In particular Mark noted, “It is not too hard to imagine myriad new federal strings being attached to the dollars flowing from federal coffers to state, local, and tribal authorities. Previous investments that sought to promote material improvements in preparedness will likely be replaced by new process-oriented requirements without achieving the desired alignment or shared sense of purpose.”
While this threat is nearly omni-present, there are several recommendations in the report which attempt to mitigate the threat. Further, here’s one of the recommendations made by the Local, State, Tribal, and Federal Preparedness Task Force that is clearly aimed at more direct material improvements in preparedness. From page 24:
One promising new preparedness initiative involves incentivizing individuals to take action by providing tax breaks for preparedness investments. We therefore recommend that all levels of government consider establishing financial incentives to encourage individuals, families, and businesses to undertake preparedness activities. The underlying logic is simple: prepared citizens minimize the potential costs of disaster and reduce the strain on first responders during a major event. The science is similarly encouraging: behavioral economists widely recognize that minor financial incentives can succeed in motivating individuals to make life-affirming decisions where even the risks of abstract, severe consequences cannot.Moderate investments of time, energy, and resources to address potential problems before they occur can achieve significant savings in the long run. More importantly, incentives create an artificial imperative in the absence of perceived threats or hazards. Incentive-based approaches may be valuable in regions prone to less frequent, but potentially catastrophic incidents. Compliance with mitigation efforts such as structural reinforcements in hurricane or earthquake zones, or defensible space in the case of wildfires, should produce tangible rewards in terms of property value, tax breaks, or insurance rebates. In fact, some States—including Virginia and Louisiana—are already complementing their existing preparedness programming with tax incentives to encourage citizens to act.
Both Virginia and Louisiana combine tax incentives with a specific communications strategy. Early in hurricane season both states sponsor annual tax holidays for purchasing season-specific supplies. The Virginia list of tax exempt products is available from from the Commonwealth’s Department of Taxation website.
This is a simple, low-cost, and easy-to-administer approach to encouraging citizens to do what they already recognize they should be doing. It is a nudge in the right direction. Packaging the timing, message, and nudge is a good example of “market-oriented” behavior by the government. The private sector amplifies the message with advertising to sell the tax-exempt products. Win-win-win.
Tax policy is regularly used to nudge us. Tax deductions and credits encourage home buying, energy conservation, charitable giving and much more. Tax credits can be especially motivating. A tax credit is a sum subtracted directly from the total tax to be paid.
The Commonwealth of Virginia — widely considered a conservative leaning state, especially in regard to tax policy — offers thirty tax credits. These range from encouraging “Agricultural Best Management Practices” to “Historic Rehabilitation” to “Long-term Care Insurance” to “Land Preservation” to the construction of “Riparian Waterway Buffers.”
There is not yet a “disaster preparedness” or better yet a “resilience enhancement” tax credit. What would one look like? Here’s the Virginia Department of Taxation description of the Agricultural Best Management Practices tax credit:
This credit is available to individuals and corporations that are engaged in agricultural production for market and have a soil conservation plan in place to provide significant improvement to water quality in Virginia’s streams, rivers, and bays. To be eligible for the credit, your plan must be certified in advance by your local Soil and Water Conservation District.
The credit is 25% of the first $70,000 you spend for approved agricultural best management programs. The maximum credit is $17,500 or the taxpayers’ tax liability, whichever is less. Unused credits may be carried forward for five years.
Individual filers complete Schedule CR, Part XIV, and corporate filers complete Form 500CR, Part XVI to claim this credit. Attach the certificate from the local Soil and Water Conservation District from the locality in which the credit is claimed.
Reference: Virginia Code 58.1-339.3
Reference: Virginia Code 58.1-439.5
The key element is the plan being certified by the local Conservation District. I have long advocated the Citizen Corps program looking to the soil conservation movement as a model. It is a fantastic success story emerging from the catastrophe of the Dust Bowl. The soil conservation movement features strong public-private partnerships, great local, state, and federal involvement, and significant connections with the academic sector as well. It is participation, collaboration, and deliberation in action.
Local Citizen Corps Councils could certify disaster plans, resilience plans, tabletops, exercises, and more. In my experience the vast majority of people value — even enjoy — participating in these processes and activities. But we need some modestly practical nudges to actually do what we want to do.