US: The Week in Public Finance: It’s natural disaster season. Can your government afford it?
By Liz Farmer
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But after last year, which was the most expensive year on record for natural disasters, how much more can states really afford?
The answer: Most don’t know.
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The report comes at a time when the federal government is looking at how to manage increasing costs. Nine of the most expensive years for the Federal Emergency Management Agency occurred between 2007 and 2017. While some places are hit more than others, virtually no state escaped a major event around that time. All 50 states and the District of Columbia between 2005 and 2014 experienced disasters severe enough to trigger a federal emergency or major disaster declaration, including floods, hurricanes, wildfires and blizzards. Wyoming had the fewest, with just three declarations, and Oklahoma -- in the heart of tornado alley -- topped the list at 36.
If states don’t have a handle on their disaster spending, says Pew’s Anne Stauffer, they can’t effectively respond to proposed changes at the federal level that could affect their ability to respond to future disasters. “States need to be able to respond and say, ‘This is what we’re doing already,’” she says. “If you take a comprehensive look and realize how expensive theses disasters are becoming, it informs policy discussion about what to do going forward.”
Two key changes are being discussed at the federal level that would directly affect states in the case of major disasters. One change would raise the financial damage threshold a disaster would have to meet before state and local governments can be eligible for federal aid. The other is an incentive program that would cover more of a government’s disaster costs in places that have already invested in disaster mitigation projects, such as elevating buildings or earthquake retrofits.
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Ultimately, says Stauffer, this lack of cohesiveness means governments could be leaving savings on the table. It’s easier to find money for mitigation efforts when governments can show how much they expect to save. “When you’re understanding how to prioritize investments,” says Stauffer, “you really need to know what you’re spending currently in order to make any strategic decisions about it.”
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