Thursday, September 23, 2010

This is what a competent State Senator can do.

The statement of Sen. Mark Obenshain on the VDOT audit:

VDOT Audit Turns Up $1.45 Billion!


The results of the VDOT audit are in, and it turned up something interesting -- money.

The audit of the Virginia Department of Transportation (VDOT) turned up examples of fiscal mismanagement, of poorly allocated resources, and of inefficient practices, as expected. But I don't think anyone expected it to turn up $1.45 billion in unspent funds within the Six-Year Improvement Plan.

Wasn't it just a year and a half ago that Tim Kaine closed down the rest areas because we couldn't come up with the $9 million necessary to keep them up and running?

I've been calling for an outside performance audit for two years, and I haven't been alone in this effort. My friend and colleague Del. Todd Gilbert has been with me each step of the way, and Delegates Glenn Oder and Scott Lingamfelter have pushed external audits as well. Each time, VDOT pushed back, saying that their own routine internal audits were more than sufficient.

So much for that idea.

According to a comprehensive financial and performance audit conducted by Cherry, Bekaert and Holland, LLP, VDOT is sitting on almost a billion and a half dollars in unexpended funds even as roads went unplowed and bridges unrepaired, the Department pled poverty, and Democrats called for tax increases for transportation. This is completely unacceptable. As Governor McDonnell put it, "Money has been sitting in the state's wallet while Virginians have been sitting in traffic."

How could this happen? In a word, bureaucracy. Or, in two words, fiscal mismanagement.

Every year, roughly $230 million allocated to specific projects is unspent when those projects are canceled or become inactive, but often, rather than using the freed up monies for other transportation projects, the funds just lie in dormant accounts.

Some time back, when the federal government delayed passage of a federal transportation bill, the Commonwealth set aside $524 million as a federal revenue reserve so that all projects would not grind to a halt should federal funding dry up. That may have been a prudent move at the time, but we have a transportation bill now, yet over half a billion dollars remained off limits, essentially forgotten.

Of course, it makes sense to set aside money for a rainy day, which is why Virginia has a separate reserve fund of long standing as well. But whereas most states maintain a sixty day reserve, Virginia's covers five and a half months, and hasn't been touched. That's hard to justify when essential transportation projects are being put on hold. What's a reserve fund for, if not for times like these? Virginia will now be moving into line with other states, drawing down to a sixty day reserve.

Finally, we have at least $400 million in unused toll credits, which is just money going to waste. These toll credits are not cash, but they may be the next best thing. Normally, when the federal government provides transportation funding, Virginia must make a 20% match. These accrued credits, however, can be used instead - and we haven't been doing it. For several years, Virginia has been paying the federal government when it could have been simply cashing in its toll credits.

All told, we're talking about $1.45 billion in money we essentially didn't know we had, in a Department with a $3.3 billion annual budget. That's great news, but the fact that it took an audit to tell VDOT that this money existed and could be redeployed is utterly unacceptable.

Thankfully, the McDonnell administration agrees, and his Secretary of Transportation, Sean Connaughton, is working to implement the fifty recommendations in the newly available audit so that we never have a repeat of this fiscal mismanagement. Full implementation of a remedial action plan is anticipated within forty-five days, and it can't come a moment too soon.

Incredibly, $877 million was left unspent during the last two years, and six months into Fiscal Year 2010, we had only obligated a mere 5% of the federal transportation dollars available to us under the stimulus package, a delay I called inexcusable at the time. And I had no idea-no one did-how far behind we truly were. Like the Governor said, Virginians are sitting in traffic while this money sits in the government's coffers, but that is about to change, and another $800-900 million will be committed to specific projects by the end of the year.

We need to do this right. We can't go on an indiscriminate spending spree because we found money we didn't know we had, and we should never push money out the door just because it's available. We owe the taxpayers a far more prudent policy than that.

But the projects aren't hard to find. Anyone who has spent any time on Virginia's roads know that maintenance projects have suffered and new construction is sorely needed. The results of this audit provide a way forward, not just identifying some crucial funds for the present, but charting a more prudent path for the future.

This isn't the end by any stretch of the imagination. I believe that more work remains to be done in fully accounting for operational practices within VDOT, as this was more of a financial than a performance audit, though it does provided many useful recommendations in both areas. This is, however, a huge step forward.

An outside audit of VDOT was a long time in coming, but the real challenge is ahead. It's time to make VDOT more efficient, more cost-effective, and more accountable. And now we have a roadmap.

With best regards,


Mark D. Obenshain
Virginia State Senator

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