A new audit finds the state Department of Transportation dramatically underestimated the cost of major highway projects by failing to account for inflation and other factors, with costs on 16 projects ballooning by more than $3 billion since lawmakers approved them.
Cost estimates for the projects — some nearly complete, others barely underway — now add up to nearly $5.8 billion. That’s more than double what the department estimated when the projects became law.
The much-anticipated findings, released Thursday by the Legislative Audit Bureau, also say Wisconsin’s highway conditions are deteriorating and compare poorly to neighboring states.
Sharply critical of planning and management at Gov. Scott Walker’s DOT, the findings are the latest blow for an agency that just underwent a management shakeup. They arrive as Walker and lawmakers are ramping up a debate on the state’s next transportation budget, centering on the question of whether more revenue — likely from gas tax or fee increases — are needed.
Minority Democrats and some majority Republicans in the statehouse have said more revenue likely is needed. Their opponents, including Walker and some GOP lawmakers, have said the DOT must find cost savings and scale back projects.
Both sides cited parts of the audit Thursday to bolster their cause. Walker spokesman Tom Evenson reiterated that the governor remains resistant to raising the gas tax, an issue on which he has clashed with Assembly Republicans.
“The bottom line is we shouldn’t even be thinking about raising the gas tax or fees until we find every last cost savings at the DOT, and the audit shows we can find more savings,” Evenson said.
Assembly Speaker Robin Vos said the audit shows “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,” said Vos, R-Rochester.
Sen. Rob Cowles, co-chairman of the Legislature’s Joint Audit Committee, called the findings “unacceptable.”
In an interview, Cowles, R-Green Bay, said the results make him less likely to support an increase in transportation revenue before the agency tightens up its practices.
“If (estimates) had been done correctly up front, not as many projects would have been approved by the Legislature,” Cowles said.
The huge increases in project costs are due to the department not sufficiently planning for inflation and “unexpected cost increases,” the audit found. As a result, it says the department budgeted more work than it could complete.
The findings mean lawmakers may need to approve fewer projects — and take steps to ensure projects are completed before new ones are approved, said Rep. Samantha Kerkman, R-Salem, co-chairwoman of the audit committee, and Rep. Keith Ripp, R-Lodi, chairman of the Assembly Transportation Committee.
“This is what happens when we delay these projects,” Ripp said. “Let’s not (approve) them until we know the money is there.”
One of the projects, on U.S. Highway 10 in central Wisconsin, was approved in 1989 at a cost of $125 million. Still incomplete, it since has cost nearly 4½ times the initial estimate.
The audit finds a similar pattern with 19 highway projects completed from 2006 through 2015. Their combined cost total is $772.5 million more than what the DOT told lawmakers they would cost when they approved the projects.
Cowles didn’t blame any individual for the problems identified in the audit, saying they may stem from the department’s culture and go back several administrations.
“I think we all have to ask tougher questions,” Cowles said.
The department could take additional steps to find “considerable additional savings” on highway projects, the audit found.
It could have saved $192 million, or an average of $32 million a year, from fiscal year 2009-2010 through fiscal 2014-2015 if costs during the construction phase of state highway projects had not exceeded performance goals.
It also said the department should do more to solicit additional bids for projects, a finding Ripp said he wants to review further. Of 2,247 project contracts reviewed in the audit, 363, or 16.2 percent, saw just one bid submitted.
The audit contains several findings that suggest Wisconsin highways compare poorly with other states, and that highway conditions are getting worse.
The proportion of state highways rated in good condition decreased from 53.5 percent in 2010 to 41.0 percent in 2015 under the department’s rating system, the audit found.
Using a different index employed by the Federal Highway Administration, the audit found 32.2 percent of Wisconsin state highways are in “good” condition — a share far less than any other Midwestern state. The next closest was Iowa, which had 55.3 percent of highways in good condition.
Democrats such as Sen. Jon Erpenbach, D-Middleton, a member of the Legislature’s budget panel, called the audit findings “shocking.”
Erpenbach said lawmakers were not told when they approved the projects that DOT cost estimates failed to account for inflation. He added the findings underscore Walker’s failure to properly fund the state’s roads and bridges.
“Our infrastructure is falling apart before our eyes,” Erpenbach said. “The governor has not come up with a plan.”
Peter Skopec, executive director of the liberal Wisconsin Public Interest Research Group, said the audit also raises the question of whether the state is setting the right priorities for transportation spending. The audit found $521.5 million, or 7.9 percent, of the $6.6 billion construction projects completed under the rehabilitation program from January 2006 through December 2015 involved expansion of the state highway system.
“We’ll never have enough money to do absolutely everything on the state’s wish list, from expanding or rebuilding major highways to fixing local roads or improving transit,” Skopec said. “Budgets are ultimately about making choices, and we’ve chosen to prioritize spending on major highways over other investments over the last few decades, at the expense of other needs.”
The DOT recently got new leadership after former Secretary Mark Gottlieb resigned. Its new secretary, Dave Ross, said in a statement Thursday that he welcomes the audit findings as “a road map to improved efficiency and transparency at the DOT.”
“As the new secretary, I couldn’t ask for more timely help,” Ross said.Looking at local highways
A state audit released Thursday scrutinized highway projects throughout the state, finding many have vastly exceeded original cost estimates. Here are the ongoing Dane County projects included in the audit:
Project Year approved Original estimate Current estimate
U.S. Interstate 39/90 Expansion, Madison area to Illinois line 2011 $715 million $1.2 billion
U.S. Highway 18/151-Verona Road Expansion 2011 $150 million $283.3 million
U.S. Highway 12 Expansion, Sauk City to Middleton 1993 $51 million $140.4 million