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VDOT audit reveals 2 huge pots of gold

By Anita Kumar
Washington Post Staff Writer
Thursday, September 23, 2010; 10:36 PM

RICHMOND - Gov. Robert F. McDonnell announced Thursday that he will spend almost $1.5 billion on transportation improvements over the next six years after a new audit of the Virginia Department of Transportation found that hundreds of millions of dollars have been sitting unspent in various accounts for several years.

The bulk of the money comes from two sources: About $400 million had accumulated in construction and maintenance accounts while an additional $654 million in federal money was never allocated to any projects, the audit showed.

"I'd say there has been money sitting in accounts while people have been sitting in traffic," McDonnell said at a news conference at the state Capitol. "And that's unacceptable."

McDonnell (R) repeatedly blamed former governor Timothy M. Kaine (D) and his administration for unnecessarily holding on to reserve money when they did not have to and for not spending money quickly enough.

"There was some change in philosophy and policy in the previous administration going back to 2006-07 that has resulted in some of these monies now sitting in places that they shouldn't have been, and some federal options that should have been exercised that weren't," he said.

Lt. Gov. Bill Bolling (R) , who joined McDonnell at the news conference, criticized Kaine for closing rest stops and trying to raise taxes while money was available to spend. Kaine had closed 19 of 42 rest stops to save $9 million annually.

"This money was sitting idly by, not being used properly. That simply doesn't make sense,'' he said. "That money is now out the door working for the people of Virginia."

McDonnell, who has pledged to find money for transportation without raising taxes, also hopes to receive $458 million from privatizing the state's liquor stores. He expects to call legislators back for a special session in November.

Kaine, now chairman of the Democratic National Committee, issued a rare statement defending his performance as governor, saying he led the state during the toughest economic downturn in a generation.

"When the McDonnell administration went to market this past May to sell transportation bonds, they bragged about the smart fiscal management at VDOT,'' he said. "The nation's top bonding agencies studied the agency's performance and agreed, rating the VDOT bonds a strong AA credit."

The 150-page audit, released Thursday afternoon, makes more than 50 recommendations to solve such problems as taking months to hire consultants and poor communication between agency offices. The state will begin to make the changes in the next 45 days.

The audit did not show any fraud. McDonnell said the state fired a manager at the transportation agency (but would not name the employee) and demoted a "couple people." VDOT Commissioner Gregory A. Whirley, a longtime VDOT employee who served during the Kaine administration, was praised by McDonnell.

The audit recommends converting $400 million in credits that it receives from the federal government for maintaining toll roads into money it can use as state matches for federal projects. That will free up state money for other projects.

The state also will stop keeping 10 percent of the federal transportation money it receives each year in reserve and will keep only a 60-day state reserve for construction money.

McDonnell called the state's reserve policy "unrealistic" and "unacceptable" and noted that it has far higher reserve limits than other states require.

But Democratic legislators said Thursday that the new proposed reserve amounts are way too low. "We are really cutting it close to only go back to 60 days of reserves,'' said Del. Vivian E. Watts (D-Fairfax), a former transportation secretary.

Transportation Secretary Sean T. Connaughton said state officials will decide what the money will be spent on within the next 45 days, but the money could be put toward any one of a large number of planned maintenance projects in Northern Virginia. Those include improvements on I-66 and I-95 and bike trails.

Senate Majority Leader Richard L. Saslaw (D-Fairfax) said the transportation agency is coping with the loss of more than 1,000 employees through the years and the challenges of allocating federal stimulus dollars.

"While no one wants to see funds lying unused," Saslaw said, "I appreciate that the VDOT management employed a cautious approach during a period of great financial uncertainty and did not over-obligate funds."

An additional $100 million is in accounts used by localities, primarily in Hampton Roads, to pay for transportation projects. State officials are pushing local officials to spend that money, but Democrats argue that the money could not be used because a 2005 state law prevents officials from spending the funds until they are pooled from all revenue sources.

Bob Chase, executive director of the Northern Virginia Transportation Alliance, a business-supported group that lobbies for transportation funding, said he welcomed news that more money will be going toward new construction and maintenance projects but that the General Assembly still needs to approve new long-term investments in transportation. Virginia's transportation needs equal $18.7 billion over 10 years, according to the transportation secretary's office.

The four-month audit, conducted by Cherry, Bekaert and Holland of Richmond, cost $424,000.

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.

In May, the first audit, of public-private partnerships, recommended that the state create a government office solely dealing 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. A fourth audit will be released later this year.

House Speaker William J. Howell (R-Stafford) said the audit showed "gross inefficiencies."

"Allowing for the immediate obligation of over $1.4 billion for transportation projects across Virginia will mean more bang for taxpayer bucks, more relief for congestion-weary drivers and more jobs and economic opportunities,'' he said.

kumaranita@washpost.com Staff writer Rosalind S. Helderman contributed to this report.

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