Old money discovered anew

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By Landmark News Service

Ten years ago, the Virginia Department of Transportation was on a reckless spending spree, delaying payments on completed projects in order to start new ones. More than 160 projects had to be canceled to restore financial sanity.
A new audit initiated by Gov. Bob McDonnell revealed last month that the pendulum has swung too far in the opposite direction.
Today’s VDOT is paralyzed by bureaucratic rules intended to improve accountability that instead have resulted in hundreds of millions of dollars sitting unused in more than 25 separate financial accounts.
State leaders have a duty to be good stewards of the taxpayers’ money and avoid excessive risk.
But the old adage “nothing ventured, nothing gained” is a reminder that excessive caution also carries a price in missed opportunities.
In VDOT’s case, the agency hoarded maintenance dollars that should have been used this spring and summer to hire road builders when the recession had forced them to offer their services at discount prices.
McDonnell is smart to get available dollars in circulation as quickly as possible. But he must also avoid the impulse to burn through every dollar in VDOT’s reserves without concern for the future.
The audit is a call for moderation, not an excuse for allowing the pendulum to sweep back into another careless spending spree.
The most jarring discovery from the audit concerns the state’s maintenance fund. Those dollars are intended to be disbursed rapidly to repaving projects and other upkeep needs. But during Gov. Tim Kaine’s administration, the funds languished for months at a time.
VDOT ended its most recent budget year in June with $529 million unspent in its maintenance account. During former Gov. Mark Warner’s term, the carry-over amount remained below $40 million annually.
The backlog is the result of a policy adopted by former VDOT Commissioner David Ekern that required maintenance contracts to jump through bureaucratic hoops similar to those for larger construction projects.
The policy began when the state was forced to start using federal dollars for maintenance, a decision that triggered more regulations. But Ekern imposed the new rules on state-funded maintenance, too, adding time and complexity to the most mundane patchwork.
As gas tax revenues continued to plummet, Ekern began a series of layoffs intended to reduce his workforce by a thousand people, to 7,500. Haphazard implementation left him with fewer than 6,900 workers, but he failed to ratchet back the new regulations. The backlog of dollars swelled.
VDOT’s staff was consumed with claiming every federal transportation dollar the state was eligible to receive, but the agency did not have the manpower to spend it.
While maintenance demands a new approach, McDonnell must be more cautious in drawing down reserves in VDOT’s separate construction account. The audit recommends a reduction from $478 million to $250 million, but that may not be realistic.
After the administration of former Gov. Jim Gilmore drained reserves to $17 million and postponed payments on long-finished projects to mask VDOT’s insolvency, legislators ordered the agency to pay off all projects within a year of completion. As a result, construction reserves have held steady around $500 million for the past seven years.
More troubling is McDonnell’s plan to end VDOT’s practice of earmarking $80 million to $90 million annually as emergency funds in case Congress fails to approve the federal transportation budget.
The audit recommends reducing that amount but acknowledges that some safeguards may be needed because of continued uncertainty over federal road aid.
However, the governor has proposed to spend the entire cushion of $524 million built into VDOT’s six-year road plan. That may be unwise, especially if McDonnell continues to push for more borrowing to pay for roads.
It’s important to remember that none of the $1.5 billion McDonnell’s audit uncovered is new. The money was there all along; it simply wasn’t being turned into asphalt, concrete and steel as expeditiously as it should have been.
The governor deserves credit for putting those dollars to work for Virginia. But even his top lieutenants admit the state faces $18.7 billion in transportation needs over the next decade. This money will make some difference.
But McDonnell’s constituents are still waiting for him to come up with a realistic plan to address the enormous challenge that remains.

A Landmark News Service editorial.