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Officials from the state Department of Transportation faced questions from lawmakers on Tuesday in light of a critical audit that found the agency significantly underestimated the costs of ongoing and completed major highway projects.

Officials from the state Department of Transportation faced questions from lawmakers on Tuesday in light of a critical audit that found the agency significantly underestimated the costs of ongoing and completed major highway projects.

The DOT underestimated cost estimates for 16 ongoing major highway projects by a total of about $3.1 billion and did not adequately account for the extent to which inflation and unexpected expenses could contribute to cost increases, the audit, released last month, found. Costs for 19 completed projects exceeded estimates by $772.5 million.

"This is a very consequential audit that points out a number of problems within the agency," said legislative audit committee co-chairman Sen. Robert Cowles, R-Green Bay.

DOT Secretary Dave Ross told the Joint Legislative Audit Committee the agency will implement "all of the recommendations" included in the report.

"We must work to restore the public’s faith and trust in our ability to manage resources and deliver a safe, effective and efficient program," Ross said.

Lawmakers on the committee introduced a proposal on Tuesday that would require DOT officials to account for all costs associated with a project, including inflation, and update the estimate annually. Lawmakers would be updated on any changes in the yearly estimate. 

"We have protections to prevent us from being here," said Rep. Melissa Sargent, D-Madison, of the audit. "So how did we get here, and by providing new legislation, does that actually prevent us from getting here again?"

The hearing comes amid an ongoing debate among lawmakers and Gov. Scott Walker over how to address a projected $1 billion shortfall in the state's transportation fund.

Joint Finance Committee co-chairman Rep. John Nygren, R-Marinette, called the audit the "tip of the spear" on the ongoing discussion.

"It’ll be used not only to potentially make some reforms, but it will also be used as we deliberate the biennial budget coming up," Nygren said.

Walker's proposed budget allocates about $6.1 billion for transportation funding, including a $40 million increase in general transportation aids to counties and municipalities.

The governor's budget includes $500 million in borrowing, which would be the state's lowest level of transportation bonding since the 2001-03 budget.

It would also authorize a permanent annual transfer of excess revenue from the state's petroleum inspection fee, which is expected to direct about $431 million into the transportation fund and help reduce the state's debt service over an eight-year period, according to the governor's office.

Walker has repeatedly pledged to veto any budget that includes a gas tax or vehicle registration fee increase without a corresponding decrease elsewhere, but some Assembly Republicans say the state should be open to all possible funding options, including a gas tax increase, vehicle registration fee increase or implementing tolls.

The audit found expenditures on state highways increased from $739.7 million to $2.1 billion from fiscal year 1996-97 to fiscal year 2015-16. In addition, the percentage of the state's 11,758 miles of state highways rated in good condition declined from 53.5 percent in 2010 to 41 percent in 2015.

The department could have saved millions of dollars by keeping down engineering costs and soliciting more bids for projects, the audit found.

"My takeaway is this is a management issue," said Joint Finance Committee co-chairwoman Sen. Alberta Darling, R-River Hills. "We can put everything in statutes, but if they’re not abiding by these statutes nothing is going to change."

Darling suggested bringing someone in from outside the agency to change management practices.

"The only way to change this is to change the way they do business," Darling said.

Ross said he agreed with Darling's assessment.

"We need to change the culture at DOT," he said. "We need to become more performance driven. We need to become more accurate."

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