Who pays for Irene?

Posted August 26, 2011

It’s a scenario no state likes to see even in the best of budgetary times: a major hurricane barreling toward its coastline, with the potential for storm-force winds and flooding far inland.

The last storm Irene’s size to hit North Carolina – Isabel, in 2003 – caused damages of more than $450 million to public and private property in NC. The state budget this year is a lot tighter than it was in 2003.

State spending

State spending on Emergency Management was cut by $539,000 in this year’s budget. NCEM director Doug Hoell said he was able to cover the cut with federal grant dollars, so he didn’t lose any personnel in his division. But those dollars had to be diverted from other plans, like county profiles and special projects. And other divisions within Crime Control and Public Safety did lose staff.

“Emergency Management has been cut like everybody else,” said spokeswoman Julia Jarema. “But we rely on other agencies and counties. When they’re cut, it affects our capabilities.”

Jarema said some counties have even had to cut their public information staff, making it harder for the state to gather local information. “Everybody’s pretty slim,” she said.

Still, state EM director Doug Hoell is confident tight fiscal times won’t impair Irene response efforts. “We have the response resources we need.”

Gov. Bev Perdue agrees. “I know the budget is tight, and I know resources are tight,” she said Friday, “but there has never been a time in the great state’s history when we didn’t step up and do what we needed to do. People don’t need to worry today or tomorrow or Sunday about financial issues.”

“Our only primary concern is getting through today and tomorrow, and seeing what kind of damage we have on Sunday morning,” she said.

County spending

State Emergency Management owns some equipment of its own, much of it paid for through federal grants. But when the state “mobilizes” on the ground, it does so largely through the use of local resources, from law enforcement officers to communications equipment.

If the state budget’s had a rough time for the past three years, some counties have had it even worse. Most county revenue comes from a share of the sales tax, which has been down along with the economy, and from property taxes, which often go unpaid for periods of time when homes are in foreclosure.

Dare County spokeswoman Dorothy Toolan said her county’s spending on emergency management didn’t change much last year from the preceding year. But Hyde County spent considerably less last year. As of April 1st, its spending for emergency management in FY 2010-11 was about $80,000, on track to fall well below the $130,000 the preceding year, but similar to other reductions in the county’s budget overall.

Federal dollars

By far, the biggest resource available to pay for response and clean-up is the federal government. Federal disaster relief dollars usually match state disaster spending three-to-one if the event qualifies for federal assistance.

Emergency Management deputy chief Mike Sprayberry said the state has about $220 million available if needed for Irene. That would leverage at least $660 million in federal dollars.

Federal grants have also underwritten much of North Carolina’s disaster response capabilities, from heavy equipment to training and communications. That funding increased dramatically after 9/11.

It’s worth noting, though, that in many cases, federal aid to individuals and communities is not a grant – it’s a loan at low interest that has to be paid back. That’s usually the case for assistance to small business owners through the SBA, as well. And it doesn’t appear overnight, either – it can take weeks or longer to process a request for assistance.

Private insurance

For property owners and renters, insurance can cover some of the costs of damage to private property. There are a lot of restrictions on exactly what’s covered, though – like flood damage, which isn’t covered by typical homeowner insurance.

Even when insurance will cover damage, it can take quite a while to get a check to fix the damage after a widescale disaster that can generate hundreds or thousands of claims.

NC Department of Insurance spokeswoman Kerry Hall says after this spring’s tornadoes, “We were hearing from people it was taking a week and a half just to get the adjuster out there.”

“The insurance companies bring in extra adjusters, but it’s just a question of volume of claims they’re dealing with,” Hall said. “It’s different in a disaster than on an average day. We try to remind people to be patient.”

This will be the first hurricane to hit the coast since NC adopted an updated Beach Plan, an state-mandated private insurance pool meant to make coverage more affordable for coastal homeowners.  Under the terms of the plan, every policy in the state could be hit with a surcharge if Irene's damages to private insurers exceeds $4 billion. But that's not likely to happen unless the storm should plow into a densely populated metropolitan area.


The fastest response to need in the community usually comes from non-profits like the Red Cross, the Salvation Army, and other charities.

David Winslow is a nonprofit fundraising consultant who worked for former Gov. Jim Hunt in 1999, raising donations to help the victims of Hurricane Floyd.

Winslow says he got a call from Hunt’s office at 6am the morning after the storm came through, asking for help. “We had to create a system from the bottom up,” Winslow said.

“In the immediate aftermath of a storm like that, there are immediate needs that government is, on its own, too slow to respond to,” Winslow said. “People who have been wiped out may have a mortgage bill coming up, or an electric bill. Food, gas, stuff like that. You have to get the cash into the hands of people who need it.”

Hunt and other leaders mounted a massive private fundraising drive to assist hundreds of thousands of people who were displaced or damaged by Floyd. The effort ultimately raised about $38 million from about 19,000 donors all over the world. The money came in through the Governor’s Fund, the United Way, the Red Cross, and the Salvation Army.

The whole operation was pro bono. The system they built would eventually become a model for non-profit disaster fundraising in a number of other states.

“It’s one thing to raise the money. It’s another thing to distribute it fairly,” Winslow said. “We had to work really hard to make sure this was done with total transparency, accountability, speed, and with the input of those who knew the communities.”


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  • driverkid3 Aug 30, 2011

    I don't understand why people insist on building down on the coast KNOWING that storms can and will destoy homes and businesses. Seems to be the case of doing the same dumb thing over and over and looking for a different result each time.

  • dollibug Aug 29, 2011

    No money set aside for a rainy day or for emergencies....I guess everyone just figures that the STATE will not have any and therefore, will not need any.....the budget should have allowed things like this....Oh, but we can just borrow it from the prez....I bet he will lend out the SS money....there we go again....robbing Peter to pay Paul....not a good idea at all....when the economy was when things like this should have been prepared I am sure that there was a time when there was surplus funds...and someone decided the money needed to be spent for something else....