On page 3, the criteria for what qualifies as a capital expenditure is defined, and "elements that must be present to qualify" are listed. In brief
•Must have a minimum cost of $50, 000
•Must have a useful life of at least 5 to 7 years (the purchase or project still be functioning and not be obsolete at least 5 to 7 years after implementation)"
•Must extend the life of an existing asset...for at least 5 years. These expenditures are distinguished from ongoing maintenance work that may extend the life of an asset but is done on a routine basis.....
OK these are the criteria. Now you figure out how you can apply them to Project GS-03008) on page 189, called "Polyethylene Fusion Equipment"
This project pays for the purchase every two years of a $32,000 piece of equipment that joins lengths of polyethylene tubing for the gas lines. The equipment either wears out and must be replaced, or deteriorates in performance and increases worker time to achieve the desired welding (fusing) results.
So what's the deal? It does not meet the 5 year criteria at all, and it does not meet the $50K threshold. This is obviously an operating, maintenance expenditure, not a capital expense.
This should not be in capital improvements budget -- at all.
So as far as I can see, neither the utility department nor the finance committee bothered to apply their own criteria to the project. How many other things are hidden in this budget? Does anyone care? Will it be removed?
What do you think?
This story contains 293 words.
If you are a paid subscriber, check to make sure you have logged in. Otherwise our system cannot recognize you as having full free access to our site.
If you are a paid print subscriber and haven't yet set up an online account, click here to get your online account activated.