VDOT audit

Will Session End On Time?

When the House of Delegates and Senate passed their respective budgets several days ago, the most glaring difference between the two, as anticipated, was the two chambers' approaches to Medicaid expansion. To wit, Obamacare in Virginia. The Senate included expanding Obamacare in its budget despite agreement last year with the House that the issue would be kept separate from the budget so it wouldn't become a stumbling block to passing a future budget. The agreement consisted of the creation of the Medicaid Innovation and Reform Commission, which has the authority to make recommendations to the General Assembly concerning expansion. Its charter is to formulate necessary reforms for the abuse- and fraud-ridden program that state and federal governments must accept before Medicaid expansion gets anywhere near a floor vote for approval.

MIRC has yet, after almost a year's work, to draft its recommendations for reform. Instead, it continued its efforts for another year. Despite last year's agreement and MIRC's continuation, three Senate Republicans — John WatkinsWalter Stosch and Emmett Hanger — joined all 20 Democrats to passing the Senate budget with Medicaid expansion in it. The Senate and Governor Terry McAuliffe want to backtrack on last year's arrangement and want Obamacare expanded immediately.

To emphasize its position, House Republicans offered a budget floor amendment, modeled after the Senate expansion plan. It promptly went down 67-32. House Republicans have maintained that it would be irresponsible to expand Obamacare because future costs would be so great that it could cripple the state budget.

They also argue that the program is wrought with inefficiency and fraud and have proposed a first-ever outside audit before any expansion can take place. By example, former Governor Tim Kaine refused a VDOT audit for his four years and closed rest stops and other unnecessary cuts. After he left office, the audit House Republicans sought finally took place and revealed more than $1 billion in waste. There's no telling how much waste an audit of Medicaid would uncover since it is much larger than VDOT — about 21 percent of Virginia's budget and growing fast.

Most insiders in Richmond believe that the battle over Obamacare expansion will leave the state without a budget well into spring, if not longer. A new budget must be adopted by June 30 or state government could theoretically "shut down" July 1. Governor McAuliffe has stated that he intends to veto any budget sent to him that does not include Obamcare expansion and willingly shut down state government in order to get his way — not this session's much referenced, bipartisan-and-honor-your-agreements buzz phrase, "Virginia Way." That means police and fire departments without funding, teachers without pay and roads unpaved, among other disruptions.

A few days after the House passed its budget, reports surfaced that that Governor McAuliffe threatened vetoes of legislators' unrelated bills if they didn't go along with expansion,  something his office quickly denied. But delegates took to the floor later to recount the governor's bullying tactics and threats.

The House and Senate remain in conference in an attempt to settle their budget differences. But if conferees cannot come up with a solution before March 8, the General Assembly will have to adjourn without a budget — an unprecedented scenario that is growing more likely by the hour during this last week of session. Also, should a budget not pass, or a budget pass without the continuation of the MIRC, some believe that the governor will unilaterally expand Obamacare. That action could result in litigation, leaving it up to Attorney General Mark Herring to choose sides on the issue.

If it all sounds like Washington style politics and not "The Virginia Way," you're right. It's what many predicted during the campaign if Governor McAuliffe was elected. Be prepared to watch this battle go on well into the spring, and beyond.

Virginia, and "The Virginia Way," isn't for shutdowns. But it may come to that. 

Ask Your Senate Candidates A Question Or Two

With Virginia's crucial state Senate elections fast approaching — primaries are one week from today and the general election is November 8 — candidates will campaign and talk ad nauseam about certain issues. Incumbents will toot their horns about how much money they've saved taxpayers (while simultaneously demanding funding for their pet issues) in stark contrast to the other side's handling of the nation's finances in Washington (the other side, of course, no matter which side it is, always being at fault). So, we have a question or two for you to ask candidates when they talk about how they saved Virginians' tax dollars and how they are so much more responsible than those in Washington. Despite what they would have you believe, many in the General Assembly (especially in the Senate) the last several years have shown no distinguishing characteristics from the big spenders in Washington. You know the types — spend now, tax even quicker and ask never ask questions later.

We all remember former Governor Tim Kaine's campaign promise not to seek a tax increase. In record flip-flop time, he proposed one of the biggest tax increases in Virginia history in his first week into office, ostensibly for transportation improvements. One week! Forget looking into other ways, forget looking at the books, forget taking time to review the best options. Not deterred after the legislation's rebuff, he jumped on board every tax increase bill, most notably ones that emanated from the Senate. They all failed, but he never stopped trying, even as he was turning over the keys to the executive mansion to current Governor Bob McDonnell, proposing a budget that included what would've been the largest tax increase in Virginia history (by raising the income tax, no less).

During Mr Kaine's four years of trying to raise taxes on an already-sputtering economy, conservative spending hawks in the General Assembly asked for an audit of VDOT. If you want to raise taxes for VDOT to spend, shouldn't we see how it spends what it has? But the then-governor and the tax-first, ask- later never spenders, whose reflexive answer to every problem is to tax and spend because government does no wrong with what it already spends, balked. Enter Governor McDonnell and, finally, an audit of VDOT. About 11 months ago, the audit revealed VDOT hoarding $1.45 billion (while refusing to pay just compensation to property owners whose land they confiscate). All that money while Mr. Kaine and numerous members of the Virginia Senate (many listed here) wanted to dip their hands into already-pressed families' wallets for money that wasn't necessary, a situation now mirrored by his former boss, President Obama, and liberals in Washington even as debt and spending have emerged as the biggest non-military crisis to confront us in generations.

So, as they campaign this summer and fall, and things continue to be dicey in the economy, and all blame points to Washington, ask the candidates for the Virginia Senate:

1. How many tax increases "for transportation" did they support the last four years, and

2. Did they support auditing VDOT, while advocating increased taxes on Virginia families at the same time VDOT hoarded $1.45 billion.

If they answer to either is yes, you may want to follow up with a third or fourth: Is that your idea of good fiscal management? and, Why is it you think it's okay to tax hard-working families to feed wasteful government spending?

The fact is, the VDOT audit, although seemingly forgotten already, was one of the biggest single reforms in recent state government memory and serves as a bell-ringing reminder to politicians, in Richmond or Washington, who think increasing already high tax burdens (especially in hard economic times) must be part of a solution to bring budgets into balance. It just isn't so. Cutting spending must always be the first place to look. Not to do so is patently disingenuous and shows no regard for the taxpayers, but instead, homage to the Leviathan state, instead.

Senator Obenshain Breaks Down The VDOT Audit

To better understand the particulars of the private VDOT audit and its significance, I highly recommend reading the newsletter released yesterday by Senator Mark Obenshain's (R-26, Harrisonburg), one of the General Assembly government reform leaders. He breaks it down in layman's terms and draws a map as to where the dead bodies were buried:

According to a comprehensive financial and performance audit conducted by Cherry, Bekaert and Holland, LLP, VDOT is sitting on almost a billion and a half dollars in unexpended funds even as roads went unplowed and bridges unrepaired, the Department pled poverty, and Democrats called for tax increases for transportation. This is completely unacceptable. As Governor McDonnell put it, "Money has been sitting in the state's wallet while Virginians have been sitting in traffic."

How could this happen? In a word, bureaucracy. Or, in two words, fiscal mismanagement.

Every year, roughly $230 million allocated to specific projects is unspent when those projects are canceled or become inactive, but often, rather than using the freed up monies for other transportation projects, the funds just lie in dormant accounts.

Some time back, when the federal government delayed passage of a federal transportation bill, the Commonwealth set aside $524 million as a federal revenue reserve so that all projects would not grind to a halt should federal funding dry up. That may have been a prudent move at the time, but we have a transportation bill now, yet over half a billion dollars remained off limits, essentially forgotten.

Of course, it makes sense to set aside money for a rainy day, which is why Virginia has a separate reserve fund of long standing as well. But whereas most states maintain a sixty day reserve, Virginia's covers five and a half months, and hasn't been touched. That's hard to justify when essential transportation projects are being put on hold. What's a reserve fund for, if not for times like these? Virginia will now be moving into line with other states, drawing down to a sixty day reserve.

Finally, we have at least $400 million in unused toll credits, which is just money going to waste. These toll credits are not cash, but they may be the next best thing. Normally, when the federal government provides transportation funding, Virginia must make a 20% match. These accrued credits, however, can be used instead — and we haven't been doing it. For several years, Virginia has been paying the federal government when it could have been simply cashing in its toll credits.

All told, we're talking about $1.45 billion in money we essentially didn't know we had, in a Department with a $3.3 billion annual budget. That's great news, but the fact that it took an audit to tell VDOT that this money existed and could be redeployed is utterly unacceptable.

Thankfully, the McDonnell administration agrees, and his Secretary of Transportation, Sean Connaughton, is working to implement the fifty recommendations in the newly available audit so that we never have a repeat of this fiscal mismanagement. Full implementation of a remedial action plan is anticipated within forty-five days, and it can't come a moment too soon.

Incredibly, $877 million was left unspent during the last two years, and six months into Fiscal Year 2010, we had only obligated a mere 5% of the federal transportation dollars available to us under the stimulus package, a delay I called inexcusable at the time. And I had no idea — no one did — how far behind we truly were. Like the Governor said, Virginians are sitting in traffic while this money sits in the government's coffers, but that is about to change, and another $800-900 million will be committed to specific projects by the end of the year.