County officials question new law

By Stephen S. Glass

Star Staff

   According to Carter County Executive Truman Clark, the Tennessee General Assembly has passed a new law requiring local governments to assess and depreciate the value of all county property. The new law, enigmatically named GASB-34, requires that local governments have their assessments prepared for the state comptroller's office by the end of fiscal year 2002-2003.
   But some apparent gaps in the new legislation have left members of local government with unanswered questions.
   "Property means anything from equipment for the highway department to county buildings to roads to anything else you want to name," Clark said Wednesday. "How are we supposed to figure the net worth of an entire county?"
   Since the new law has no established guidelines for assessing or depreciating the value of county property, it looks as if members of local government will be left to guess their way through the process.
   "This would be a whole lot easier if they would just give us an estimate on what a mile of road is worth and let us go from there," said Carter County Highway Superintendent Jack Perkins during Wednesday's meeting of the county highway committee.
   During that meeting, Perkins and committee members met briefly with Mike Conner, a representative of Local Government Data Processing, a software company which writes computer programs to help local governments keep their books in compliance with new state laws like GASB-34.
   Conner told the committee there are no straightforward answers on how to keep the books for GASB-34.
   "To the best of my knowledge, it's up to each county commission to set the standards for itself," Conner said. I'm sure you could do your own in-house inspections, but I don't know how an auditor would handle that. How do explain how you came up with the value of a piece of equipment or a bridge or a stretch of road?"
   Conner said the easiest -- but not the cheapest -- course of action would be for local government to hire an accounting firm to take care of GASB-34 paperwork.
   "Monroe County has already hired a firm to help them with this," Conner said. "Of course it isn't cheap. I think they paid something like $20,000 to have theirs done."
   According to Conner, each county will have to review and re-record all books dating back as far as 1980 in order to comply with GASB-34 regulations.
   "Even if a piece of equipment was bought in 1980 and has already been depreciated out, you're going to have go back and put that on the books," Conner said.
   So what is the purpose of GASB-34, anyway? That's the one question seemingly everyone is asking.
   "I don't know what the purpose of this thing is," said Conner.
   "I'm not sure why they want this," said Clark.
   "What's the purpose of this?" said Assistant Highway Superintendent Jim Slemp. "It seems like you ought to have a purpose for something like this."
   Though no one yet seems to understand the reasoning behind GASB-34 (or even what the letters GASB represent), they do understand there will be penalties for noncompliance with the new law.
   "If you don't comply, there will be an automatic adverse opinion on your 2002-2003 audit," Conner told the highway committee.
   According to Clark, an adverse opinion means that a county would no longer be allowed to borrow money on the bond market.
   "That's how local governments usually do business," said Clark. "They borrow money when something needs to be done."
   But, according to Clark, there could be one possible benefit to the new law.
   "Theoretically, you're supposed to be building up reserves to replace these items once they depreciate," said Clark. "Theoretically, a county should operate like any other business. But who knows if it's going to work out that way? That's another question."