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).

The cable-stayed pedestrian bridge will traverse a canal in downtown Scottsdale, Ariz.
Photo: Virginia Governor’s office
Virginia Gov. Bob McDonnell wants recently uncovered transportation funds contracted by Dec. 1.

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 Sept.  23. “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. By comparison, $8 million carried over at the end of fiscal 2005.

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.

Twenty-five rest stops were also closed to save costs.

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.

VDOT announced that it had obligated all of its ARRA funding Sept. 21, nearly one week before the Sept. 30 federal deadline.

“A lot of the things that came out of the audit are things that the industry has been saying for the last two years about the need to get projects out on the street faster,” says Jeff Southard, executive vice president of the Virginia Transportation Construction Alliance.

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 project 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.

Monitoring of Inactive Projects
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.

Partial funding and administrative issues were cited for more than $100 million in delayed projects.

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 within 45 days to address the audit findings.

"Every penny we have available for transportation should be quickly used for construction, paving, bridge and other maintenance contracts," 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."