State DOT Vastly Underestimated Project Costs, Audit Finds

An audit of the Wisconsin Department of Transportation released Thursday found 16 ongoing major highway projects have increased in cost by about $3 billion since they were approved by the state Legislature.

The report, written by the nonpartisan Legislative Audit Bureau, also found 19 major highway projects completed from 2006 through 2015 cost about $1.5 billion, an increase of $772.5 million from the department’s estimates when the projects were approved.

The cost overages occurred because the department failed to account for inflation in its project cost estimates, according to the audit.

“The Legislative Audit Bureau report provides a roadmap to improved efficiency and transparency at the DOT,” said Dave Ross, secretary of the state Department of Transportation, in a prepared statement. “As the new secretary, I couldn’t ask for more timely help.”

The audit comes less than two weeks before Gov. Scott Walker is expected to present his 2017-2019 biennial budget proposal, kicking off months of intense budget deliberations in the state Capitol.

In addition to outlining the department’s failure to account for inflation in its project cost estimates, the audit found the department has not complied with its own administrative rules for selecting construction projects or documented project selection rationale.

The department could have saved $6.6 million between 2005 and 2015 if regions followed thresholds outlined in the DOT’s performance measures, according to the audit.

The audit also outlined a savings of $53.1 million from 2006 to 2015 if the DOT had met its own quarterly goals for soliciting bids on construction contracts and $191.9 million if it had not exceeded its annual performance measure goals during the construction phase of state highway projects from 2009 through 2015.

The audit includes several recommendations for changes to the DOT’s fund management, project planning and highway maintenance.

Those recommendations include changing how the department calculates costs for work completed by state workers, rather than contractors. The audit also recommends the department maintain a database that tracks why and how much projects go over their estimated cost.

The audit also outlines possible legislative action to change department practices.

Sen. Robert Cowles, R-Green Bay, said legislation may go through the Joint Legislative Audit Committee, which he co-chairs with Rep. Samantha Kerkman, R-Salem.

“It’s a powerful audit, you could say it’s devastating because it shows that we haven’t done a good job, the agency has done a poor job of estimating costs,” Cowles said.

Cowles said he hopes a hearing on the audit’s findings is scheduled soon.

Many legislators weighed in on the findings Thursday, including state Assembly Speaker Robin Vos, R-Rochester, and Senate Majority Leader Scott Fitzgerald, R-Juneau.

“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,” Vos said in a statement. “It’s clear Wisconsin is trying to do too much with too little and taxpayers are not getting their money’s worth.”

Fitzgerald said he is “hopeful” the audit will be utilized during the upcoming budget negotiations.

“I look forward to reviewing the recommendations for legislative actions that will help ensure greater accountability and efficiency moving forward,” he said.

Assembly Democratic Minority Leader Peter Barca, D-Kenosha, said the Republican majority is to blame for the infrastructure challenges facing the state.

“The GOP has let the taxpayers of Wisconsin down,” Barca said in a statement. “We are in a crisis state, and we need to take immediate action.”

Senate Minority Leader Jennifer Shilling, D-La Crosse, echoed those sentiments.

“Instead of solutions, Gov. Walker and Legislative Republicans have created a crisis that is jeopardizing thousands of jobs and putting the safety of Wisconsin drivers at risk,” she said.

The state Department of Transportation budget has been a hot topic in recent months, as a memo from the nonpartisan Legislative Fiscal Bureau released last July estimated the department could face a nearly $1 billion shortfall in the next state budget, if funding remains the same.

Some members of the Republican majority in the Capitol, including Vos and Joint Finance Committee Co-Chair Rep. John Nygren, R-Marinette, have advocated for the consideration of a gas tax or vehicle registration fee to close that gap.

Walker, however, opposes any tax or fee increase without a corresponding cut elsewhere in the budget.

“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,” said Tom Evenson, spokesman for the governor, Thursday. “We welcome the opportunity to deliver services taxpayers expect at a price they can afford.”

Revenue estimates released last week showed the state bringing in more money through mid-2019 than initially estimated, which has spurred talk among Republican legislators of a $300 million tax cut and corresponding increase to pay for road projects.

Walker will introduce his budget proposal, which will include his proposals for the state Department of Transportation, on Wednesday, Feb. 8.

Editor’s Note: This story has been updated to include comments from lawmakers. It was last updated at 5:25 p.m. Thursday, Jan. 26.