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Hurricane Irene to hit state, city budgets

A woman walks past an empty battery display at a Home Depot store in Freeport on Long Island
A woman walks past an empty battery display at a Home Depot store in Freeport on Long Island

By Lisa Lambert

WASHINGTON (Reuters) - Hurricane Irene is set to lay siege to cities and states along the Eastern U.S. coast this weekend and it could continue to pummel their budgets long after its last raindrop falls.

The costs will quickly mount for seaboard states like Virginia where Hurricane Irene is expected to hit early Saturday and could be as strong as Category Three -- a major hurricane that can damage buildings, destroy mobile homes and where total power loss can occur.

To prepare, Virginia Governor Bob McDonnell put emergency personnel on 24-hour watch, staffed up hospitals and has the forestry department at the ready with chainsaws to clear debris. Local governments are mandating evacuations, with residents taking to the state's roads and bridges.

Along with those costs, the state will have to continue working after Hurricane Irene sweeps through, especially along the coast where flooding could cause major damage.

Scott Pattison, executive director of the National Association of State Budget Officers, said states will step up to deal with the crisis.

"The question becomes: what do they end up spending and what doesn't get money?" he added.

The 2007-2009 recession hit states' budgets hard, leaving them with fewer funds to respond to emergencies.

In fiscal 2010, 24 states cut their budgets for emergency management, according to the National Emergency Management Association. The median budget for responding to crises fell to $3.3 million from $3.41 million the year before.

Data for the fiscal year that ended in June was not available. Still, revenue in many states has yet to return to levels reached before the recession. That means spending on emergency management likely remained at the lower levels.

Hurricane Floyd ran a similar route to Irene's in 1999, hitting the coast of North Carolina before making its way into New England. The storm, a much more powerful Category Five, caused damage of between $3 billion and $6 billion, according to the National Oceanic and Atmospheric Administration.

In 2003, Hurricane Isabel was a Category Two that struck the Carolinas and moved into Virginia, New Jersey, New York, Delaware and West Virginia -- many of the same places currently preparing for Irene. The total damage was $3.37 billion, according to NOAA.

Hurricane Katrina, which ravaged Gulf states in 2005, was the costliest hurricane in U.S. history at $81 billion, NOAA said.

"At this point we're not concerned about costs. We've got money available for emergency purposes. Right now, we're solely concerned about public safety," Virginia Governor Bob McDonnell told reporters on Thursday.

If President Barack Obama declares a state of emergency, the federal government will reimburse some local dollars for the Irene costs.

Obama has warned U.S. citizens that it was likely to be an "extremely dangerous and costly storm".

But states, which just last month cut a total of about $100 billion from their budgets, must pay expenses the federal government will not cover.

"They're in a zero-sum game and they're in tight budgets," Pattison said.

North Carolina, where Irene is expected to strike on Saturday, pulled money from the state's disaster relief funds and other reserves to patch a budget gap for this fiscal year, according to the National Conference of State Legislatures.

To save money in June 2010, New York, which could experience its first hurricane in decades this weekend, consolidated its homeland security, emergency management, fire control and critical infrastructure offices.

Wind from the storm can down power lines or pull up trees -- areas that must be immediately addressed by cities and counties, said Diane Linderman, president-elect of the American Public Works Association.

"It is a cash flow issue, because you can't wait for the federal money to come. You have to do the clean-up right away," she said. "They have to get their communities up and running or otherwise it hurts their economy."

Funds put aside for infrastructure upgrades or new capital works projects may have to go to fixing damage from Irene, instead, said Linderman.

"It diverts resources. After a storm you have to rethink what the rest of your year will look like," she said.

Local governments have been stung by falling property taxes, their primary revenue source, over the last few years and recently have also endured cuts in aid from the states. For the budget year that started in July, New Jersey made across the board spending cuts of 10 percent and then reduced aid to local governments by $345 million, NCSL said.

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