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The Tell: A challenging hurricane season lies ahead for cities and states, new report warns

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Another likely “above-normal” Atlantic hurricane season is underway, and coastal-state and local governments are particularly vulnerable this year. That’s thanks to rising costs for materials and labor, as well as disrupted supply chains, even as the federal government nudges local jurisdictions to bear more of the cleanup costs.

A report from Moody’s Investors Service, released Wednesday, shows that rising construction costs will make recovering from storms more costly for states and cities. The price of lumber and wood products has risen for five straight months, Moody’s analysts note, and are up 90% compared to a year ago, according to the Labor Department’s Producer Price Index, while steel-mill products are 67% higher versus April 2020, the ninth-straight month of increases.

Meanwhile, the supply-chain bottlenecks resulting from the pandemic are lengthening delivery times. That will be problematic for areas that depend on tourism and require speedier rebuilding.

As environmental risks for state and local governments continue to rise, federal assistance is key, Moody’s points out. But the Biden administration is more focused on “mitigating the effects of storms before they hit,” the report notes. The White House has pledged $3 billion for projects that aim to make communities more storm-resilient.

Read: Biden doubles spending to prepare for hurricanes, other extreme weather

“But it also has an eye toward shifting more risk from future storms to downstream entities” – meaning households and local jurisdictions – “which could diminish overall disaster recovery support over the longer term,” the Moody’s team wrote.

Last December, the Federal Emergency Management Agency proposed new rules for declaring a disaster in order to trigger funding. “If the changes are implemented, fewer federal disaster declarations are likely, which would reduce the flow of federal dollars to states, territories and the District of Columbia after storms,” the report notes.

“The change, however, would also serve as an incentive for states, local governments and residents to invest in response, recovery and mitigation programs to reduce the costs associated with future storms.”

See: Cities and towns are about to get $65 billion in stimulus from Washington. Here’s what to know about the American Rescue Plan

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