Audit Blasts Wisconsin DOT for Nearly $800 Million in Cost Overruns

MADISON, WI — Citing a "devastating" audit of Wisconsin's Department of Transportation, state officials are also taking aim at the DOT for cost overruns of nearly $800 million at a time when the state faces an approximately $1.3 billion transportation budget shortfall.

According to the audit released Thursday, the DOT budgeted to complete more major highway project work than could be completed with available funding because it did not sufficiently take into account the effects of inflation and unexpected cost increases.

Those unexpected cost increases contributed approximately $772 million more than initially projected, the audit has found.

The audit bureau determined that the DOT could take additional steps to control program costs, including by consistently using its performance measures to manage and improve its operations.

Related Reading

• Highlights from the audit
• REPORT: As Local Roads Crumble, State Transportation Borrowing 'No Longer an Option'
• Delays and Broken Promises: Scott Walker Budget Proposal Pushes Racine County I-94 Project Back ... Again

State Politicians Blast DOT

State Sen. Rob Cowles, co-chair of the Legislative Audit Committee, said that the audit “will be devastating to the management of DOT.”

Republican State Sen. Dewey Stroebel (R-Cedarburg) sees the audit as the opportunity to write the DOT's wrongs - without raising taxes.

"The audit, as expected, outlined numerous possibilities for the legislature to act to ensure the Wisconsin DOT runs efficiently. We know projects are coming in way over budget. This is not acceptable," Stroebel said in a prepared statement. "It is not the time to raise the gas tax or transportation fees – especially before any of these efficiencies and concerns have been addressed."

Speaker Robin Vos (R-Rochester) blasted the DOT upon the publishing of the Legislative Audit Bureau's findings.

“The legislative audit is yet another independent report that illustrates construction delays are driving up costs unnecessarily, our road conditions are only getting worse and a long-term solution is needed. It’s clear Wisconsin is trying to do too much with too little and taxpayers are not getting their money’s worth," he said in a prepared statement.

Key Findings

The Legislative Audit Bureau summarized their key findings as follows:

• The proportion of state highways rated in good condition decreased steadily from 53.5 percent in 2010 to 41.0 percent in 2015.

• When a major highway project is considered for enumeration, DOT provides the Governor and the Legislature with an estimate of total project costs, but such estimates were incomplete, in part, because they did not take into account that inflation would increase project expenditures over time.

• From enumeration to August 2016, the cost estimates DOT reported for 16 ongoing major highway projects increased by an estimated $3.1 billion.

• DOT budgeted to complete more major highway project work than could be completed with its available funding because it did not sufficiently take into account the extent to which project expenditures increased over time as a result of inflation and unexpected cost increases.

• DOT has not changed the proportion of funds allocated among its five regions to complete certain rehabilitation projects since 2006, did not fully comply with administrative rules for selecting projects, and did not document why it selected particular projects to construct over other potential projects.

• From FY 2006-07 through FY 2014-15, work completed by DOT staff declined from 46.4 percent to 33.4 percent of total design engineering expenditures and from 37.6 percent to 32.4 percent of total construction engineering expenditures.

• DOT generally had effective oversight of the processes for soliciting bids and awarding construction contracts and took steps to control construction costs, but it could take additional steps.

• DOT potentially could achieve considerable additional savings if it met its performance measure goals. DOT has established performance measure goals to improve its management of the state highway program. However, DOT is not consistently using them to manage and improve its operations.

Governor Addresses Transportation Shortfall

As local representatives vent their frustration over delayed infrastructure projects in their areas, Gov. Scott Walker is proposing to address an approximately $1.3 billion shortfall in State road funding by borrowing $500 million while making cuts, and delaying major projects in southeastern Wisconsin.

According to a news release issued by the Governor's office Thursday morning, here are 5 key takeaways from Walker's transportation budget proposal:

1. More transportation funding for all levels of local government. Local governments will receive a $65 million increase in aid.
2. No tax or fee increases. For decades, Wisconsin’s gas tax has been among the highest in the nation and is currently among the top 10 states in the nation for the highest gas excise tax. Governor Walker made it clear in the 2014 campaign that he would not support a tax or fee increase without a corresponding decrease in other state taxes.
3. $1.7 billion in funding for the State Highway Rehabilitation Program. This would be the largest level of funding for the program in history.
4. Commitment to traffic safety and maintenance. $605 million in total funding is proposed for county and statewide efforts to maintain our roads and improve safety.
5. The lowest level of borrowing since the 2001 – 2003 state budget. This budget will include $500 million in bonding for the Department of Transportation, which is a significant 41% reduction in borrowing from the last budget and it maintains the state’s responsible long-term debt level.

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