensions?

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