Could a new premium fee prevent the next big Colorado natural disaster? Some lawmakers say yes.

When a camp fire broke out in Paradise, California, in 2018, killing dozens of people and destroying hundreds of buildings, Lisa Cutter knew her community in Colorado would be next.

The Democratic State Representative’s county includes the cities of Evergreen and Conifer in danger From the experience of a devastating wildfire. “People at the urban wildlife front are scared,” said Cutter. “They are terrified.”

Instead of waiting for disaster to strike, Cutter wants to spend more money up front to prevent disaster from occurring in the first place. Enters House of Representatives 1208, Which seeks to establish a state-run natural disaster mitigation foundation fund that would help communities finance the actions necessary to reduce or prevent future disasters.

The money for the initiative will come from fees that insurers pay on natural disaster policy premiums, such as fires and crop failures. Cutter said charging insurers – $ 1.25 for every $ 1,000 in insurance premiums, with an annual increase based on US Department of Labor indicators – is a “neat” approach, because it is in the interest of the companies, not just the interest of those insured to mitigate the disaster .

Unlike funding earmarked through the state legislature or Congress, the project will have a steady and predictable amount of money filling its coffers, advocates say. The Bill Financial Note It is estimated that it will generate approximately $ 7.6 million in its first year, of which $ 7 million will go directly to grants, net of administrative costs.

Premiums are likely to rise as insurers pass the new costs on to consumers, but Cutter estimates it will be less than an additional $ 5 per year for the average homeowner.

“The more we think up front in terms of mitigating these types of issues, the more savings we will create,” said Cutter, who leads the bipartisan legislation.

But there are opponents of the measure, including Republicans and the insurance industry, who argue that companies should not calculate and administer grant fees that do not belong to them.

“There is no link between what insurers pay and the services the corporation provides,” said Kelly Campbell, vice president of the American Association of Property Accident Insurance, at a hearing of the bill last week at the Energy and Environment Council. A committee.

A copy of the bill was introduced at the last legislative session, but was subsequently removed from the agenda due to the Coronavirus. It’s all the more important now, says Cutter, after the state’s record-breaking fires in 2020. Democrat Representative Matt Gray, from Broomfield, is the senator. Faith Winter, of Westminster, is also the lead sponsor of the bill. Senator. Kevin Priola, R-Henderson, is also an advocate of legislation.

House Act 1208 comes as state lawmakers this year pass a slate of legislation aimed at strengthening Colorado’s ability to respond to and prevent wildfires. Investing in disaster mitigation projects and making infrastructure resilient is much cheaper than paying for repairs after a disaster strikes, according to As of 2019 report From the National Institute of Building Sciences. The report, which was also cited in the House bill, found that communities save up to $ 11 for every dollar spent mitigating catastrophic impacts.

The foundation created by the Cutter legislation also aims to help communities attract more money from the Federal Emergency Management Agency. Federal dollars typically require domestic matching funds at a rate of 3 to 1. The corporation can save money to make this possible. Since the fund is an institution with a specific purpose, the money raised is not taxed and thus exceeds the limitations of the Taxpayer Rights Act and the voter approval.

During the committee hearing last week, some lawmakers questioned whether the fee-based foundation was the right way to fund the mitigation work.

Rep. Matt Soper, a Republican from Delta, said more work is needed to mitigate disasters such as A fire roamed the pineThat partially burned out in the Super District last summer. But he said he is against requiring people, including farmers – whose industry is already exposed to financial risks and who are already paying for crop insurance – to pay the bill for projects that will not affect them.

“We will have people who are not in the affected areas paying for other individuals who may be in mountain communities, or resort communities, to try to mitigate the potential risks to them,” Soubir said at the hearing.

Grants under the legislation are intended for mitigation and prevention projects, not active disaster response or recovery from past disasters. Jacob Smith, executive director of the Colorado Communities for Climate Action, which has worked closely with the main sponsors of the bill, said the line between these categories could easily blur.

In the case of forest fires, for example, scorched soil can lose its stability, creating the conditions for a later mudslide.

“It’s just inflated,” Smith said. “These challenges are getting more severe and damaging each year, and they are completely interdependent.”

While projects should be mitigation-oriented, the text of the law is left intentionally vague, according to Cutter, so communities can figure out how best to do the work. One example: I was asked if the grant could fund youth groups that do forest work to alleviate forest fires. She thinks this is a reasonable option.

“We want to see local communities going on,” What’s the best way, with whom can I work with, who can I partner with, and what can I do to get the most out of this money and get the most out of this opportunity for additional financing? ”

The legislation would create a grant allocation board, with representatives from a variety of interests and geographies, including state agencies, environmental justice advocates, local governments, scholars and the insurance industry. The Colorado Department of Public Safety’s executive director will appoint each of the eleven board positions.

The $ 7 million resulting from the legislation may sound like a lot of money, but it is a fraction of the $ 285 million cost for extinguishing wildfires in 2020, as estimated at a recent JBC hearing. This figure does not include insured losses, recovery costs and other general economic impacts.

Glenwood Springs alone is spending $ 10 million to repair and upgrade water infrastructure after last year’s Grizzly Creek fire, and other communities are also looking for higher price tags.

”[The bill is] Certainly not enough to solve the problem, but it’s another piece of funding that becomes available, ”Smith said.“ It really enables local communities to do what they feel is the most important project. ”

With climate change exacerbating natural disasters, Cutter said it is much easier to fall into the cycle of responding when they occur, rather than trying to prevent them altogether, or at least reduce their severity. And while it would be easier to have one source of money to address these issues, this one is not there, so you will take what you can get.

“I think we need every tool in the box, and that’s just another option,” Cutter said.

House of Representatives Bill No. 1208 approved the House Energy and Environment Committee by a majority of 4-8 party votes. He heads now to the House Finance Committee for another hearing.


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