Effective Planning and Budgeting Practices Can Help Arrest the Nation's Deteriorating Public Infrastructure

Pursuant to a congressional request, GAO reviewed the conditions of and trends in State and local physical capital, such as roads, bridges, and sewer treatment plants; the interaction of State and local capital budgeting practices; and how State and local governments can improve their management of physical capital.

Capital investment by State and local governments has declined by about 34 percent in the last 13 years. Much of this reduction is attributable to decreases in capital outlays for highways and school construction, the two largest functional components of capital investment by State and local governments. It appears that State and local governments have been reallocating expenses to meet increased demands for services such as health and welfare programs. GAO found that the financial problems of large cities were generally more severe than those of States or counties. These cities often have large low-income populations and are confronted by declining tax bases and voter reluctance to increase taxes. An administration proposal outlined in the 1983 budget suggests that more than 40 Federal programs should be turned back to the States along with the sources of funding. If enacted, this proposal might enable State and local governments to address their infrastructure needs more directly and alleviate some of the investment decision biases in Federal capital programs. Many of the State and local governments reviewed lack a broad perspective on capital investment. GAO found that organizations that have maintained their infrastructures place a high priority on: (1) assessing information needed to determine requirements for repair, renovation, and replacement; (2) planning program objectives; (3) selecting projects that best meet the organization's current and future infrastructure needs; and (4) controlling resources designated for infrastructure use.