Pertinent Perils

Six months after Rhode Island experienced the worst floods in over 200 years, the state is considering different proposals to protect against future damage, including aid to small businesses for relocation. The problem, of course, is that the cities and the state are broke. And the small businesses certainly cannot afford to relocate themselves at this point in the economic cycle. The Providence Journal reported the scope of the flood clean-up. The town of West Warwick removed from its roads and sidewalks:

• 2,000 tons of silt and sludge
• 427 tons of construction debris and furniture
• 11.8 tons of ruined electronics, such as microwaves and air conditioners
• 7 tons of water-soaked mattresses and box springs
• 2.5 tons of tires

During the boom cycle, we should have been investing in our infrastructure and in our security, investments that would prove critical in leaner time. Now we have critical needs for our communities, but we lack the means to pay for them.

Record-setting rainfall spurred heavy flooding in much of the Northeast, including my home state of Rhode Island. During the month of March, more than 15 inches of rain fell on the state’s capital, Providence, an all-time record. The floodwater has begun to recede, but the cleanup of what is the worst flooding in 200 years will take some time. The pain is particularly acute as the state already has one of the highest unemployment rates in the country, close to 13% and, with a budget deficit, few resources to fund relief programs. Life has yet to return to normalcy, with National Guard troops deployed in the state, nonessential government workers given time off and schools and businesses, including the University of Rhode Island, closed. Transportation has been disrupted, as stretches of Interstate 95, the highway connecting Boston to New York, were closed. Amtrak suspended train service, as tracks were submerged underwater. The Rhode Island Emergency Management Agency has asked residents to limit their use of electricity and water owing to flooded electrical substations and sewage systems. Public health officials remind residents exposed to floodwater to wash their hands carefully to protect against bacterial and viral infections. The President has issued an emergency declaration for the state, thereby engaging the Federal Emergency Management Agency to coordinate federal relief aid programs. Relief for residents and small businesses, however, is likely to be limited. RI residents were given an extension, until May 31, to file their state and federal income taxes. However, in terms of direct aid, small businesses should not expect much. FEMA programs are generally designed to rebuild public infrastructure, not to provide private assistance. Businesses can adjust their taxes for uninsured losses, such as flood-damaged inventory. But this is where an appropriate insurance program, including business interruption insurance, is critical.