NEW YORK (
) -- As New York and New Jersey officials outline the financial costs of Hurricane Sandy, which may run in excess of $70 billion, the size of the storm's bill indicates taxpayer funds may be needed to fill a gap between what states, insurers, and the Federal Emergency Management Agency can pay out, and what's actually needed.
Top lawmakers and officials indicated on Monday that the federal government, not just storm battered states, may be asked to foot the bill between Sandy's economic blow and the FEMA funds and insurance-related claims available to handle the storm's aftermath.
Amid uncertainty over the threat of increasing storm damage to the northeast and whether federal lawmakers can even agree on a budget deal to avert a so-called '
,' the question is whether Washington will be willing to foot a recovery bill that could run in the tens of billions.
On Monday, New York State Governor Andrew Cuomo and New York City Mayor Michael Bloomberg unveiled calculations on the Sandy's damages, which showed New York may face a $42 billion hit, highlighted by $19 in damages to New York City's infrastructure, housing and local economy. In New Jersey, Gov. Chris Christie said Sandy's storm toll could reach nearly $30 billion. In Connecticut, damages may reach $360 million.
While calculations of the storms costs are on the rise, states are preparing for payments from FEMA and insurers to remain fixed. For instance, in New York City, Mayor Bloomberg said insurers will likely cover $3.8 billion, while FEMA will contribute at least $5.4 billion. That still leaves New York City in the hole by about $10 billion, which Bloomberg said he would ask for in federal funding from Congress.
"New York has suffered unprecedented damage from Hurricane Sandy, both wide and deep, and it demands a strong and equally serious response from the Federal Government," said New York Senator Charles Schumer, of the state's needed funding in a statement.
In New Jersey, the story is similar. Already, Gov. Chris Christie - a staunch fiscal conservative - has said he will work to get federal funding to pay the state's storm costs in full. On Monday, Christie stuck to that stance. "I stand ready to work with our congressional delegation and the Obama administration to get the funding support New Jersey expects and deserves," Christie said in the statement.
The issue for New York and New Jersey is threefold, as local officials outline storm costs that may soon fall into the a wider congressional budget debate.
Both states are in the process of filling budget deficits, which ratings agency
Standard & Poor's
still expects to run between $1 billion and $3 billion in coming years, indicating fiscal stress prior to the Hurricane's landfall. Sandy also was a serious blow to state agencies like the
Metropolitan Transit Authority
, which face a total of nearly $7 billion in damages and economic loss. In the immediate wake of the storm, S&P said those agencies could see ratings downgrades if 'Sandy's effects are meaningful and longer term,' but it hasn't yet disclosed the rating impact of recent loss projections.
Meanwhile, even worst-case projections of insurance industry payouts signal storm damages and private sector economic loss will come in well above covered claims. The
Property Claim Services
, an aggregate of insurers projected storm claims, calculates insured losses will be $11 billion, while competitors
have increased loss estimates as high as $25 billion. Reinsurer
says it may face an economic hit.
Finally, unlike southern and mid-Atlantic coastal states, New York and New Jersey have little set aside for hurricane and flood related losses, given the rare occurrence of Sandy's northerly landfall and crippling storm surge.
As Sandy's damages grow and local officials prepare to push for federal aid, the ultimate question is whether a budget weary lawmakers in Washington will be willing to let U.S. taxpayers foot the storm's bill, amid uncertainty on the frequency of storms and whether the nation is already poised to run off a 'fiscal cliff.'
-- Written by Antoine Gara in New York