Mother Nature's Economic Punch

When officials in Beverly, Mass., outside of Boston,  calculated their snow removal budget for the year, they figured that $580,000 ought to be sufficient, a 33% increase from the previous year.  It turned out to be woefully inadequate.

According to the Beverly Citizen, the town of about 39,000 is about $250,000 in the red for in its snow removal budget.  Its situation is not unique given rising costs for fuel and salt.  The timing, though, could not have been worse.

Record snow falls have blown a hole in municipal budgets up and down the Eastern Seaboard which were already struggling with high unemployment, a stagnant housing market and decreased state aid caused by the economic slowdown.  Residents in New York City have experienced their snowiest January on record and AccuWeather.com reports that cities throughout the Northeast are seeing double-digit snow accumulations today.

For local governments, there are few more important services that they provide to residents than snow removal.  The weather affects all citizens equally regardless of race, creed or economic status.   People want their roads cleared as soon as the first snowflake falls on the ground and will vote out of office any politician who does not get the job done right.  This vital service, though, carries a hefty price tag.

In Westport, Conn. , officials have “maxed out” their $410,000 snow removal budget.  Cash-strapped Harrisburg, Pa., which last year threatened bankruptcy because of an ill-advised incinerator deal,  has already “exhausted about half of its salt and anti-skid supply and about a third of its overtime budget for snow removal,” according to ABC 27, a local TV station. In Philadelphia, Mayor Michael Nutter told reporters that the city would figure out its cost of removing the wintry accumulation later.

“I have no idea what the different storms have cost. …  They’ve pretty much have been coming on a weekly basis,” said Nutter in a press conference. Last year,  Nutter’s efforts to tax sugary sodas and other drinks to close the City of Brotherly Love’s budget deficit failed.  He also recently joined several other big city mayors to press for more federal aid.

Philadelphia, like the rest of the Northeast, expects significant snowfalls in the winter. Southern cities, such as Atlanta, do not.   The Georgia city was crippled by a Jan. 9 storm that dumped 4 to 6 inches, which in the Northeast would have barely raised an eyebrow.  Residents complained that the city’s response was inadequate.  Early estimates for the region’s snow removal costs were $1.6 million, according to the Atlanta Journal-Constitution.

Officials in Maury County, Tenn., which is about 50 miles from Memphis, were overwhelmed by the recent storm that hit their community.

“The local highway department had only have about 25 workers trying to clear the entire county – more than 850 miles of roads,” says News Channel 5,  a local TV station. “Administrators with the highway department said they simply cannot handle it all.”

If people hate the weather now, they better grin and bear it because more of the same is on the way. AccuWeather.com Chief Long Range Forecaster Joe Bastardi expects this winter to be the coldest since the 1980s and for wintry events to last into April in some areas, which would be longer than last year. If that is true, that is bad news for the economy.

Local governments will need to turn to states for assistance, which will need to seek aid from the federal government because they are broke too.  Of course, the federal government has a deficit topping more than $1 trillion,  so it doesn’t have much spare change either.   Let’s not forget the impact the weather has  on retail sales and economic productivity.

In the end, it’s in the public interest for snow to be removed from roads to prevent accidents and allow emergency responders to gain access to the places where they are needed.  The problem which no one has figured out how to solve is how to pay for this needed government service.  Taxpayers, who desperately need a break, probably are not going to get one this year because of Old Man Winter.

–Jonathan Berr