administration was moving away from eliminating FEMA in favor of transforming or restructuring the agency, while continuing to emphasize a shift of responsibilities to state and local governments. Every state already has some form of emergency management agency, but with far less federal funding and support, they will need to take on bigger financial and logistical, and response coordination responsibilities. Some states will likely “explore bolstering interstate cooperation through mutual aid agreements (such as the Emergency Management Assistance Compact, (EMAC)” according to the State Energy and Environmental Impact Center at the NYU School of law. But “those pooled resources are likely to be inadequate to replace FEMA Preparedness Grants and emergency response training opportunities historically provided by FEMA,” the center said. Other growing state responsibilities would include public alert and warning programs, as well as emergency shelter and temporary housing. The potential costs for states and localities are staggering. Consider Hurricane Helene, which was the most severe hurricane to hit the country since Katrina in 2005. “Our entire county operating budget is between $16 and $17 million a year,” said Josh Morton, director of the Saluda County Emergency Management Division in South Carolina. “We have estimated that for us to have responded to Helene without any federal assistance we would have to increase property taxes by roughly 35% to make up the difference on the local level. We would also have to hire a lot of extra county staffing post- disaster, so that number would probably be closer to 45% or 50%.” Morton, who is also first vice president of the International Association of Emergency Managers, added, “FEMA can move its staff and funding around to wherever the disasters are. And by doing this at a national level, as
opposed to a local level, it’s actually saving the taxpayers of this country a lot of money,” Dramatic cuts to FEMA have important implications for the private sector as well. “Disaster recovery has become a pretty big industry,” said Wendy Ellard, co-leader of Baker Donelson’s Disaster Recovery and Government Services Team. “There are debris removal contractors, there are debris removal monitors, there are a slew of professional consultants that have made it their business to assist after these large events. Many of the accounting firms, including the Big Four, have disaster recovery branches now.” According to Ellard, “These professionals are preparing themselves now to provide more support to the states and locals. But there are rules regarding how these professionals can be engaged, like competitive procurement laws. States and locals will have to pay attention to those requirements, so they can set up contracts in advance. They’ll need to engage those professionals now and have standby contracts in place.” In addition, FEMA reductions could have broad impacts on local economies if disasters take a bigger toll and recovery is delayed due to lack of funds. There will be plenty of challenges. In general, less centralized management means more variation in policies and practices that the private sector will deal with. Insurance companies, particularly, will face additional pressures. FEMA’s disaster aid has limited insurance company losses in the past. Drastic reductions raise the specter of greater claim frequency and size, and the need for changes in market offerings. As with cybersecurity, challenges create opportunities for firms that can offer innovative insurance ideas and partnerships that speed up effective recovery operations, or provide much needed help in disaster risk reduction. Demand will likely increase for predictive technology, data analytics, AI expertise and climate modeling.
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