Opinion: Columnists

Manhattan Moment: Who should pay Sandy's bill?

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Mayor Michael R. Bloomberg of New York headed to D.C. on Wednesday to make his case for the $42 billion in Superstorm Sandy aid that the state and city want from the federal government. He asserted that "hurricane recovery is not a partisan issue." But it is a public policy issue. Congressfolk from both parties should think before they write checks.

New York Gov. Andrew Cuomo, D, has been almost obsessive that the feds should pay for 100 percent of Sandy cleanup and repairs. He puts those costs at $32.8 billion (including city money). Plus Cuomo wants an additional $9.1 billion for "prevention and mitigation." In his pitch, the governor went so far as to say Sandy was "more impactful" than Hurricane Katrina.

Sandy was horrific, but it was not Katrina. Katrina lopped off 9 percent of New Orleans' metropolitan economy. Sandy likely inundated less than 1 percent of New York's economy. It helps that Sandy, unlike Katrina, didn't empty out a city.

There's another difference. New Orleans got extraordinary aid partly because the federal government, with its control over waterways, was responsible for building New Orleans' levees. That system did not perform to standard in keeping water out. New York suffered no failure of federal infrastructure.

What should New York -- and New Jersey -- get, and what should the victims of future storms get?

There are two separate issues: emergency response, and repair and rebuilding. On the first, having the Federal Emergency Management Agency contracting with unaffected regions to bring in ambulances, generators, and other critical equipment and workers to a disaster area isn't big government. It keeps local and state governments smaller than they otherwise be, as they don't have to pay for things they don't need 99.99 percent of the time.

But should the feds pay 100 percent of these costs, or keep it at the 75 percent they already pay, absent special legislation? One hundred percent is going too far and even creates moral hazard. State and local governments do have a responsibility to prepare for disaster, or prevent some of a disaster's fallout. The knowledge that the feds will pick up the full tab after a disaster decreases their motivation to do so.

Plus, the residents of a town vulnerable to some types of disaster have to pay for that vulnerability. Otherwise, coastal towns would encourage too much building, for example, knowing they can reap the benefits without suffering the associated costs. This is true for Florida and California as well as for New Jersey.

On the second issue: The problem with dependence on Washington for long-term rebuilding is that it encourages states to focus on how much "free money" they're getting, not on whether they're spending it wisely.

Cuomo has asked for $9.7 billion to rebuild or repair housing -- more than he wants for preventative public infrastructure. But encouraging people to rebuild on a vulnerable coast is unwise. Of course, they can do so; it's a free country. But they should do so at their own risk and expense, not at others'. Cuomo also wants federal money for a better electrical grid. But ratepayers should fund their own grid to the reliability that they want.

Most of the time, New York benefits from being on the coast, even if it carries a risk. New York also benefits from its high population density, but it also pushes up recovery costs. Why shouldn't the state's taxpayers pay to protect these assets?

In a 2011 report, the Congressional Research Service warned that "because there is a perception that a supplemental [disaster] appropriation must be passed quickly, [it] may be less likely to be scrutinized in the same manner" as a regular bill.

Congress should apply scrutiny to all disaster requests, so that it doesn't create a new entitlement out of inevitable emergencies.

Nicole Gelinas is a contributing editor to the Manhattan Institute's City Journal.

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