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Va. Transportation Dept. audit uncovers hundreds of millions in unspent funds

By Anita Kumar
Wednesday, September 22, 2010; 11:42 PM

RICHMOND - Washington Post Staff Writer

Gov. Robert F. McDonnell is expected to announce Thursday the findings of a new audit of the Virginia Department of Transportation, which sources said has uncovered hundreds of millions of dollars in unspent funds spread across several accounts.

Tucker Martin, a spokesman for McDonnell (R), declined to comment Wednesday. But two sources familiar with the audit, who spoke on the condition of anonymity so as not to preempt the governor's announcement, said the accounts could total $500 million.

Sen. John C. Watkins (R-Chesterfield) said Secretary of Transportation Sean T. Connaughton told him that the audit could bring in at least $300 million. According to Watkins, Connaughton said those funds, nearly $500 million from the possible privatization of the state's liquor system and a third, yet-to-be-announced revenue source could total $1 billion. The money is significant because the state has struggled for years to find road and transit funds. "All the stars have to be aligned right," he said.

In recent weeks, Connaughton has hinted that the audit would bring major personnel and policy changes to the agency, even saying it would make national news.

"The biggest issue we are looking at is financial management - money that was in the pipeline," Connaughton told a business audience in Northern Virginia two weeks ago. "We had some indications that we were facing some challenges when we took office, and the auditors confirmed that those concerns were valid."

Connaughton briefed Republican senators about the audit - conducted by Cherry, Bekaert and Holland - at their annual retreat last weekend in Williamsburg, Sen. Emmett W. Hanger Jr. (Augusta) said.

McDonnell, Connaughton and VDOT Commissioner Gregory A. Whirley will announce the results of the audit at an afternoon news conference at the state Capitol.

Democrats are expected to immediately counter that the money could not be used because state law prevents officials from spending the funds until they are pooled from all revenue sources. The funds are in accounts used by localities to pay for transportation projects, the sources said.

Soon after his inauguration in January, McDonnell called for four audits of VDOT, an agency that in the past three decades has undergone more than 50 audits. The four audits were expected to cost no more than $500,000.

In May, the first audit dealing with public-private partnerships recommended that the state create a government office solely with those types of deals. Last month, the second audit of the Virginia Transportation Research Council - which works with the University of Virginia and the Virginia Tech Transportation Institute to research, test and implement transportation improvements - found that more needs to be done to determine whether its findings are being implemented.

Staff writer Rosalind S. Helderman contributed to this report.

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