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VDOT audit finds almost $1 billion in unspent funds

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The Virginia Department of Transportation left about $900 million of available maintenance funding unspent in the midst of a weak economy, an audit of the agency found.

Conducted by Richmond-based Cherry, Bekaert and Holland LLP, the audit found that while the transportation agency slashed about $2.8 billion from its construction budget as the economy plummeted, it left much of its available funds unspent over the last two fiscal years.

“Money has been sitting in the state’s wallet while Virginians have been sitting in traffic,” Gov. Bob McDonnell said in a statement. “We will move immediately to put this funding to work building roads and reducing congestion statewide.”

The audit found that a lack of budget accountability led to $877 million in unspent maintenance funds in fiscal years 2009 and 2010. VDOT had $1.58 billion available for maintenance in fiscal year 2009, but only spent $1.23 billion, leaving $348 million unspent. In 2010, the agency spent $1.13 billion of the available $1.66 billion, resulting in a $529 million carryover.

“Every penny we have available for transportation should be quickly used for construction, paving, bridge and other maintenance contracts,” Transportation Secretary Sean Connaughton said. “We cannot begin to address how we fund transportation in the future until we are maximizing the use of transportation revenues we currently receive.”

McDonnell has instructed VDOT to award the $800 to $900 million in maintenance contracts by Dec. 31. About $614 million of that money can be used for construction and maintenance projects within the next 12 months. The remaining $440 million can be used to accelerate projects in the agency’s six-year highway improvement program.

The audit blames the oversight and spending delays on a lack of focus on maintenance and construction operation as the agency reorganized over 18 months amidst the economic downturn. This made the agency reluctant to commit funds and led to inefficient processes, the audit found.

State officials also say that recommendations under the audit will provide an additional $1.5 billion for the state’s six-year highway plan.

In addition to oversight of maintenance funds, the audit made the following recommendations:

  • Disseminate federal funds earlier in the year to eliminate delays.
  • Monitor inactive funds to release them for other projects.
  • Monitor regionally and locally administered projects more closely.
  • Seek approval from the Federal Highway Administration to use more than $400 million in toll credits available, which would allow VDOT to use 100 percent of federal funds and eliminate a state match requirement.
  • Eliminate a $524 million federal revenue reserve to accelerate projects in the six-year program.
  • Reduce cash reserve policies from a 5.5 month reserve to a 60-day reserve to release $200 million in immediate funding.

Virginia Senate Majority Leader Dick Saslaw defended VDOT in a statement. “It is clear that this audit identifies no new funds for transportation.  What we do see, however, is an agency with a critical mission, dealing with the loss of over 1,000 employees in an unprecedented era of shrinking state revenues and considerable uncertainty in the availability of future federal funds.  Coupled with the immediate challenges of allocating federal stimulus dollars, it appears that some projects may have been slowed down in the process.”

Saslaw praised VDOT for its fiscal restraint in a time of uncertainty and points out that state law requires that adequate funding for projects before it can be allocated.

McDonnell has given Connaughton and VDOT Commissioner Gregory A. Whirley 45 days to develop a plan to address the findings.

 


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