Legislative auditor finds Minnesota Department of Transportation should better track costs

A state review released Wednesday found that the Minnesota Department of Transportation (MnDOT) fails to consistently assess whether its funding decisions make good financial sense.
The Office of the Legislative Auditor found there's little evidence the department "systematically analyzes the financial consequences of its decisions." But in other cases, MnDOT has implemented new procedures to better assess the projects it undertakes.
In a detailed response, newly appointed MnDOT Commissioner Margaret Anderson Kelliher said "the report affirms many efforts that MnDOT is working on to improve our abilities to measure and use financial effectiveness in our decisionmaking process."
The topic was chosen a year ago after some legislators questioned whether MnDOT is spending public money in a cost-effective fashion.
The timing of the 68-page report is "serendipitous in a way and very timely because of the debate we're having over the way transportation is funded," said Rep. Rick Hansen, D-South St. Paul, who chairs the Legislative Audit Commission.
Gov. Tim Walz has proposed a budget that calls for a 20-cent-per-gallon increase in the state gas tax, to be phased in over two years, as well as increases in the motor vehicle sales tax and registration tax. All told, those taxes are estimated to generate $11 billion over 10 years to help pay for road, bridge and transit improvements.
But the tax increases face a tough slog at the Capitol as Republicans aim to curb taxes and spending. As the debate heats up this spring, operations at MnDOT will be closely scrutinized.
The review of MnDOT is appropriate because the department's reach is broad and "affects the lives of all Minnesotans," Hansen said. "It's like a performance review."
In fiscal 2018, MnDOT spent just over $2.1 billion building, repairing and maintaining the state highway system. Transportation taxes — including gas, registration and automobile sales taxes — paid for 62 percent of that amount.
Because of its big budget, "it's important that MnDOT use the large sums of money it receives as effectively as possible," the report states.
But the report found some pronounced glitches.
For example, while MnDOT is required by law to report on decisions that saved money, these reports don't identify cost overruns or other unanticipated spending.
In addition, the report notes that MnDOT does not have a complete inventory of all the infrastructure it maintains.
Maintenance decisions tend to be made by district-level staff throughout the state, the report notes, and budgeting has not been tied to performance outcomes. MnDOT has been developing a new database that will help track highway infrastructure beyond roads and bridges, such as retaining walls, overhead signs, lighting and highway ramp meters.