Maryland’s transportation department incorrectly assumed the federal government would reimburse hundreds of millions of dollars’ worth of highway repairs, according to a new audit, potentially leaving the state on the hook to find the money.

The State Highway Administration has $358.7 million worth of expenses listed on the books as coming from federal funds, but that money hasn’t been authorized, according to the report issued Thursday by the Office of Legislative Audits.

Over the past few years, the state has increasingly listed a portion of project costs as being reimbursable by the federal government, auditors found.

State transportation leaders knowingly listed costs as federal funds without assurance the money would come through, the auditors wrote, because they wanted to minimize a deficit in the Transportation Trust Fund, the main state fund for transportation projects.

Transportation leaders objected to some of the auditors’ claims.

“It is not factually accurate to say that projects were not authorized, but it is accurate that in some cases, expenses charged exceeded the authorized amount,” the Maryland Department of Transportation wrote in response to the audit.

The MDOT response said “no expenses were purposefully miscoded.”

The federal government gives initial approval for projects, but sometimes costs increase beyond the authorized amount, MDOT wrote. In those cases, the state will review whether to ask for a modification to seek more federal money or use state funds.

Auditors looked into the issue after receiving a tip on a waste, fraud and abuse hotline but found no evidence of criminal activity.

If the state does not get the federal reimbursement for the nearly $360 million listed on the books, that could present a financial challenge.

The Transportation Trust Fund has been strained as drivers use less gas and pay less in gas taxes, which are the main source of money for the fund.

The state’s General Fund is also under pressure. An ongoing trend of less money coming in than expected led the governor and state lawmakers to close a budget gap this year with a combination of tax and fee increases, and budget cuts.

More sobering financial news came last week, with estimates that the federal tax and policy bill dubbed the One Big Beautiful Bill Act will cause the state government to lose out on a combined $189 million in general fund revenue this year and next.