Transportation InfrastructureA Problem In Search of Principles

Presented to

Southeastern Association of State Highway and Transportation Officials (SASHTO)

Presented by

Bradley L. MalloryPresident 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 Funding No Silver Bullets

Tax-Driven Base Unsustainable

Indirect User Fee System Weak

VMT Fee System Consensus

Financing Approaches Unsuitable

Quantifying the National Infrastructure ProblemInfrastructure Type Condition Comments

Airports D Long overdue modernization Increased delays and inadequate support infrastructure

Bridges C 1 in 4 of America’s bridges are either structurally deficient or functionally obsolete

Dams DDrinking Water D

Energy D+Hazardous Waste D

Inland Waterways DLevees D

Public Parks & Recreation CRail C Rail offers the highest return on investment with the lowest environmental impact

But, $200 billion is needed to facilitate the anticipated growth through 2035

Roads D One-third of America’s roads are in poor to mediocre condition $186 billion is needed annually to substantially improve road conditions

Schools DSolid Waste C+

Transit D Use of transit infrastructure increased 25% between 1995 and 2005 $21.6 billion to substantially improve transit infrastructure to meet growing demand

Wastewater D

Source: ASCE Infrastructure Report Card (2009)

Quantifying the National Infrastructure Problem

America’s Infrastructure G.P.A. DEstimated 5-Year Investment Need $2.2 trillion

Estimated Actual Spending $903 billionAmerican 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 Taxes must be raised Taxes must be raised

Understanding the Nature of the Problem

Emotionally Charged Issues

Agree on Principles

Let the Process Work

1st Principle

Maintenance First …

But Not “Maintenance Only”

2nd Principle

User Fees Plus …

Use All the Tools Available

WVVA

NC

SC

GA

FL

KY

TN

AR

LA

MS AL

PR

3rd Principle

Market Discipline …

“Skin in the Game”

4th Principle

Shared Decision Making …

Effectiveness, Not Efficiency

5th Principle

Sustainability …

Engineering, Not Social Engineering

6th Principle

2004 2005 2006 2007 2008 2020

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 InfrastructureA Problem In Search of Principles

Presented to

Southeastern Association of State Highway and Transportation Officials (SASHTO)

Presented by

Bradley L. MalloryPresident and Chief Executive Officer

Michael Baker Corporation

September 1, 2009