What I'm reading this week
Marshall Fire recovery, insurance rates in Texas, and the fiscal effects of disasters
Marshall Fire Recovery: Who’s Home, Who Isn’t - and Why
by Will Matsuka, Boulder Weekly (December 20th, 2023)
On the two year anniversary of Colorado’s Marshall Fire, about 300 households have rebuilt their homes, or 27% of the homes lost. Undoubtedly this pace feels slow for disaster survivors and their communities, but it is a real achievement…comparable events like the Fourmile Canyon Fire and Waldo Canyon Fire took much longer to reach a comparable level of recovery. The bad news, as our research team has also documented, is that the recovery is quite uneven, with financial resources (predictably) playing a big role in determining who has rebuilt. In the long-view, however, I suspect we will take inspiration from local innovations like joint-government debris removal program and Marshall ROC, an organization that connects with fire survivors and continues to advocate for their housing needs.
Climate Change, Costly Disasters Sent Texas Homeowner Insurance Rates Skyrocketing This Year
by Erin Douglas, Texas Tribune (November 30th, 2023)
One of the major stories in the disaster and climate impacts space in 2023 is the turmoil within insurance markets. Earlier this year we saw stories from California and Florida about the withdrawal of major insurers due to increasing disaster losses and the escalating costs of new construction. A similar story is playing out in the Lonestar State where the triple whammy of inflation, climate-fueled disaster losses, and escalating construction costs pushed insurance rates up by 22% in 2023, about twice the national average.
Local Fiscal Effects of Disasters
by Adam G. Levin, Congressional Research Service (December 21, 2023)
One of the less-appreciated impacts of disasters is how they can challenge the fiscal health and well-being of local governments. In the aftermath of a disaster, local governments are often put in a financial bind by the unexpected costs incurred. Emergency services, debris removal, critical infrastructure repairs, etc. are expensive but necessary spending. While these costs might be partially reimbursable, a local government must have cash-on-hand to front the spending while also continuing to provide routine municipal services. To make a bad situation worse, disaster-driven displacement and interruptions to the local economy can have devastating consequences on revenue sources like sales taxes and property taxes. In extreme cases like Hurricane Katrina, local governments can be forced to reduce their budgets by upwards of 30% to accommodate the sudden shortfalls in revenue, even with substantial outside assistance. This recent report from the Congressional Research Service is a useful summary of FEMA’s Community Disaster Loan (CDL) program, which aids local governments by giving them quick access to forgivable loans of up to 25% of their operating budget (or $5 million, whichever is lower) to maintain essential municipal services after a federally-declared disaster. While the $5 million cap probably needs to be revisited, access to quick fiscal resources seems like smart public policy. This peer-reviewed study by Gang Chen (2019) of the financial impacts of disasters on local governments in New York, for instance, shows that a local government’s fiscal reserve (including its disaster reserves) ‘strongly improves the financial conditions of a city or county government’ one year later. For local governments with weak financial foundations, the CDL program can be a life raft that prevents or mitigates a downward fiscal spiral.