State road projects cost double estimates
Failure to account for inflation cited as an issue
Madison — The cost of major road projects in Wisconsin doubled between the time they were planned and built, a sweeping audit of the state Department of Transportation revealed Thursday.
It cost $1.5 billion to build 19 major projects between 2006 and 2015 — $772.5 million more than originally estimated, the Legislative Audit Bureau found. Even though the state was spending money on most of these projects for 18 years or more, the DOT didn’t take into account the considerable effects that inflation and changes to project design would have on those costs over time.
Another 16 projects that were ongoing as of August 2016 saw similar spikes in their costs. Originally expected to cost $2.7 billion, they are now slated to come in at $5.8 billion, the audit found.
“They’re not estimating them properly,” state Sen. Rob Cowles (R-Allouez) said on WHBY (1150 AM).
“The Legislature is more likely, along with the governor, to approve (a project) if they are told it’s going to cost much less than it actually does,” said Cowles, the co-chairman of the Legislature’s Joint Audit Committee.
The skyrocketing costs will influence the debate over whether more money should be put toward
roads, giving both sides arguments.
Those seeking more money for roads, including Assembly Speaker Robin Vos (R-Rochester), can point out the audit suggests the shortfall in state transportation funding is more dire than previously thought since costs have essentially been lowballed. Those reluctant to raise taxes for highways, including Gov. Scott Walker, will argue the DOT is not giving lawmakers honest estimates or managing its budget effectively.
“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 a statement from Tom Evenson, a spokesman for Walker. “We welcome the opportunity to deliver services taxpayers expect at a price they can afford.”
But Evenson did not explain why the Republican governor’s DOT had given estimates that were so off base for years.
Even considering the DOT’s current cost estimates, officials face a $1 billion gap over the next two years between the amount of money they expect to take in and the projects that are planned.
Walker has repeatedly said he would not raise the gas tax or vehicle registration fees unless an equivalent cut is made in other taxes.
Vos, the Assembly Republican leader, wants to raise $300 million in new revenue over two years for roads and cut general taxes by that much or more.
“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.
The fight over transportation comes as the Federal Highway Administration has warned Wisconsin officials they should hold off on starting major projects until they complete stalled ones already planned. The state must get approval from the federal agency for many of its projects because it provides about a quarter of its road funding.
While Walker and others see the audit as a sign that more money can be wrung from the DOT, it did not find anywhere close to enough to solve their budget woes. The audit found some waste and opportunities for savings, but a big contributor to errors in the estimates was failing to account for inflation or other unavoidable costs.
“We found that DOT budgeted to complete more major highway project work than could be completed with its available funding,” the auditors wrote. “It did so because it did not sufficiently take into account the effects of inflation and unexpected cost increases on project expenditures.”
Before 2011, the DOT also did not include the cost of engineering and some other costs such as changes to the scope of the project, auditors found.
In some cases, the cost of projects was more than four times as much as their estimates. For instance, Highway 29 between I-94 and Chippewa Falls was estimated to cost $33.4 million in 1991 but wasn’t completed until 2011 at a cost of $147.5 million.
The audit was issued just weeks after Transportation Secretary Mark Gottlieb retired. Walker appointed David Ross to take his place.
“My goal for the DOT is to maximize Wisconsin’s transportation infrastructure without increasing the burden on taxpayers,” Ross said in a statement. “The Legislative Audit Bureau report provides a road map to improved efficiency and transparency at the DOT.”
State Rep. Melissa Sargent (D-Madison), who sits on the audit committee, said: “Republicans can’t keep writing checks our state can’t cash. Wisconsin taxpayers should be outraged at the results of this audit ...”
The auditors found that from 2006 to 2015 the DOT could have saved $290 million, or 3%, on its total spending of $9.6 billion for that period, if the agency had met its own performance goals for tasks such as bid solicitations and controlling costs during construction.
State spending on highways rose steadily for two decades without accounting for inflation but fell last year for the first time over that period.
The bureaucracy at DOT hasn’t risen, at least in terms of its workforce. The 1,546 workers at the DOT today are 8% fewer than in 1996, auditors found.
What has risen is the proportion of overall state highways rated in bad condition. The audit found that the portion of highways in good condition decreased from 53.5% in 2010 to 41% in 2015 and the proportion rated in poor condition increased from 7% in 2010 to 17.5% in 2015.
The state’s most-traveled highways have remained in better condition as the DOT spent more of its rehabilitation money on those roads.