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DiNapoli estimates economic loss from Sandy could top $18 billion

by jmaloni

Press release

Fri, Nov 2nd 2012 05:25 pm

New York State Comptroller Thomas P. DiNapoli on Friday projected the economic damage from Hurricane Sandy could exceed $18 billion for New York state.

"These are difficult days for New Yorkers as we work to clean up and recover from the devastation caused by Hurricane Sandy," he said. "Lives have been lost, homes and property destroyed, and businesses large and small remain paralyzed across New York City, Long Island, the Hudson Valley and the greater metropolitan region.

"My office's preliminary estimate of economic losses due to the storm ranges from $15 billion to $18 billion. Our daily infrastructure of highways, power, sewer and water - the elements of modern life that we take for granted - have all been altered by this storm. Though the rebuilding effort may offset some of these losses, we must continue to monitor what the long-term economic impact to New York will be."

The comptroller is projecting that tax revenue collections for the state, which are already $436 million below initial projections, will be affected in the short term. DiNapoli will issue his early outlook for the upcoming state fiscal year next week.

DiNapoli's estimate of $15 billion to $18 billion is based on initial assessments in relation to previous natural disasters. Economic losses include disruption to daily business and the loss of property and wealth, some of which may not be included in other estimates. Preliminary estimates of the fiscal impact of Hurricane Sandy are speculative, DiNapoli said, as there are many unresolved economic variables, from the duration of power outages to the effects of flooding on infrastructure and the environment.

The Metropolitan Transportation Authority was facing fiscal strain before the storm. And some local governments hit hard by Sandy, such as the city of Long Beach, were already experiencing severe stress. DiNapoli notes that while federal assistance will cover the full cost of emergency public transportation and power restoration, he supports the push by Governor Cuomo, senators Schumer and Gillibrand, and the New York delegation for full federal reimbursement for all repair and recovery costs.

To expedite recovery, DiNapoli has notified state agencies that his office is accelerating approval of contracts and payments related to hurricane recovery, as it did last year after Hurricane Irene. DiNapoli will also monitor spending closely to ensure funds are spent appropriately and to assist storm victims.

"The sooner we get contractors on the ground to assist residents and business owners, the faster New York will be back on its feet," he said.

Specifically, DiNapoli's preliminary review of economic sectors found that:
•Ongoing disruption of New York's financial sector is expected to be minimal. But because it accounts for about 14 percent of the state's tax collections and about 7 percent of the city's, any negative storm aftershocks could have significant implications.
•Infrastructure, including highways, airports, seaports, sewer and water systems, was severely impacted and is still undergoing damage assessments. While much of the cost may be covered by insurance or federal assistance, damage would be in the tens of billions. Rapid remediation would reduce damage from the corrosive effects of water, pollutants and other factors.
•The storm may prevent New York City from breaking last year's records for tourist spending and attendance if the recovery continues into the holiday season. New York City tourism is the city's fifth largest industry.
•Flooding of sewer and water systems and their overflows will exacerbate cleanup efforts and raise health concerns. Toxicity assessments may be required near contaminated sites such as Newtown Creek and Gowanus Canal. The full extent of environmental hazards is yet to be determined.
•Mitigating the risks associated with future storms is essential. A 2010 report by the New York State Sea Level Rise Task Force projected sea level rise in the state's coastal regions of two to five inches by the 2020s. A coordinated effort is vital to address risks as more powerful storms are being predicted.
The comptroller has directed his staff to prepare a more comprehensive analysis of the economic impact on the city, state and local governments as more concrete information becomes available.

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