WASHINGTON — The Governmental Accounting Standards Board on Tuesday will propose that state and local governments report five-year projections of cash inflows, outflows, and future financial obligations as supplementary information, following the notes to their financial statements.

GASB’s proposal, which if adopted would have to be followed by governments seeking clean audit opinions, comes after analysts, rating agencies, legislators, and investors have expressed concern about their inability to determine from publicly available financial reports whether state and local governments are on financially sustainable paths.

Currently, governments generally provide a snapshot of their finances as of the date of their financial statements, as well as a one-year retrospective overview in their operating statements.

But issuers and government groups have resisted providing future projections and are likely to object to GASB’s initiative, which will be released as a so-called preliminary views document.

Public comments are due by March 16. GASB plans to hold two public hearings on the proposal, one in Los Angeles on March 28 and the other in New York on April 16.

“We know already some governments will push back,” Robert Attmore, GASB’s chairman, said in an interview. “We’ve heard them and we understand their views, but we think it’s important to get this out.”

GASB’s proposal, called Economic Condition Reporting: Financial Projections, would require state and local governments to report information about: projections of cash inflows and outflows, with explanations of the known causes of fluctuations; projections of financial obligations, including bonds, pensions, other post-employment benefits, and long-term contracts, with explanations of the known causes of fluctuations; projections of annual debt service payments, including principal and interest; and a narrative discussion of governments’ dependencies on other governments to provide services, according to a GASB press release.

“The current economic downturn has emphasized what has been known for a long time: information is not always publicly available regarding the financial challenges facing governments,” Attmore said in a statement.

The accounting standard-setter would seek financial projections based on current policy, informed by historical information and adjusted for known events and conditions that will affect the government’s finances for “at least the next five fiscal years,” according to the statement.

GASB, which launched a study of economic condition reporting more than a decade ago, pressed forward with this proposal in part due to increased concerns about possible federal spending reductions.

An estimated 30% of state revenue flows from the federal government, including federal outlays on transportation and Medicaid, Attmore said.

Users of state and local governments’ financial statements, including citizens, bond purchasers, and academics, have informed GASB they need these projections in order to assess the entity’s financial health, he said.

Issuers, meanwhile, have told GASB this proposal would prove too costly, should be voluntary, and falls outside the scope of the standard-setter’s mission, according to Attmore.

Such criticisms are premature, Attmore said, adding that more than 50 governments have volunteered to test the proposed requirements.

Attmore did not identify them or predict whether GASB would release a so-called exposure draft after the hearings and public comments.

“We’ll wait and see what they say, and we’ll evaluate all that feedback,” he said.

Issuers have already objected to furnishing projections as part of an ongoing pension project.

Earlier this year, when the National Association of Bond Lawyers floated public pension-disclosure guidance, issuers balked at providing future projections of a plan’s funding status, warning they would be speculative.

Analysts favored such disclosure, saying it would boost transparency about possible credit risks.

An issuer group has also expressed concerns that as a result of Dodd-Frank Act provisions that require more independent fundings for GASB, the standards-setter will have greater resources to impose potentially burdensome accounting and financial reporting requirements.

Previously, GASB relied on voluntary donations from state and local governments, as well as revenue from sales of its publications, but contributions have been falling and lawmakers questioned the conflict with governments’ contributions to their standard-setter.

Dodd-Frank authorized the Securities and Exchange Commission to direct the Financial Industry Regulatory Authority to collect a GASB accounting support fee from dealers to help fund the board.

FINRA earlier this year floated a quarterly GASB support fee on dealers based on their muni bond sales.

The comment period on that proposal ended in August. A FINRA spokesperson said there have been no further developments on the proposal.

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