Tips for Local Governments: Financing for a More Resilient Future

Share on Social Media

dollar sign in arrow circle with chalk on blackboard.

As part of resilience planning, local leaders must assess how local hazards and threats may impact their financial resources in order to both strengthen existing resources and prevent the community’s finances from plunging into the red in the event of a natural or manmade disaster or threat.

Ideally, communities should look at ways to build more resilient finances before a disaster, however local leaders can also integrate resilient financing options into their disaster recovery plans. The tips below provide advice and ideas for getting started with evaluating and strengthening your finances against the impacts of hazards and threats.

Know your hazards so you can assess their potential financial impacts.

  • There is no magic formula for predicting financial impacts, but you should learn as much about the potential impact of your natural hazards as possible.
  • Free publicly available tools, typically organized by hazard, get better all the time. For instance, local leaders can try Climate Central’s set of easy to use maps to visualize heat, smoke, drought, flood and other vulnerabilities.

Consider how your future hazards could impact the flow of taxes and funding streams in your community.

  • Prioritize the potential biggest losses, and develop solutions to address them first.
    • For example, if you determine that a major rain storm could flood and shut down your main street businesses, resolve the flooding issue so that your sales tax base isn’t halted in the event of a flood.

Build relationships with regional local leaders, not just their emergency management, to further opportunities for risk pooling and shared solutions to financial disaster recovery.

  • Disasters and disaster declarations rarely impact just one jurisdiction, your recovery approach should integrate existing regional partnerships to pool resources and recover efficiently.
  • Regional allies can help bring more state and federal funds to your community, and solutions that benefit the region.
  • Many citizens live in one jurisdiction but work in another; a recovery strategy that benefits multiple communities can increase citizen support and satisfaction.
  • Consider including utilities in your regional planning. Because they typically serve a multi-jurisdiction region, they can be strong resources and allies in regional resilience.

Integrate bankable projects into your planning as much as possible to create long-term revenue sources.   

  • Bankable projects are revenue-generating and include things like public transit systems and toll roads. They require taxes and fees or fees to pay them back. As climate risks are set to grow in the future, working with elected officials and your constituents to ensure you have adequate revenue for resilience investments today that protect from tomorrow’s risk is key.
  • Local governments can also integrate more creative solutions like tourism revenue on parks.

Mainstream prevention measures into your capital and operating budgets to ensure that each of your infrastructure investments are designed, built and maintained with hazards in mind.

  • Infrastructure built to withstand hazards mitigates damage and reduces emergency spending and service interruptions if a hazard or sudden threat does occur.

Be prepared for your next interaction with credit rating agencies.

  • Credit rating agencies are aware of your community’s hazards, and they want to know that you are too. Be prepared to demonstrate hazards and risks facing your community, and how you’re addressing them.

Consider emerging, innovative types of financing such as catastrophe bonds.

  • Catastrophe bonds protect governments or government entities against a specified disaster with an established objective metric such as mortality rate, wind speed, or flood water level.
  • If a disaster meets the specified trigger conditions, the bond investments are released to be applied towards response and recovery.
  • Smaller local governments can consider taking a regional approach to catastrophe bonds by issuing them through a regional entity such as a Council of Governments (COG).

Contact Us

Comments or Questions? Reach out to IBTS.

Stay Connected

Stay up to date with all the latest IBTS news.

Full navigation