Federal Pullback, Climate Change Could Boost State Spending on Disasters

By: - June 19, 2017 12:00 am

A car remains flipped over in its car port months after a tornado spun through east New Orleans. Climate change and potential shifts in federal funding could lead states to spend more on disaster recovery.

© The Pew Charitable Trusts

Editor’s note: A graphic in this story, US Disaster Spending by Agency, was updated to reflect that the amounts listed are in thousands of dollars.

Part One of Storm Surge: How States Will Have to Step Up As Disasters Become More Frequent and Expensive

NEW ORLEANS — The tornado hit the suburbs of east New Orleans at lunchtime on a mild Tuesday in February.

The twister spun across mid-century ranch houses still etched with the spray-painted symbols that search and rescue squads left after Hurricane Katrina. At its calmest, the tornado tugged at asphalt shingles. At its most vicious, it flipped parked cars and snatched entire roofs and walls from their frames.

The roughly 150 mph winds hopped over Chef Menteur Highway and blew out walls at a NASA assembly plant. By the time the tornado fizzled out over Lake Borgne, it had caused millions of dollars of damage. Together with a cluster of other windstorms, it yielded the seventh presidentially declared major disaster of 2017.

States have come to rely on these declarations, a practice that helps individuals and communities recover from disasters. And since the 1980s, the federal government has been on the hook for the majority of recovery costs when a disaster is declared.

But as the country faces an increasing number of billion-dollar disasters, federal officials are considering scaling back that spending, aiming to save taxpayer money and encourage states to prepare for disasters with their own resources.

And that has some local officials worried. Without the federal relief they depend on, many communities could be hamstrung after a disaster, unable to help their most vulnerable residents.

Some could have to hold back so much money that other programs and services would suffer, said Bryan Koon, Florida’s emergency management director. “They would be miserable places to live and if you have a large enough disaster, they would be destroyed.”

The proposed pullback, along with the threat of more frequent and intense natural disasters linked to climate change, is already forcing cities and states to change the way they prepare for — and recover from — events like tornadoes, forest fires, floods and hurricanes.

But preparing now for a billion-dollar storm that may be decades away can be a hard sell for officials who also have to come up with money for schools, roads and other essentials.

“Some states that have a rainy day fund, or some other kind of set aside fund, for them it might be easy,” Koon said. “For most legislatures, [the money] is not going to magically appear.”

Nobody knows exactly how much states spend to prepare for and recover from disasters. And tracking just how much the federal government spends is difficult. A study last year by the U.S. Government Accountability Office found that 17 federal agencies spent at least $277.6 billion on disasters between 2005 and 2014. GAO has not made the same calculation for earlier periods.

In a separate analysis, the progressive Center for American Progress found that between 2011 and 2013, the federal government was spending an average of $400 per U.S. household each year on disaster relief.

The federal government had $8.9 billion in its disaster relief fund this fiscal year, of which $4.1 billion has been committed to help repair the damage of floods, tornadoes and hurricanes from as far back as 2005. That includes .8 million to help Louisiana tornado victims rebuild their homes and connect them with social programs like food stamps and unemployment benefits.

A house in east New Orleans is still awaiting repairs months after a tornado.

© The Pew Charitable Trusts

States generally qualify for the Federal Emergency Management Agency’s public assistance program — money to replace and repair infrastructure — if they sustain damage that crosses a certain dollar threshold, which is now set at .43 per state resident.

But critics say that rate is too low and some declarations are issued when the damage is relatively small. For example, Louisiana, with roughly 4.7 million people, would have to sustain just $6.7 million in damage to meet the threshold for federal aid.

To get help from FEMA, a governor must formally request federal disaster assistance. Presidents do sometimes decline disaster requests, and those decisions have raised questions about whether the process lacks transparency and is too subjective or politically motivated.

If the president does declare a disaster, FEMA will typically reimburse the affected states and localities for at least three-quarters of their recovery costs, which can include debris removal, road repair and other infrastructure needs. The declaration also opens the door to federal housing and home repair assistance for affected residents and money to strengthen structures against future storms.

Other federal agencies, including the Department of Housing and Urban Development, Department of Agriculture and the Small Business Administration, also offer support through their own programs, not connected to the disaster declaration.

Counting on Federal Funds

Not until the nuclear threat of the Cold War did the U.S. government begin to set money aside to support disaster-stricken states. What started as a $5 million federal disaster allocation in 1950 grew rapidly as Congress added benefits like temporary housing, health services and grants to repair state property. By 1953, the congressional disaster outlay had grown to $52 million.

Now, under the Stafford Act, the federal government is on the hook for at least three-quarters of the recovery costs of presidentially declared major disasters, giving states little incentive to set aside their own money to pay for them.

For many state and local governments, saving more money for disaster relief is out of reach without a significant influx of revenue.

Like most cities, Baton Rouge — where thousands of residents found themselves underwater last August after two feet of rain doused the area and flooded local rivers — sets aside no extra money to recover from a major disaster. The assistance the city and its residents needed quickly overwhelmed savings and personnel during last year’s flood.

Contractor signs litter the front yards of houses damaged by a February tornado in east New Orleans.

© The Pew Charitable Trusts

“We have to use existing staff and those folks who already had 40 hour a week jobs,” said Rowdy Gaudet, an assistant chief administrative officer for the city.

The flooding, along with damage from another storm a few months earlier, was so expansive and destructive — 51 of the state’s 64 parishes received federal disaster declarations — that FEMA is paying 90 percent of the public safety and infrastructure rebuilding costs in Baton Rouge and surrounding localities.

So far FEMA has approved $360 million in recovery costs and the state is picking up the remaining 10 percent, using $105 million in congressionally allocated Community Development Block Grants designed to benefit low-income communities with unmet disaster recovery needs.

Typically that block grant money would go directly to homeowners, but in Baton Rouge it is being redirected because the public infrastructure need is so significant, Gaudet said.

“They’re taking resources that could go toward homeowners to help out local governments,” Gaudet said. “Because the reality is some local governments [in flooded parishes] would not be able to meet that 10 percent threshold.”

In picturesque Howard County, Maryland, a wealthy suburb nestled between Baltimore and Washington, D.C., leaders were happy to receive federal money following a torrential rain storm in late July that all but wiped out an 18th century mill town that is now home to trendy restaurants and antique shops.

FEMA has allocated nearly $4.9 million so far to rebuild the town, but the county expects to ultimately need $8.2 million from the agency to pay for infrastructure and public property repairs.

As in Baton Rouge, recovery support also had to come from local agencies.

“It’s a lot of money to take out from some of these [county] departments,” said Howard County Executive Allan Kittleman, a Republican. “They didn’t expect this to happen to them.”

States in the Game

The federal money Howard County and Baton Rouge relied on may not always be around.

This year President Donald Trump took aim at disaster funding, proposing a budget that cuts FEMA by 11 percent and targets emergency preparedness grants to state and local governments.  

To reduce federal disaster spending, think tanks and government officials have for some time suggested increasing the damage threshold that states need to meet to qualify for federal funds, increasing their share of the costs under the Stafford Act, and creating a disaster deductible that states would have to meet in order to qualify for federal funds — changes that local officials say would shift significant costs to states.  

FEMA has twice asked for public comments on a deductible proposal that would set varying rates for states based on their risk and what they have done to prepare for disasters before they strike.

Proponents of the agency’s deductible plan say it would encourage states to save money for future disasters and design more resilient communities. (The Pew Charitable Trusts, which funds Stateline, has expressed support for the idea.)

Some proponents also argue that it’s a question of fairness.

“It would relieve taxpayers in non-disaster states from continually subsidizing taxpayers elsewhere,” Diane Katz, a senior research fellow at the conservative Heritage Foundation, wrote in her comments to FEMA.

New York, Louisiana, Florida, Mississippi and Texas received the most federal disaster assistance between 1999 and 2015, averaging a $623.2 million a year payout. States like Idaho and Wyoming, which are less disaster-prone, only received, on average, $687,985 and $763,162 in relief during that time.

Groups like the National Association of Mutual Insurance Companies also support the proposal, suggesting it would incentivize states to do more before disaster strikes. Already the insurance industry has begun to see increased losses related to disasters.

But some cities and states say the deductible is unfair to disaster-prone states and local governments that don’t have the means to invest in resiliency on their own.

For example, the FEMA proposal would require Louisiana to meet a $73.9 million deductible by fortifying communities and setting aside money for recovery spending, before it could receive federal assistance, even though the state is much smaller than others, like Texas, with similar proposed deductibles.

In his comments to FEMA, New Orleans Mayor Mitch Landrieu wrote that the deductible proposal would be “severely damaging” to the city and unfair to states at higher risk of disaster.

Pat Forbes, executive director of the state division of administration in Louisiana, which collected $16.6 billion in federal disaster assistance between 1999 and 2015, said disasters are unpredictable and could hit any place at any time. And, he said, the entire country could feel the impact if a community collapses.

“When the disaster, especially one as catastrophic as [last year’s Baton Rouge floods], happens in your community, you can’t recover without outside help,” Forbes said.

Local officials also complain that the loss of federal money would jeopardize other programs and projects.

“I’m not saying this isn’t a big priority,” said Kittleman, the Howard County executive. “[But] we still have to make sure we have schools that are funded. … We have lots of needs for our human services with the aging population.”

Koon, from Florida, said states have to be ready to negotiate with the federal government, because even if a deductible proposal isn’t ideal, it’s better than other options.

“At least you can plan for it,” Koon said. “You budget for it. And done properly, you can use it to incentivize mitigation and other things to help reduce the impact of those future disasters.”

Disaster Recovery on a Warming Planet

As the fight over who should pay for disaster recovery heats up, climate change almost certainly will make those disasters more frequent and expensive.

Though scientists don’t know exactly how it will impact specific disasters, a warmer planet will mean changes in weather events, said Ken Kunkel with the North Carolina Institute for Climate Studies. 

Rising sea levels will lead to more coastal flooding. Warmer oceans likely will cause more heavy rain events. And hotter temperatures and depleted soil moisture could lead to more intense wildfires.

“We have adapted … to a certain kind of world,” Kunkel said. “We’re not going to have exactly that kind of world in the future.”

Not all disasters are caused by climate change, but experts at the National Oceanic and Atmospheric Administration believe that in 2015, wildfires in Alaska, a drought in Washington state, and a “sunny day flood” in the Miami region all were related to rising global temperatures.

The researchers also found that climate change increased the chance of record rains in south Louisiana, like those that caused last summer’s flooding in Baton Rouge, by at least 40 percent.

Not only will low-lying and coastal communities be impacted by these events, but places that weren’t built to withstand them will likely have to grapple with major disasters down the road, said Quinn Dauer, an assistant professor at Indiana University Southeast who studies natural and technological disasters.

For instance, in Baton Rouge, many of the homes damaged by August’s flooding were not protected by flood insurance because they were not in the flood plain.

“Really what makes a disaster is humans engaging in an environment in a way that’s going to increase their vulnerability to one of these physical forces,” Dauer said. “Usually [those] with the least amount of resources are the ones that are at greatest risk.”

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Sarah Breitenbach

Sarah Breitenbach, who writes about the business of government for Stateline, has spent much of her professional life writing about Maryland politics and policy. She began her career covering education and state government for the Frederick News-Post and has worked for the Gazette of Politics and Business and The Associated Press.