|Ocean County had the largest number|
of "affected" houses. But Cape May
was the worst hit relative to population.
Source: CityEconomist, from FEMA data.
We know that some counties within New Jersey were much harder hit than others, although every county in the state was declared FEMA-eligible. The worst-hit counties are Cape May, Atlantic, Ocean and Monmouth - i.e., the four southeastern coastal counties.
The $29.4 billion New Jersey cost will be borne by state taxpayers, the Federal Government and private businesses and individuals. Every one of the various forms of coverage of these costs comes with a price tag. The question is who pays for them and when. For a national calamity, the nation steps up to pay some of the bills.
- Private insurance will cover some of the (1) property damage above the deductible and (2) business interruption and loss of use. But coverage will be harder to get in future; deductibles will rise; premiums will increase. The NYC Comptroller's Office showed that how this happened after 9/11. It makes sense that casualty insurance companies over time have to match their premiums to their claims, especially when interest income is low, so some of the premium hikes are reasonable.
- If private utilities are self-insured or their premiums go up, they will use this in their rate base when they apply for rate increases.
- Government payouts at all levels will have to be financed from the expense budget or with bonds. Either way, they impose a budgetary burden now and later.
- The Small Business Administration loan program will either collect back from businesses or will have to absorb the loss and get funding from the federal budget.
- FEMA and the flood insurance program within its umbrella will need to get more federal funding for amounts not already set aside for claims.
- The uninsured and unreimbursed portion of losses will be absorbed by individual businesses or households. In New Jersey alone, FEMA has recorded more than 70,000 homes "affected" by Sandy. Many of these homes will be expensive to repair or rebuild. Many are uninsured because insurance may have been hard to get or too expensive.
- Because of the high costs of rebuilding infrastructure, rebuilding near water may become more difficult. Private homeowners may see their property values decline.
Within all the big numbers are many private tragedies, people who are faced with bills they can't pay or rebuilding that they may not be permitted to do. As usual, small businesses and struggling households are the hardest hit. Only a few get attention in the media. Americans help their neighbors in time of need. In the end, we all bear some of the cost but some people bear more than their share.