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To better understand the particulars of the private VDOT audit and its significance, I highly recommend reading the newsletter released yesterday by Senator Mark Obenshain’s (R-26, Harrisonburg), one of the General Assembly government reform leaders. He breaks it down in layman’s terms and draws a map as to where the dead bodies were buried:

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.

What do property rights and the suddenly found surplus at VDOT have to do with each other? Unfortunately, a lot.

First, a little more detail than yesterday’s post, which was based on early reports. As it turns out, the much asked for (and denied administratively by the previous two governors as well as legislatively by General Assembly tax-and-spenders) private audit of VDOT found more than $500 million buried in a hole or sitting in a closet. That was for only the most recent fiscal year. A cumulative amount, from all sources, including something akin to unused federal funding credits, totals $1.45 billion! The reasons ranged from projects coming in under budget (good) but the unused money not then reallocated to other or new projects (bad), to money stashed away from canceled projects (really bad), and a reserve fund (on top of the “Rainy Day Fund”) that was never used and allowed to accumulate excesses of unneeded cash (incredibly inept).

As I mentioned yesterday, it’s not exactly as easy as 2 + 2 = 4, but that’s exactly why conservatives for years have asked for a private audit. Governor Bob McDonnell administration deserves credit for an excellent first step in VDOT and state government reform. He also has found a way to put much of this money to work within weeks. As the governor said, we’ve been sitting in traffic while the money has been sitting in the state’s wallet — all while General Assembly liberals and former Governor Tim Kaine tried to ram tax increase after tax increase at us for transportation.

That’s unforgivable governance. But what’s worse is the arrogance of VDOT and local governments in opposing one of the most important bills during the 2010 General Assembly — HB 652, patroned by Delegate Ward Armstrong (D-10, Martinsville) — which would have provided property owners a mechanism to get full and just compensation when government took their land through eminent domain. In what can now be exposed as nothing less than despicable, VDOT slapped a speculative $40 million (over five years) Fiscal Impact Statement on the bill. Speculative because there was no fixed cost to the bill, only a legal process to allow property owners a fair shake at compensation.

VDOT, in essence, was admitting that it underpays property owners, never mind the impropriety of a state agency using hard-earned taxpayer dollars to sabotage the rights of those very same taxpayers, by meddling in the legislative process. But that didn’t stop the agency from crying poverty, saying it couldn’t “afford” it, and that it hardly had the money it needed to keep up with basic maintenance. Not ironically, it teamed with those same government-at-all-costs (literally) legislators to kill the bill in the Senate Finance Committee (some of whom had additional nefarious reasons) after it passed the House 98-1. All while hoarding $1.45 billion of taxpayer money.

So, this revelation has several layers of repercussions. Not only has there been mismanagement and an attempt to raise taxes for no reason, certain legislators and government bureaucrats have trampled on constitutional rights and used our tax money to do so. That’s one big intersection of devious interests that VDOT has no business building.