Auditor urges more oversight, better forecasting at DOT

Wood presented her recent audit of DOT's cash-flow management to the Senate Transportation committee. It found the agency had overspent its 2019 budget by $742 million, or about 13 percent of its $5.9 billion budget, due to several problems that have persisted for more than a decade.

Instead of basing its spending plan on project-specific cost estimates, Wood said, the agency uses prior-year spending. That forecasting method doesn't account for cost increases or for years when there are more projects in the works.

The agency portions out the money at the beginning of the year to the 14 regional divisions, she said, but has been lax in following up to monitor divisions' spending rate and compliance with the overall spending plan. That's the responsibility of the chief engineer and chief operating officer, she said.

Additionally, Wood said, the agency has been under-budgeting for natural disasters since at least 2014 and has failed to scale back planned spending when natural disasters cause cash-flow problems.

Some Republicans on the committee asked about Gov. Roy Cooper's potential involvement in or knowledge of the problems at DOT, but Wood said she had no knowledge or evidence that Cooper had either of those.

Asked how long the problems had persisted, Wood answered, "Since I’ve been state auditor. That would be three governors now, three administrations."

"I’m going to say this about all three governors: None of us are any better than the secretaries we depend on and we trust to do the right thing," she said. "The secretary is where the buck should stop in any agency, including my own."

Wood said another problem is the complexity of the funding mechanisms the DOT uses to pay for projects, seeking advance authorization for federal dollars, using GARVEE bonds and regularly borrowing against the next year's funding.

That advance construction fund is about $4.8 billion, she said, but no one at the agency could give her a detailed accounting of what dollars were earmarked for what projects. She urged lawmakers to require DOT to supply an explanation.

"I'm not questioning the advantage of advance construction," Wood told lawmakers. "What I'm questioning is that you can't give me a detailed explanation of what’s in that number and how much is really spent. How much is GARVEE bonds? How much is committed to multi-year contracts?

"That is just a black hole we don’t have any details on," she added.

"That has to stop," said committee Co-chairman Sen. Tom McInnis, R-Richmond. "We have to know where we are."

Co-chairman Sen. Jim Davis, R-Macon, said he’s committed to coming up with a bipartisan bill that will start fixing the problems, beginning with more oversight of the DOT's spending plans.

"People need to be held accountable, but our ultimate goal is to address the issue," Davis told reporters after the 90-minute meeting.

The DOT is scheduled to appear at the committee next week to present its response to the audit, but Wood said Wednesday that recently-appointed DOT Secretary Eric Boyette reviewed and agreed with all of the findings and is already taking corrective measures.

"He had no pushback, none at all," Wood told the committee.