Weather and climate-related disasters like floods and wildfires cause tens of billions of dollars in damage each year. When events are granted a presidential disaster declaration (PDF), states are eligible for federal government support to cover a substantial portion of disaster-related costs. However, the Trump administration is proposing changes that would shift more of the financial burden to states.
Last week, CNN reported that the Federal Emergency Management Agency (FEMA) plans to change the disaster declaration process ahead of the 2025 hurricane season, which starts next month. These proposals notably include raising the damage threshold for a presidentially declared disaster, denying major disaster declarations for snowstorms, and limiting the federal cost share for public assistance funding after a disaster to 75 percent.
To understand what these proposed changes could mean for federal disaster spending and state and local government budgets, we analyzed FEMA data of disasters from 2008 to 2024. We find these changes would substantially reduce the number of declared disasters (71 percent of events from 2008 to 2024 would not have qualified) and shift significant costs to state and local governments: approximately $41 billion in public assistance spending over the same 16-year period.
Understanding the disaster declaration process
After every disaster, state, tribal, territorial, and local governments conduct damage assessments. Disasters that cross certain damage thresholds may be eligible for a presidential disaster declaration determined at the discretion of the president, but some particularly threatening events receive an expedited declaration before damages are incurred or estimated.
To be declared a disaster, the damage assessment should exceed the statewide per capita impact (PCI)—a ratio of a disaster’s monetary damage to the state’s population. In 2025, disasters with a PCI above $1.89 are considered eligible for a major disaster declaration. The federal government can and sometimes does look beyond the PCI when considering a request, but it tends to be the minimum threshold.
Once a presidential declaration is made, the federal government can render aid through FEMA’s Disaster Relief Fund. Federal aid falls into two categories: individual and public assistance. Individual assistance programs are designed to help disaster survivors and include items like emergency sheltering and unemployment assistance. Public assistance programs primarily go to state, tribal, territorial, and local governments for activities like clearing debris or repairing and replacing disaster-damaged infrastructure. The near-term changes being considered by FEMA are specific to public assistance programs.
The proposed changes would lead to fewer disaster declarations and less federal funding
We analyzed 870 major disaster declarations from 2008 to 2024 that received public assistance grants and for which we could find the preliminary damage assessment reports. In total, these disasters led to more than $190 billion in public assistance spending (in 2024 dollars), with roughly $170 billion paid for by the federal government and $21 billion paid for by state and local governments. Most of this spending went toward a small number of events. Hurricane Maria led to more than $78 billion in public assistance costs, and Hurricane Sandy cost more than $22 billion in New York alone.
To understand how the proposed changes would have affected federal public assistance spending for these disasters, we quadrupled the PCI threshold for each year, in line with the proposed quadrupling of the 2025 PCI threshold from $1.89 to $7.56. For example, in 2015, the PCI indicator was $1.41, so we assumed the changes would have eliminated declarations for disasters with a PCI of $5.64 and below. We also assume that all events with an expedited declaration would continue to receive a presidential declaration even after the proposed changes, as these events tend to be large and costly but do not have PCI data.
The proposed changes to the PCI threshold and the removal of all snowstorm declarations would have meant 71 percent of major disasters from 2008 to 2024 would not have received a presidential disaster declaration. As a result, roughly $15 billion in federal public assistance funds (9 percent of all federal public assistance funding) would have shifted from the federal government onto state and local governments.
States with large populations and significant disaster losses—New York, California, Florida, and Texas—would have lost the most funding because of these changes, but all states would be affected. Per capita, states like Iowa ($155) and Hawaii ($145) would have lost the most federal support. In states that suffered smaller disasters, the changes would wipe out nearly all public assistance support. In Pennsylvania and Ohio, 100 percent of federal public assistance funding across their respective eight and six disaster events would be lost.
Some events stand out for their relatively high cost, even as they fall below the new PCI threshold. Florida after 2020’s Hurricane Sally would have lost more than $200 million in federal funding to help cover public assistance costs.
Changes would also shift more of the cost burden for disasters to the states
The 1966 legislation that established FEMA set a 75 percent minimum federal cost share for most public assistance spending, meaning the federal government covers at least 75 percent of costs while state and local governments cover the rest. In recent years and across administrations, however, the executive branch has taken on a larger share of public assistance costs. Now, the new proposed changes recommend sticking to the minimum 75 percent federal cost share.
In theory, this change would have shifted $27 billion in public assistance costs from the federal government to state and local governments between 2008 and 2024. Not surprisingly, it would have the largest effect on states and territories that receive large amounts of public assistance dollars and that tend to suffer from the highest-cost disasters, which have the greatest likelihood of receiving a cost-share adjustment. However, for disasters of all sizes, taking on additional spending can be challenging, especially for smaller cities, towns, and rural governments with relatively limited budgets and tax bases.
Changes could leave state and local governments facing financial challenges
FEMA’s proposed changes would place greater financial responsibility for disasters on state and local governments. In part, this aligns with long-standing, bipartisan efforts to create clear incentives for communities to mitigate risk.
However, despite bipartisan support for disaster management reform, the rapid pace of these proposed changes—coupled with the elimination of FEMA’s hazard mitigation programs and staff reductions at the agency—could leave state and local governments with severe fiscal and technical challenges following disasters in the coming years. Already, the Trump administration has denied state requests for major disaster declarations, including from the governors of Washington and Arkansas.
Adequate financial resources are essential for the speedy recovery of communities in the wake of disasters. To adapt to the changes proposed by FEMA, states and local governments will need to adjust their long-term budgets to account for the expected loss of federal aid, in some cases by hundreds of millions of dollars per year. But with many state budgets already set or nearing completion for the next fiscal year (or longer) and with hurricane season and the western wildfire season approaching, these changes could cause significant short-term challenges, potentially leaving communities in disrepair for longer and leading to tax increases for their residents.
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