1. Opinion

Craig Fugate : A smarter way to fund disaster recovery in America

Hurricane Matthew caused damage in Flagler Beach in October.
A disaster deductible for states would push them to plan ahead.
Hurricane Matthew caused damage in Flagler Beach in October. A disaster deductible for states would push them to plan ahead.
Published Jan. 3, 2017

As Hurricane Matthew brushed along the East Coast last fall, it left a trail of destruction across the mid Atlantic. The storm left dozens dead and billions of dollars in damage in its wake. In North Carolina alone, record rainfall caused flooding so severe that experts categorized it as a "1,000-year event." A disaster of such magnitude — statistically — should only occur once in multiple lifetimes. But as we've seen over the past decade, storms like these aren't nearly so rare.

Regardless of the cause, natural disasters are increasing in severity and frequency. When Hurricane Sandy struck the Northeast in 2012, water from New York Harbor — the levels of which have risen by a foot since 1900 — caused billions of dollars in damage, making what was an already catastrophic event much worse. In 2015, three separate record-breaking floods hit Texas over a six-month period alone, including one in May that killed 27 people.

Later that same year, 19 people died in devastating floods across South Carolina. Last year in Louisiana, we witnessed two separate "once-in-a-lifetime floods," including the tragic flooding in August that left 12 people dead and thousands homeless.

The personal toll wrought by these storms comes with a heavy financial price tag. The Government Accountability Office reports that FEMA spent over $95 billion in federal disaster aid on 650 major disasters between 2004 and 2013. A separate study by the Heritage Foundation reports FEMA now responds — on average — to a disaster every 2.8 days, driving a need for more and more money to cover the costs of disaster recovery. Simply put, the current way we fund federal disaster recovery in this country is not sustainable over the long term. In the new era of tightening budgets and more frequent disasters, how do we adjust for the future?

The easiest way to save taxpayer dollars, of course, would be for the federal government to just declare fewer federal disasters. By tightening our standards of what constitutes a disaster worthy of federal funds, we'd save billions of dollars a year. For years, Congress and government watchdogs have pressed FEMA to enact precisely this approach.

But as a former state emergency manager for the state of Florida, I know doing so would leave states in a serious lurch, only able to rely on help from the federal government after the most catastrophic of events. Declaring fewer disasters doesn't mean less damage or fewer costs, it just shifts the burden to those who truly may not be able to afford to pay for them.

Instead, FEMA has proposed an alternative based on an insurance model. What if states were required to kick in a larger share of disaster recovery costs up front? In other words, states would have to pay a "deductible" toward recovery costs for certain types of assistance after each disaster as a condition of receiving federal funds. Additionally, what if we allowed states to earn credits toward their deductible by making investments in activities that actually save lives, mitigate risks and reduce disaster costs?

Adopting this approach would shift some responsibility away from the federal government to states. But at the same time, a deductible would encourage state governments to implement proven initiatives that we know lower the costs of dealing with disasters, for everyone, over the long term. After all, the most important decisions to manage future risk happen at the local level. Under this proposal, states would have motivation to implement strategies such as stronger building codes, smarter land use ordinances and more realistic floodplain management practices.

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Insurance companies use deductibles because they know they work to change behavior. Homeowners may install alarm or sprinkler systems, and drivers drive more safely, because they are incentivized through lower premiums and deductibles, but doing so also reduces the risks associated with the reality of living in an unpredictable world. Our proposal does the same.

Left unaddressed, politicians and budget slashers will take drastic action to curb skyrocketing disaster costs on their own in coming years. In so doing, they'll likely hone in on simple solutions that transfer costs and miss the real opportunities we have to save taxpayer dollars while making America more resilient as well. As a busy hurricane season has finally drawn to a close, it's time for us to find a smarter way to deal with the new normal of more common disasters in America. Considering a disaster deductible for states is a good place to start.

Craig Fugate, the FEMA administrator under President Barack Obama, was the head of Florida's Emergency Management Agency under Gov. Jeb Bush. He wrote this exclusively for the Tampa Bay Times.