Poor management of available resources at the Virginia Dept. of Transportation resulted in $877 million in transportation funds left unspent during the last two fiscal years, says an independent audit commissioned by Virginia Gov. Bob McDonnell (R).

Some of that funding carried over from previous fiscal years will be used to help VDOT award $800 to $900 million in contracts by Dec. 1.

“This audit demonstrates that available funding has not been effectively used in the past few years,” McDonnell said. “That is unacceptable. Money has been sitting in the state’s wallet while Virginians have been sitting in traffic.”

The audit showed that during fiscal 2009, VDOT had $1.58 billion available for maintenance, but spent only $1.23 billion. During fiscal 2010, the agency had $1.66 billion available for maintenance but spent only $1.13 billion.

The budget surpluses occurred while VDOT was slashing its budget, citing slumping revenue brought on by the economic downturn. Since 2009, the state cut approximately $2.8 billion from the six-year transportation spending program, according to the governor’s office. In February 2009, VDOT announced that it would lay off up to 1,000 salaried employees and cut 450 hourly employees.

The report was also critical of VDOT’s management of federal funds.

Over the past two fiscal years, less than 10% of available federal funds had been obligated six months into the year. Virginia was among the last states to roll out federal stimulus dollars for transportation. The state was awarded a total of $694.5 million in American Recovery and Reinvestment Act funds.

Among the factors that may have slowed some projects is what the governor’s office calls a “one-size-fits-all” approach to project development. Major interchange projects are managed the same as small turn-lane or repaving projects, McDonnell says.

The audit noted that every maintenance project was developed as though it was eligible for federal funding. As a result, VDOT used more rigorous environmental, funding and design reviews than were required for projects funded solely with state funds.

The audit noted that VDOT must improve monitoring of inactive projects to release unused funding for other projects as soon as possible. In fiscal 2010, nearly 20% of the state’s federal funds were obligated on inactive projects and had to be released for use elsewhere.

Other recommendations include eliminating the $524-million federal revenue reserve and adding it back to the budget to accelerate the planning of projects. The audit also suggested revising cash reserves from 5.5 months to 60 days, freeing up $200 million for immediate use on transportation projects.

The governor called on Virginia Secretary of Transportation Sean Connaughton and VDOT Commissioner Greg Whirley to develop an action plan to address the audit findings. An extended version of this story originally appeared on ENR.com.