Guest Commentary

By State Reps. Roger Roy and Bill Oberle
Special to the Coastal Point

Recent reports that have appeared in the Delaware media often including comments from DelDOT Secretary Nathan Hayward, indicated that state lawmakers knew of the impending shortfall and did nothing to prevent it. This is inaccurate. Legislators, including ourselves, were not aware that we were going to need to make some changes to the Transportation Trust Fund (TTF) until 2005 when Secretary Hayward indicated there was a shortfall.

The TTF is funded with a mix of transportation-related fees and taxes and is earmarked to pay for road projects. In the early ’90’s, when the state operating budget was tight and the TTF was flush with cash, past administrations began moving transportation-related operational expenses — like the salaries for DelDOT employees — over to the TTF.

By the end of this process the operational budgets of the Delaware Transit Corporation and the Division of Motor Vehicles were also being paid for with TTF money. Some fees and tolls were increased and other revenues were transferred to the TTF to compensate for the additional burden placed on it.

In the mid ’90’s, legislators again raised fees and tolls, when asked by the administration, in order to keep the TTF whole. Aside from a recent increase in the tolls on I-95 implemented by Secretary Hayward, the taxes and fees supporting TTF have not been raised in nearly a decade, nor have we ever been asked to raise them.

While it was recognized that eventually some increases were going to be needed, the extreme shortfall was a surprise.

What many people do not realize is that DelDOT is a state agency unlike any other. The department’s multi-year capital spending plans maintain a separate accounting system to track its transportation projects. After crafting this six-year package, DelDOT presents it to state officials and lawmakers as a fully-formed, sustainable financial plan.

It has been long-standing practice to finance Delaware’s road projects with a 50-50 mix of cash and borrowed money (bonds). This sound and prudent device is designed to ensure that the state does not run up a burdensome debt. It has also been one of the reasons the state’s bond ratings are among the highest in the nation, costing us less to borrow money and saving taxpayers millions of dollars.

The 50-50 practice has also been useful in reining-in DelDOT. With a limited amount of cash to dedicate to road projects in any given year, the amount of money the agency could borrow was also limited.

This gave DelDOT fixed budgetary boundaries that they are supposed to live within. It is the secretary’s job, in consultation with the governor and the General Assembly, to choose the nature and scope of the projects to be included in the department’s capital spending plan.

The legislature has traditionally given DelDOT a great deal of freedom to use its expertise in making these difficult choices. They have been trusted to do the right thing and this trust has usually not been misplaced.

Until early this past spring, the state’s transportation plan appeared to be sound. DelDOT officials made numerous presentations of their six-year construction plan and repeatedly told both the governor’s budget staffers and state lawmakers that they had sufficient funding to build the planned projects using the 50-50 cash/borrowing formula.

During this period, DelDOT Secretary Nathan Hayward never indicated there was a need for additional revenue.

As the state budget planning process for Fiscal 2006 moved forward, cracks began to appear in DelDOT’s plan and agency officials began hedging. By late spring, the department’s top officials were telling us that $200 million of transportation projects that had previously been authorized could not be included in the upcoming budget. This was a drastic shift and astonished everyone outside the agency.

At the time, DelDOT officials could not even tell us how much additional money they would need to build all the planned projects on their waiting list. It took executive and legislative fiscal staff months to wade through DelDOT’s data to determine that the agency needed $2.7 billion beyond its expected revenue to complete the projects already authorized in its capital plan.

In a recent issue of The News Journal, Secretary Hayward claimed that lawmakers refused to raise many of the taxes and fees that support the TTF. This distortion is an apparent attempt by Secreary Hayward to shift blame for the mismanagement of transportation project spending to the General Assembly.

State lawmakers have never failed to respond when DelDOT has said it needed additional funding. In this case, lawmakers didn’t act because Secretary Hayward never sounded the alarm.

Secretary Hayward is correct when he says the state is rapidly developing and that this growth has put more pressure on the agency. However, this doesn’t excuse DelDOT’s huge project backlog. Part of DelDOT’s mission is managing growth, and that responsibility starts and ends in the secretary’s office.

We believe that part of the reason for DelDOT’s current woes is its reliance on consultants. By their own estimates, the agency spent approximately $94 million in Fiscal 2005 on transportation consultants, employing 929 contract workers.

These skilled specialists are responsible for a variety of functions, including project planning and design. Often, consultants are used to conduct workshops and hold meetings to determine what project options are most favored by the public. The downside is that as outside vendors, they have little vested interest in selecting the most cost-effective project.

The Indian River Inlet Bridge is an example of this process, which led DelDOT to select that most expensive option to replace the existing span. While visually striking, the replacement bridge would have been the first of its kind in the U.S. and the longest of its type in the world.

DelDOT was forced to re-examine the project when it became apparent that only one company was willing to tackle the cutting-edge design and that their bid was going to come in at approximately $200 million — $80 million more than original estimates.

Another aspect of the problem is that in recent years DelDOT has developed a “culture of project authorization,” too easily giving major transportation projects approval for construction. The agency needs to do a better job of reviewing and restricting the number and size of the projects it authorizes for building.

Lastly, DelDOT’s accounting and financial planning process has been a “black box” for too long. Had the Controller General’s Office and the Budget Office had access to the agency’s data, red flags might have been raised earlier about the looming problems. Opening DelDOT’s financial information to personnel trained for budgetary oversight can only improve the accuracy of the planning process and increase everyone’s faith in it.

Legislators are not blameless in this. We let DelDOT run itself as it saw fit and were reluctant to alter a system that had worked well for many years. It was a mistake and it needs to be corrected. We need to revamp DelDOT’s project-selection protocols and open the agency up to more oversight and accountability of the planning and financing processes.

We face some tough choices in the upcoming months as we address what projects need to be done and how we’re going to pay for them, but it is an overreaction to say that this situation constitutes a “crisis.” Lost in the news accounts about DelDOT funding is the fact that the current construction budget is $393 million — the same as the previous year.

Our current transportation spending is in the black and while our future obligations may appear daunting, there is no need for panic or rash decisions. We are confident we’ll be able to shape a multi-year plan that we can both afford and which will deal with the most pressing needs of Delaware’s motorists.