Link to article here. Link to Express-News blog with more here.

TxDOT error causes $1.1 billion blunder
By Janet Elliott
Houston Chronicle
08/29/2008

AUSTIN — Poor internal communication and complicated procedures caused a $1.1 billion blunder that forced Texas transportation officials to pull back on construction projects earlier this year, according to an audit released Thursday.

Texas Department of Transportation officials actually discovered the accounting error six months earlier, the report said.

The accounting error occurred when bond proceeds were counted twice when the department developed the fiscal year 2008 contract award schedule. As a result, $4.2 billion in planned projects was reduced to $3.1 billion.

This resulted in a reduction of $71.5 million worth of construction and maintenance in the San Antonio region and a $161 million deduction in the Houston area. Auditors faulted department officials for failing to immediately communicate the error to the Texas Transportation Commission, lawmakers and the public.

“Although the department asserts it briefed all commission members individually, no briefing documents, specific dates or calendars were provided to auditors to verify these briefings,” the report said.

Auditors recommended that TxDOT develop a formal process for reviewing money available for projects, keep commission members informed in open meetings, post updates on the agency's Web site and alert legislators when funding in their areas change.

The department said it was already making changes suggested in the report.

“I am committed to increasing the department's transparency, and the recommendations identified in this audit put us another step closer to realizing that goal,” said Amadeo Saenz, TxDOT executive director, in a statement on the agency's Web site.

The report comes amid a backdrop of legislative distrust about the department's financial projections as TxDOT turns to privately financed toll roads to meet future transportation needs.

The department has projected a $3.6 billion shortfall by 2015 and said that increased maintenance needs will leave little for new construction.

Lt. Gov. David Dewhurst, who along with House Speaker Tom Craddick asked for the audit, said in a written statement that the report confirms his arguments that the agency needs to be more transparent and make wiser use of its resources.

“The people of Texas deserve a world-class transportation system,” Dewhurst said. “I'm hopeful this report, along with recommendations made by the Sunset Commission, will provide the Legislature with a good roadmap for making immediate and long-term improvements to our transportation system.”

A legislator who has been critical of TxDOT welcomed the details contained in the audit.

“However, I must admit I am dismayed to learn that there were persons in the department who became aware of this error as early as September 2007, and yet it was not brought to the Legislature's attention until early this year,” said Rep. Ruth Jones McClendon, D-San Antonio, in a written comment.

McClendon sits on the Sunset Advisory Commission, which is conducting a periodic review of the department's operations. A staff report recommended replacing the five-member commission with a single commissioner.

Other proposed changes include increasing legislative oversight through a new House-Senate committee; making TxDOT's transportation planning and project development more open and easily understood; enhancing chances for public involvement; and improving TxDOT's contract management.