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Capital Budgeting in the Wake of a Natural Disaster

Capital Planning After Disaster

In the wake of any natural disaster, local governments have to mobilize quickly to protect their citizens and begin recovery efforts. In catastrophic disasters, full recovery can be a decades-long process.

Depending on the level of devastation caused by fires, floods, hurricanes, tornados, and other disasters, town leaders are often faced with the enormous task of figuring out how to rebuild an entire community. In addition to the many challenges the town faces, they have to add multi-faceted disaster recovery projects to their capital planning – which means tackling the budgeting process on a scale that many government officials may not have experience with. Suddenly, a town may go from managing a $5 million capital budget to a $100 million capital budget, which may include a variety of State and Federal recovery funding sources in addition to local revenues.

Anytime a local government receives an influx in funds to help manage a natural disaster or other crisis (i.e. COVID-19 pandemic), it can be challenging to find the optimal scenario for appropriating funds to short- and long-term recovery efforts. This job is made all the more challenging when governments use spreadsheets, like Excel, that become highly complex when scaling to manage large, multi-year, multi-fund budgets.

Additionally, a town may have the extra challenge of finding ways to communicate with all of the residents that were displaced by the disaster. Naturally, residents who have left the area will still want updates on the recovery process and the projects that factor into their own decisions on returning or next steps.

How Local Governments Receive Money For Recovery

After a natural disaster, there are many ways a local government can obtain funds for recovery, including:

  • State Funding
  • Federal Funding
  • Grants
  • Statewide disaster accounts, supplemental appropriations, transfer authority, and state agency budgets
  • Property and asset insurance to recover from losses

Developing A Recovery Plan To Begin Rebuilding

A Long-Term Community Recovery Plan is a blueprint for a town to use on the road to recovery. Most plans include short-, mid-, and long-term phases for rebuilding.

Ideally, a LTRP is a comprehensive planning effort that includes resident-driven engagement to understand the community’s aspirations for the future. Active public participation helps define the vision for a path forward in rebuilding a safe, strong, and more resilient community.

Part of the initial planning phase also identifies a town’s strengths, weaknesses, and opportunities — both before and after the natural disaster. A town then typically goes through a process of community meetings, workshops, and town council meetings to develop and finally adopt the LTRP.

Here’s an example of what a LTRP could look like for a town that was devastated by a hurricane:

Phase 1: Recovery – 1.5-3 years

  • Tree removal
  • Debris removal

Phase 2: Rebuild – 10 years

  • Underground utilities
  • Roads
  • Building
  • Planting

Phase 3: Thrive – 10+ years

While some recovery projects are similar to any town’s normal capital projects, some projects are incredibly unique following a natural disaster. Depending on the level of destruction, a town may have to essentially rebuild their entire infrastructure from the ground up.

Effective Collaboration Is Essential When Managing An Influx In Funds After A Natural Disaster

Once recovery projects are identified, they have to be worked into the government’s capital improvement plan in the coming years. Virtually every department is impacted, and effective collaboration is essential for managing such a massive influx in funds.

For governments that use Excel and Word, this is where things can get challenging. Imagine going from $5 million to $100 million in capital projects and managing that on a spreadsheet (or hundreds of tabs on multiple sheets). Even spreadsheet super-users can attest to the finicky nature of managing something so large and complex.

Elected officials must collaborate with multiple department heads, the finance department, and others to create and manage the capital projects on spreadsheets. They have to create multi-plan, multi-year scenarios on countless tabs to find the optimal use of funds over time.

It’s almost impossible to not eventually run into the problem of too many people in a spreadsheet, broken links, or accidental input/deletion — which necessitates countless hours of reconciliation to ensure accuracy before the official capital budget can be adopted.

How Governments Can Modernize To Meet Their Natural Disaster Challenge 

Capital Improvement Planning (CIP) has traditionally been a time-consuming, error-prone process of chasing down requests through Excel or paper forms – leaving finance departments to prioritize and plan for future investments without the right tools to manage the process. These pain points become even more evident on a large scale, as is the case after a widespread natural disaster.

When the number of projects and funding sources suddenly increase after a disaster, many governments find that their typical capital process is not scalable. This is when the search often begins for a modern, cloud-based budgeting solution.

ClearGov’s Capital Budgeting software streamlines and automates the way governments collect, create and communicate their capital improvement plan (CIP). Additionally, it gives organizations a way to stay connected with residents and keep them apprised of projects from anywhere.

Communicating With Displaced Residents & Establishing Confidence

After a natural disaster, governments must figure out ways to communicate with, and get input from, all of the residents that were displaced. This requires a modern form of communication to stay connected with residents and inform them of progress without overwhelming a government’s phone lines and inboxes.

Combined with ClearGov’s Transparency platform, Capital Budgeting Capital Budgeting can further be used to create dedicated project pages for every approved and funded capital project. A town can link to the projects from their ClearGov Transparency center or website’s recovery page, and residents can check the status of capital projects at any time, from any device, and can even subscribe to projects to receive automatic updates.

For each project, residents can click to view the project details, where they will find information such as:

  • a description of the project
  • additional maps and images
  • supporting materials
  • a breakdown of expenses by year that includes engineering, construction, and other components of the project
  • funding sources
  • and more

With a cloud-based tool, local governments can improve the way they budget, spend less time on manual tasks and reconciliation, and more time on what matters most: rebuilding their community.

Watch a quick demo and learn more about ClearGov’s Capital Budgeting solution.

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May 17, 2022

Matt Benati

Matt Benati is Vice President of Marketing for ClearGov®, the leading provider of Budget Cycle Management software for local governments. Matt is passionate about helping organizations modernize their annual budgeting process by automating workflow, increasing collaboration, and improving transparency between governments and citizens.