Transportation Infrastructure A Problem In Search of Principles Presented to Southeastern Association of State Highway and Transportation Officials (SASHTO) Presented by Bradley L. Mallory President and Chief Executive Officer Michael Baker Corporation September 1, 2009

National Surface Transportation Infrastructure Financing Commission “A New Framework for Transportation Finance” Source: National Surface Transportation Infrastructure Financing Commission Insufficient FundingNo Silver Bullets Tax-Driven Base Unsustainable Indirect User Fee System Weak VMT Fee System Consensus Financing Approaches Unsuitable

Quantifying the National Infrastructure Problem Infrastructure TypeConditionComments AirportsD  Long overdue modernization  Increased delays and inadequate support infrastructure BridgesC  1 in 4 of America’s bridges are either structurally deficient or functionally obsolete DamsD Drinking WaterD EnergyD+ Hazardous WasteD Inland WaterwaysD LeveesD Public Parks & RecreationC RailC  Rail offers the highest return on investment with the lowest environmental impact  But, $200 billion is needed to facilitate the anticipated growth through 2035 RoadsD  One-third of America’s roads are in poor to mediocre condition  $186 billion is needed annually to substantially improve road conditions SchoolsD Solid WasteC+ TransitD  Use of transit infrastructure increased 25% between 1995 and 2005  $21.6 billion to substantially improve transit infrastructure to meet growing demand WastewaterD Source: ASCE Infrastructure Report Card (2009)

Quantifying the National Infrastructure Problem America’s Infrastructure G.P.A.D Estimated 5-Year Investment Need$2.2 trillion Estimated Actual Spending$903 billion American Recovery & Reinvestment Act$71.76 billion Five-year Investment Shortfall($1.176 trillion) Source: ASCE Infrastructure Report Card (2009)

SAFETEA-LU  Expires September 30, 2009  Always LATE!!!  Possible 18-month extension  Stimulus supplement not a long-term solution  Leadership is THE issue  Presidents have not mattered  Congress has!

The Realities  Why we have reason to be optimistic …  Strong leadership  Bi-partisan committee  Emerging recognition of the need  Why we should be worried …  Taxes must be raised

Understanding the Nature of the Problem  Emotionally Charged Issues  Agree on Principles  Let the Process Work

1 st Principle Maintenance First … But Not “Maintenance Only”

2 nd Principle User Fees Plus … Use All the Tools Available

WV VA NC SC GA FL KY TN AR LA MSAL PR 3 rd Principle Market Discipline … “Skin in the Game”

4 th Principle Shared Decision Making … Effectiveness, Not Efficiency

5 th Principle Sustainability … Engineering, Not Social Engineering

6 th Principle Do It Now … It Won’t Get Cheaper or Easier “Average costs of highway construction materials: Up 46% Since 2004” Source: AP Report from TRIP (The Road Information Program) Research ?

Conclusion Best Possible Outcomes Understanding the Problem + Applying the Principles + Political Will

Transportation Infrastructure A Problem In Search of Principles Presented to Southeastern Association of State Highway and Transportation Officials (SASHTO) Presented by Bradley L. Mallory President and Chief Executive Officer Michael Baker Corporation September 1, 2009