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Responsibly Rebuilding AlbertaCTF Recommendations for Rebuilding
from the 2013 Floods
DerekFildebrandt
CanadianTaxpayersFederation
T:1-800-661-0187
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About the Canadian TaxpayersFederationTheCanadianTaxpayersFederation(CTF)isafederallyincorporated,non-profitandnon-partisan
advocacyorganizationdedicatedtolowertaxes,lesswasteandaccountablegovernment.TheCTF
wasfoundedin1990whentheAssociationofSaskatchewanTaxpayersandtheResolutionOne
AssociationofAlbertajoinedforcestocreateanationaltaxpayersorganization.Today,theCTFhas
morethan84,000supportersfromcoast-to-coast.
TheCTFmaintainsafederalofficeinOttawaaswellasprovincialandregionalofficesinBritish
Columbia,Alberta,thePrairies,OntarioandAtlanticCanada.Provincialandregionalofficesconduct
researchandadvocacyactivitiesspecifictotheirprovincesinadditiontoactingaslocalorganizersof
nation-wideinitiatives.
CTFofficesfieldhundredsofmediainterviewseachmonth,holdpressconferences,utilizesocial
medialiketwitter,Facebook,YouTubeandourownblog,aswellasissuingregularnewsreleases,
commentariesandpublicationstoadvocateonbehalfofCTFsupporters.TheCTFsflagship
publication,TheTaxpayermagazine,ispublishedfourtimesayear.ActionUpdate e-mailsoncurrent
issuesaresenttoCTFsupportersregularly.CTFofficesalsosendoutweekly LetsTalkTaxes
commentariestomorethan800mediaoutletsandpersonalitiesnationwide.
CTFrepresentativesspeakatfunctions,makepresentationstogovernment,meetwithpoliticiansand
organizepetitiondrives,eventsandcampaignstomobilizecitizenstoaffectpublicpolicychange.
AllCTFstaffandboarddirectorsareprohibitedfromholdingamembershipinanypoliticalparty.TheCTFisindependentofanyinstitutionalaffiliations.ContributionstotheCTFarenottaxdeductible.
CanadianTaxpayersFederation-AlbertaOffice
2625ShaganappiTrailNW,
POBox84171MarketMall
Calgary,AlbertaT3A5C4
Phone:1-800-661-0187
Email:[email protected]
Website:taxpayer.com
DerekFildebrandt
PublishedinAugustof2013
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Table of Contents
ABOUTTHECANADIANTAXPAYERSFEDERATION 1
TABLEOFCONTENTS 2
I-SUMMARYOFFACTS&RECOMMENDATIONS 4
SUMMARYOFFACTS 4
SUMMARYOFREBUILDINGRECOMMENDATIONS 4
SUMMARYOFFISCALRECOMMENDATIONS 5
CONDITIONSFORARESPONSIBLERECOVERY 5
II-INTRODUCTION 6
III-CONTEXT:PRE-FLOODFISCALSTATUS 7
BUDGET2013-14 7
TABLE1:PRE-FLOODFISCALOUTLOOK($MILLIONS) 8
SUSTAINABILITYFUND 9
TABLE2:SUSTAINABILITYFUNDBALANCE2008-09TO2013-14* 10
IV-RECOVERYPACKAGE 11
CTFSUPPORTERSURVEY 11CTFSUPPORTERSIMPACTED 11
REBUILDINGPRIVATEPROPERTY 12
CONDITIONSFORAID 12
CTFSUPPORTERVIEWSONAID 13
V-LONGTERMPROTECTION&INSURANCE 15
NOFUTUREAID? 15
CTFSUPPORTERATTITUDES 16
USEXPERIENCEWITHMANDATORYINSURANCE 17
BACKGROUND 17
PERCEPTIONSOFRISK 18
EXPECTATIONSOFGOVERNMENTAID 18
INSURANCEASDISCRETIONARYSPENDING 19
FAILUREOFTHEUSINSURANCEMODEL 19
FLOODINSURANCEFORALBERTANSANDCANADIANS 20
NOWATERTIGHTSOLUTION 20
MANDATINGFLOODINSURANCEFORAT-RISKOWNERS 21
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FEDERALNATURALDISASTERINSURANCEMANDATE 23
VI-PAYINGFORTHERECOVERY 24
MUNICIPALPUBLICINFRASTRUCTURE 24FEDERALANDPROVINCIALSUPPORT 24
CALGARYANDTHE$52MILLION 24
ALBERTA 25
PUBLICINFRASTRUCTURE 25
TOTALCOSTS 26
NEWDEFICITPROJECTION 26
TABLE3:UPDATEDFISCALOUTLOOK($MILLIONS) 27
TABLE4:SUMMARYOFPROPOSEDCHANGESTOBUDGETOVER2YEARS($MILLIONS) 28
REALLOCATINGSPENDING 30
TABLE5:RESPONSIBLYREBUILDINGALBERTAFISCALPLAN($MILLIONS) 30
VIII-BUDGETINGFORDISASTERS 32
DISASTERSPENDINGHISTORY 32
CHART2:DISASTER&EMERGENCYSPENDING,2003-04TO2012-13 32
VIII-CONCLUSION 34
APRAGMATICSOLUTION 34
IX-APPENDIX 35
EXTENDEDCTFSUPPORTERVIEWS 35
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I-Summary of Facts & RecommendationsSummary of Facts
Theconsolidateddeficitisestimatedtogrowfrom$5.1billionto$8.1billionduetotheflood.
Withoutmajorcorrectiveaction,Albertawillrunacumulativedeficitof$14billionoverthenext
threeyears.
TheSustainabilityFundisestimatedtobeentirelydepletedthisfiscalyearbasedonpre-flood
spendingplans.
Summary of Rebuilding Recommendations
InadditiontoMinisterGriffithssoftcaponaidforprivatepropertydamage,introduceahard
capbysettinganaidlimitof$100,000onbasicrepairs.
Mandatethatallat-riskpropertyownerspurchaseprivateoverlandfloodinsurance.Determining
whichpropertiesareat-riskshouldbebasedonclaimsundertheDRPwithinthelasttenyears.
Providerelocationassistancetoownersinhigh-riskareasuptothe2013taxassessedvalueuptoa
hardcapof$500,000.
Thegovernmentshouldindicateitsintentionstowardsaninsurancerequirementimmediatelyin
ordertoallowpropertyownerstomakedecisionsbetweenrebuildingandrelocating.
Workwiththefederalgovernmenttotowardstheestablishmentofafederalnaturaldisasterinsurancemandate.
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Summary of Fiscal Recommendations
Reducenon-disasterrelatedoperatingspendingby$2.7billionduringthe2013-14and2014-15fiscalyears,andfreezetheremainingoperatingspendingfor2014-15and2015-16.
Extendthe2014-15and2015-16CapitalPlanoverthreeyears.Operatingandcapitalspending
measureswillfreeupacumulative$4.4billionannuallyforemergencyfloodspending.
Calgaryshouldspendtheinitial$52millionoftaxroomonupgradesfromdamagedpublic
infrastructure,withthestrictconditionthatthetaxroomisreturnedtotaxpayersinfutureyears.
Budget$500millionfordisasterandemergencyspendingeachyear.
Conditions for a Responsible Recovery
1. Thatthegovernmenthaveaplantopayfortherebuildingprogrambyredirectingexisting
spendingcommitmentstowardsthefloodtoensurethatthepre-flooddeficitof$5.1billiongrows
aslittleaspossible.
2. Thattherebereasonablelimitscommiseratewithpastdisasteraidontheamountthat
taxpayerswillbeliabletopayforindividualpropertyownersfacingdamages;and
3. Thattaxpayersandpropertyownersbeprotectedinthefuturetoensurethatpaymentsmadeto
privatepropertyownersareone-timeonly,withfuturepropertydamagecostsexternalizedtothe
propertyowner.
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II-Introduction
OnJune20th,2013,therealtiesoflifechangedforthousandsoffamiliesandbusinessesin
southernAlbertaasfloodsonascalerarelyseen.Thismeantthatnaturealteredtheirreality
andpeoplehadtoadapttonewcircumstances.
Afloodstrickenfamilymightcanceltheirplansforvacationortobuyanewcar.Asmall
businessmightcancelplanstobuynewcapitalitemslikemachinery.Alargebusinessmight
putoffplansforexpansion.Thisdoubtlesshappenedonalargescaleforthethousands
affected.
Thefinancialrealitiesofgovernmentshavealsobeenaffected.
Thefederal,provincialandmunicipalordersofgovernmentallreactedquicklytotheflood,
andfirstresponders,victims,volunteersandeverydayAlbertansstoodtogethertopull
throughtheinitialchallenges.
ButmajorproblemsawaitAlbertainthemedium-and-longterm.Withthenaturaldisaster
behindAlberta,afiscaldisasternowlooms.Whilesignificantspendinganddeficitswillbe
requiredtorebuild,demandthreatenstoturntheprovincialgovernmentsalreadyreckless
fiscalfootingintoanall-outdisaster.
Liketheflood-strickenfamilythathadtocancelitsvacationplans,sotoomustAlbertasgovernmentresponsiblyresetitsprioritiesinordertoensurethatthephysicaldamageofJune
2013doesnotbecomefiscaldamagelongintothefuture.
ThisistheCanadianTaxpayersFederationsplantoresponsiblyrebuildAlberta.
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III-Context: Pre-Flood Fiscal Status
Budget 2013-14
AlbertaFinanceMinisterDougHornertabledAlbertas2013-14budgetonMarch7th,2013,
titlingitResponsibleChange.ItwasacurioustitleforbudgetthatpromisedtoturnAlberta
backtoGetty-eradeficitsandobscurefinancialreporting.
Thebudgetitselfmovedmostcapitalspendingoffofthebooksandalteredwhatwas
traditionallymeasuredastheprovincesdeficit.Inthebudgetlockup,theCanadianTaxpayers
Federation(CTF),oppositionparties,mediaoutletsandstakeholdergroupswereuniversally
unabletopegthedeficitwithtotalconfidence.Asaresult,thereweredozensofestimatescalculatedbyallconcernedgroups,butnoonecouldsaywithtotalcertainly,justhowmuch
theprovincewascomingupshort.
ThenextmorningtheGlobeandMailprojectedthedeficitwas$1.9billion1.Theopposition
Wildroseprojected$5.5billion2.TheEdmontonJournalandCalgarySunclaimeda$1.97billion
deficit,$4.3billioninborrowinganda$2.1billionwithdrawalfromtheSustainabilityFund3.
Theconfusionisunderstandablewitheveryonehavingtodothemathbackwardsandtryto
rebuildthebudgetbasedonearlieryears.
OnMarch13
th
,theCTFreleaseditspost-budgetanalysiswithadeficitprojectionforBudget2013-14:$5.1billion.
Theconfusionstemsfromadrasticchangeinaccountingpractices,thattheprovincesauditor
generalhascondemnedasextremelydifficultforAlbertansandhisownofficeto
understand4.Inshort,thegovernmentwentfromonebudgetandonedeficitnumber,to
threebudgetsandapileofdifferentnumbersrepresentingdeficits,borrowingand
adjustments.
1Wingrove,JoshandWalton,Dawn.CanadaswealthiestprovincecutsdeepasAlbertaembracesausterity.The
GlobeandMail.March72013.http://www.theglobeandmail.com/news/national/canadas-wealthiest-province-
cuts-deep-as-alberta-embraces-austerity/article9474700/ 2Budget2013:Backindebt.WildroseAllianceParty. http://www.wildrose.ca/feature/budget-2013-back-in-
debt/3Larson,Jackie.Albertagoingdeeperindebt,unveilsbudget.March7,2013.CalgarySun.
http://www.calgarysun.com/2013/03/07/alberta-releases-budget 4Henton,Darcy.EventheauditorgeneralhastroublefiguringoutAlbertascomplicatedfinances.Calgary
Herald.
http://www.calgaryherald.com/Even+auditor+general+trouble+figuring+Alberta+complicated+finances/8636505
/story.html
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Table 1: Pre-Flood Fiscal Outlook ($ millions)
Operating Budget 2013-14 2014-15 2015-16
Total Revenue $38,612 $41,911 $44,998Less
Revenue received for capital purposes $(522) $(464) $(389)
Investment income retained by the Heritage Fund $(297) $(379) $(651)
Savings of resource revenue - $(416) $(492)
Allocation for the Capital Plan debt servicing costs $(238) $(404) $(593)
Operational Revenue $37,555 $40,248 $42,873
Operational Expenses
Operating expenses (net of in-year savings) $36,422 $37,144 $37,904
Disaster / emergency assistance $200 $200 $200
Amortization / inventory consumption / loss on disposals $982 $1,000 $1,040
General debt servicing costs $402 $424 $437
Total Operational Expense $38,006 $38,768 $39,581
Operational Surplus / (Deficit) $(451) $1,480 $3,292
Capital Budget
Capital Plan Spending $5,209 $5,172 $4,660
Capital Plan Borrowing
Alternative financing (P3s) $344 $206 $114
Transfer from Contingency Account - - -
Direct borrowing $3,190 $4,379 $4,039
Withdrawal from Capital Plan financing account $1,067 - -
Deposit to Capital Plan financing account - - -
Total Capital Plan Borrowing $4,601 $4,585 $4,153
Funded Capital Plan
Revenue received for capital purposes $522 $464 $389Retained income of funds and agencies for capital purposes $84 $118 $118
Disposals of capital assets $2 $5 -
Total Funded Capital Plan $608 $587 $507
Capital Plan Surplus / (Deficit) $(4,601) $(4,585) $(4,153)
Consolidated Surplus / (Deficit) $(5,052) $(3,105) $(861)
Theoperatingdeficitin2013-14wasprojectedtobe$451million.Thatisacashshortfallfor
theday-to-dayexpensesofthegovernmentforthingslikegovernmentemployeesalariesand
runningMRIs.ThisisthefigurethatFinanceMinisterDougHornerclaimedwasthedeficit.
Yet,whilethegovernmentplannedtospend$38.6billiononoperations,thereisstillanother$5.2billionspentontheCapitalPlan,whichhasbeenrolledintoseparatebudgetentirely.
TheCapitalPlanwillnowbefundedalmostentirelybydebt(88%),inoneformoranother.
Thereasonthatthisisnotconsideredspending,isbecausethegovernmentnoweffectively
considersborrowedmoneytoberevenue.
TounderstandhowmuchoftheCapitalPlanisborrowed,onehastopeeloutseveralline
itemsthatarealreadycountedintheOperationalPlan.Thisincludesthingslikefederal
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transfersforcapitalfundingandself-generatedincomefromarms-lengthagencies.This
leavestheCapitalPlanwithafundingshortfallof$4.6billion.Thisismoneythatwillcome
fromtraditionaldebtandpublic-privatepartnerships.
ThefundingshortfallsfortheCapitalandOperationalplanstakentogetherproducea
consolidateddeficitof$5.1billion.ThisisthenumberthatAlbertasgovernmentis
obfuscating.
TheCTFscalculationofthereal,consolidateddeficitexcludesoneareaoftheoperational
budgetthatsomecalculationshaveincluded:cashadjustments.Forthemostpart,these
cashadjustmentsconsistofthingslikestudentloansandprofitsreturnedtotheAlberta
TreasuryBranch.Whileseveralmediaorganizationsandoppositionpartieshaveincluded
cashadjustmentsintheircalculationsofthedeficit,theCTFbelievesthattheseitems
shouldberightfullyexcluded.
Thepointbeing,beforeasingledropofrainfellinJune,Albertawasalreadyontracktoruna
$5.1billionconsolidateddeficitin2013-14.
Sustainability Fund
CTFSupporterSurveyComments
WhathappenedtotheSustainabilityFundthatwasdesignedtoassistAlbertansincasesofemergencies?
Whereisthe$16billionoftheSustainabilityFund?Thatshouldbeusedandonlythat.Answersneedtobe
givenonthis.
TheSustainabilityFundexistsorexistedasAlbertasrainydayfund.Establishedasaway
fortheprovincetosaveforshort-to-mediumtermdownturnsinrevenueorupticksin
emergencyspending,itwasintendedasavehicletosmoothfiscalvariances.Unfortunately,it
wasabusedasalong-termcrutchforoverspending.
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Table 2: Sustainability FundBalance 2008-09 to 2013-14*
Year Millions of $
2008-09 $16,8222009-10 $14,9832010-11 $11,1922011-12 $7,4972012-13 $3,3262013-14* $0
*CTFProjection
Injustfiveyears,theSustainabilityFundwillhavegonefromanimpressivesurplusof$16.8
billion,tobeingdrainedbytheendofthecurrentfiscalyearbasedontheCTFspre-flood
projections.Bytheendoffiscalyear2012-13,theSustainabilityFundhadbeendrawndown
tojust$3.3billion.
Chart 1: Sustainability Fund, 2008-09 to 2013-14*
*CTFProjection
Withapre-flooddeficitprojectedof$5.1billionfor2013-14,thiswillleavetheSustainability
Fundentirelyeliminated,andafurther$1.7billioninborrowingrequirements.WhileFinance
MinisterDougHornermaytechnicallyleavesomecashinthefund,itwillbemorethanborrowedagainsttothepointwhereitwillbeeffectivelyliquated.
Forallintentsandpurposes,theSustainabilityFundisgone.Asaresult,theprovincedoesnot
havethemoneynecessarytofundanyfloodreliefprogram.
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
MillionsofDollars
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IV-Recovery Package
CTF Supporter Survey
InJulyof2013,theCTFsentanonlinesurveytoover21,000Albertasupporters.1,476
respondedtothesurveys11questions,includinghundredsofpersonalized
recommendations.Thisreportanditsrecommendationsareguidedbythesurveysresults.
CTF Supporters Impacted
FourpercentofCTFsupportersdirectlysufferedpropertydamagefromthefloodsinSouthernAlberta,andanother6%wereevacuatedfromtheirhomes.Twenty-sevenpercent
hadfamilyorclosefriendswithpropertydamageand19%hadfamilyorfriendswhowere
evacuated.
CTFsupportersandfamilyaffected
4%ofsuffereddamage
6%wereevacuated
27%hadfamilyorclosefriendssuffer
damage
19%hadfamilyorfriendsevacuated
Ofthosewhosufferedpropertydamage,38%estimatedtheirlossestobelessthan$10,000,
31%estimatedtheirlossestobebetween$10,000and$50,000,15%between$50,000and
$100,000,andanother15%between$100,000and$500,000.Norespondentsreported
damagesover$500,000.
DamagessufferedbyCTFsupporters
38%lessthan$10,000
31%between$10,000and$50,000
15%between$50,000and$100,000
15%between$100,000and$500,000
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Rebuilding Private Property
Conditions for Aid
Theissueoftaxpayerspayingtorebuildandrepairprivatepropertyhasinitiatedsome
discussionsincePremierAlisonRedfordpledgedtodoso.Sincethefirstdaysoftheflood,the
CTFhasrecognizedthatgovernmentassistancewillberequiredintherebuildingprocess,
albeitwithconditions.TheCTFsConditionsforaResponsibleRecoveryare:
1. Thatthegovernmenthaveaplantopayfortherebuildingprogrambyredirectingexisting
spendingcommitmentstowardsthefloodtoensurethatthepre-flooddeficitof$5.1billiongrows
aslittleaspossible.
2. Thattherebereasonablelimitscommiseratewithpastdisasteraidontheamountthat
taxpayerswillbeliabletopayforindividualpropertyownersfacingdamages;and
3. Thattaxpayersandpropertyownersbeprotectedinthefuturetoensurethatpaymentsmadeto
privatepropertyownersareone-timeonly,withfuturepropertydamagecostsexternalizedtothe
propertyowner.
Thisreportwilldealwithconditiononeensuringthattheprogramisresponsiblyfundedin
SectionVIofthisreport.
Theprovincewentatleastsomewaytosatisfyingconditiontwo(reasonablelimits)when
MunicipalAffairsMinisterDougGriffithservednoticeonJune28thatprivateproperties
wouldonlyreceivefundingtoabasicleveloffinish.Inpractice,thismeansthattaxpayers
willpaytorebuildpeopleshomes,butthattheywillnotpayforupgradeslikehardwood
floorsandgranitecountertops.Nonetheless,largeluxuryhomeswillpotentiallyleave
taxpayersonthehookforsimilarlylargebillsthatgobeyondwhatisnecessarytomakea
homelivableagain.
TheCanadianTaxpayersFederationsupportsrebuildinghomesandbusinesses,butonlyif
thisistrulyaone-timeventure.
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CTF Supporter Views on Aid
CTFsupportersexpressedawillingnesstoopenthepublicpursetohelprebuildprivate
properties,butwithavarietyofstrongcaveats.
Shouldtherebyamaximumcapontheamountoffloodreliefpaid?
7%No,governmentshouldcoveralldamagesentirely.
78%Yes,thereshouldbeamaximumamountthatthegovernmentwillcover.
15%Thereshouldbenofundingtoprivateownerswhatsoever.
At84%,theoverwhelmingmajorityofCTFsupportersbelievethatthereshouldbe
governmentaidtoflooded-outpropertyowners,with7%believingthatalldamagesshould
becoveredregardlessofcost,and78%supportingaid,butwithamaximumcap.Fifteenpercentbelievethatthereshouldbenofundingforprivatepropertyowners.
Ifthereisamaximumcaponassistance,atwhatlevelshoulditbe?
42%.Upto$100,000
23%.Upto$100,000and50%beyondthat
11%.Upto$500,000
5%.Upto$500,000and50%beyondthat
1%.Upto$1million
2%.Upto$1millionand50%beyondthat
CTFSupporterSurveyComments
Thegovernmentshouldprovideallhabitablehomeswithnewfurnaces,hotwatertanks,electricalpanels,
fridges,freezers,stoves,appliances,etc.forthingsthatarethenecessityoflife.Ifthehomesarenolonger
habitable,thegov'tshouldpaytotearthemdownandremovethemandthehomeownershouldnotpay
anypropertytaxesuntilanewhouseisacquired.
Capthepaymentsandthenadvisenofutureassistance,everifyouremaininafloodplain.
MostCTFsupporterswereinfavorofeithersettingahardcapof$100,000(42%),orahard
capof$100,000and50%ofdamagesbeyondthat(23%).Acapof$100,000wasalsoapplied
tovictimsofthe2005floods.
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Recommendation
InadditiontoMinisterGriffithssoftcaponaidforprivateproperty
damage,introduceahardcapbysettinganaidlimitof$100,000on
basicrepairs.
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V-Long Term Protection & Insurance
No Future Aid?
PremierRedfordhasstatedthatwhilethegovernmentwillbethereforprivateproperty
ownersthistime,aidinthefuturewillhavestringsattached.Anypropertyownerwhomakesa
claimundertheDisasterRecoveryProgram(DRP)andchoosestostaywheretheyarewill
haveanotationattachedtotheirpropertytitleindicatingthattheirlandwasflooded.For
propertyownersinfloodways,thiswillcomewithanadditionalwarningthattheywillnotbe
eligibleforfutureaid.Forpropertyownersinthestilldangerousbutslightlylessinundated
floodfringes,theywillbeeligibleforfuturefloodaid,butonlyiftheytakeprescribedflood
mitigationmeasures,whichthegovernmentwillalsosubsidize.Thosewhodosowillalso
havetheflood-warningnotationremovedfromtheirpropertytitle.
Thesearepositivemeasures,howeverfewAlbertanstrulybelievethatiftheprovincefaced
anothermajorfloodin20to40yearsthatthegovernmentwouldallowfamiliesand
businessestofacefinancialruin.Theresultmostsurelywouldbeanotherroundof
governmentaidforownersinbothfloodplainsandfloodways.Thisisexposingbothproperty
ownersandtaxpayerstounnecessaryrisk.
Thepremiersstatementthatthisroundofaidisone-time-only(forfloodways)is
commendable,butdifficulttobelieveifitisnotbackedwithasetofpoliciesthatbuildsin
protection.Furthertothis,thegovernmenthasalreadystatedthatownersinfloodfringeswill
beeligibleforfutureaidsolongastheytakemitigationmeasures.
OnJuly25th,PremierRedfordmetwiththeInsuranceBureauofCanadaandseveralCEOsof
insurancecompanies5.Whilesomebusinesseshadcoverage,thevastmajorityofAlbertans
wereunabletopurchaseoverlandfloodinsurance6.Thismeantthatevenresponsiblehome
andbusinessownersthatfeltthemselvesatriskoffloodinghadlittleabilitytoprotect
themselveswithinsurance.ThisisacriticalpointinthewillingnessofAlbertanstoopenthepublicpursetoaidthesefamiliesandbusinesses.
5AlisonRedfordMeetswithInsuranceCompaniestoTalkFlooding.TheCanadianPress.July25
th,2013.
http://www.huffingtonpost.ca/2013/07/25/alberta-flooding-insurance_n_3653867.html 6Albertafloodvictimsmostlyoutofluckwithinsurance.TheCanadianPress.June21,2013.
http://www.cbc.ca/news/business/story/2013/06/21/business-flood-insurance-alberta.html
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CTF Supporter Attitudes
Howshouldthegovernmentprotectpropertyowners&taxpayersinthefuture?
4%.Createagovernment-runinsuranceagencyforoverlandflooding.Purchaseshould
bemandatory.
23%.Createagovernment-runinsuranceagencyforoverlandflooding.Purchaseshould
bevoluntary,butownersmustsignawaivermakingclearnogovernmentaidwillbe
availableinthefuture.
5%.Requiremandatoryinsuranceforallpropertyowners,buthaveprivatecompanies
provideit.
30%.Requiremandatoryinsuranceforallpropertyownersinat-riskorfloodproneareas,
buthaveprivatecompaniesprovideit.
39%.Nothing.Insurancecompaniesdontinsureoverlandfloodingforareason.
CTFsupportersweredividedontheissueoffloodinsurance.Twenty-sevenpercent
supportedthecreationofagovernment-runinsurancecompany,withmostofthosebelieving
thatthepurchaseofsuchinsuranceshouldbevoluntary,butthatthoserefusingtobuyshould
havetosignawaiverforgoingfutureaid.
CTFSupporterSurveyComments
Donotallowbuildingonfloodplainsunlesstheownersexceptfullresponsibilityandhaveprivate
insurancecoverage.
Introducemandatoryprivatehomeownerinsurancetocoverfloodinsuranceassoonaspossibleandmake
thisfloodmoneyaonetimedealthiswaytheresponsibilityfallsontothehomeownerifyouchoosetolive
inahighriskareathecostofyourinsurancewillreflectit.
Ifinsurancecompaniesdon'tcoverthistypeofdamage,startagovernmentinsuranceprogramthat
insuresproperty.Insurancecompaniesareinitforprofit.Givethemtheultimatum,eithercoverthecostor
wewillstartagovernmentprovincialinsurance.
Ensurethatthere'sa'notification'onthepropertyregistrationwhenthehomeinafloodplainsoproperty
ownersknowwhattheyarebuying.Undernocircumstancesshouldthegovernmentgetintoflood
insurance.Therearecompanieswithactuariesthatcandothat.Onlythoseinpostalcodeswithrisks
shouldhavemandatorycoveragerequired.
Anynewdevelopmentwithina200-yearfloodplainwithintheprovincemustbeleviedafeeequalto1/3of
thevalueoftheconstructiontobepaidintoafloodinsuranceaccount.
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Thirty-fivepercentsupportedthegovernmentmandatingthatprivatepropertyownershave
insuranceprovidedbyprivateinsurancecompanies.Mostofthesebelievedthatitshould
onlyapplytothoseinareasthatareat-riskofflooding.
Thirty-ninepercentsupportednopushforinsuranceintheprovince,believingthatinsurance
companiesdontprovideoverlandfloodinsuranceforareason.
While61%ofCTFsupporterswantedtoseesomegovernmentactiontomakeoverland
floodinginsuranceeitheravailableormandatory,theywerequitedividedaboutthebestway
togoaboutit.
US Experience with Mandatory Insurance
Background
LikeCanada,theUnitedStateshasstruggledwiththechallengeofexternalizingtheriskof
livinginflood-pronelands.TheUnitedStateshasexperimentedmuchfurtherthanCanada
however,leavingexamplesandlessonstobelearnedfromitsmistakesandsuccesses.
Privatesectorfloodinsurancewasofferedbeginninginthe1890s,howeverthelosses
incurredbyinsurersinthe1927Mississippifloodsledtothewithdrawalofcoveragebythe
endof19287.Fromthenon,floodinsurancewasrarelyofferedbytheprivatesectoruntilthe
USCongresspassedtheNationalFloodInsuranceProgramin1938.ThismadetheUSfederalgovernmenttheprimaryfloodinsuranceproviderforhomeownersandsmallbusinesses.This
stillinvolvedprivateinsurerswhowouldmarketpoliciesundertheirownnamesandretaina
percentageofthepremiumstocovercosts,butwasbackedbytheUSfederalgovernment.
Communitiesthattookpartintheprogramwererequiredtofollowlanduseregulationsand
buildingcodestoreducerisk8.Whileprivateinsurersrefusedtoprovidefloodinsuranceto
homeownersandsmallbusinesseswithoutfederalbacking,theyoftenwerewillingtoinsure
largecommercialproperties.
HowardKunreutherandMarkPaulyoftheUniversityofPennsylvaniaconductedanextensive
studyonthedifficultyofinsuringagainstcatastrophiceventsliketerroristattacks,floodsand
hurricanes.Thereasonsforthiswerenumerous,includingthedifficultyofinsurance
7Insurance:FactsandProblems.Manes,Alfred.HarperBrothers.19388TheNationalFloodInsuranceProgram.Pasterick,EdwardT.ApartofHowardKunnreutherandRichardJ.
RothSr.sPayingthePrince:TheStatusandRoleofInsuranceAgainstNaturalDisastersintheUnitedStates.
1998.
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companiesstayingsolventafteracatastrophiceventinwhichithasmanypolicyholders
affected.
Perceptions of Risk
PhilDaviesoftheFederalReserveBankofMinneapolisarguesthatmostpeopledonot
accuratelyunderstandtherisksthatfloodsrepresent9.
ThisissupportedbyKunreutherandPaulywhofoundthat,
Individualsfacedwiththepossibilityofacatastrophiclosstendtoignorethe
eventuntilafteritoccurs,atwhichpointtheyareextremelyinterestedin
protectingthemselvesMostresidentsinareaswiththepotentialfor
catastrophiclosseshavelimitedknowledgeofthehazard.Thereisconsiderable
evidencefromfieldstudiesandcontrolledexperimentsthatpriortoacatastropheindividualsunderestimatethechancesofsuchadisasteroccurring.
Infact,manypotentialvictimsperceivethecostsofgettinginformationabout
thehazardandcostsofprotectiontobesohighrelativetotheexpected
benefitsthattheydonotobtainsuchinformation,andthereforedonotconsider
investinginlossreductionmeasuresorpurchasinginsurance10.
KunreutherandPaulypointoutthatintimesofshort-termbudgetconstraints,insurance
coverageisoftenoneofthefirstspendingitemsdroppedbyfamiliesandsmall-businesses,
especiallyforlowerincomehouseholds.Formanyfamilies,insuranceisconsidereda
discretionaryexpense.
Expectations of Government Aid
CTFSupporterSurveyComments
Let'shelpthosewhoabsolutelyneedittosatisfytheirbasicneeds,buttherewasalevelofriskpeople
took,andaffordedtotake.Wecan'tsetaprecedenceofbailingpeopleoutbecause100yearsfromnow,
you'llbeonthehookagain.
KunreutherandPaulyemphasizethatanothermajorfactordepressingthedemandfromhomeownersforcatastrophicdisasterinsuranceisanexpectationofliberalgovernment
assistance.Theyarguethat,
9FlawsintheOintment,Davies,Phil.FederalReserveBankofMinnesota.2006.
http://www.minneapolisfed.org/research/pub_display.cfm?id=3192 10Kunreuther,HowardandPauly,Mark.InsuringAgainstCatastrophes.December29,2006.
https://hcmg.wharton.upenn.edu/files/?whdmsaction=public:main.file&fileID=1703
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FederaldisasterassistancecreatesatypeofSamaritansdilemma:providing
assistanceexpost(afterhardship)reducespartiesincentivestomanageriskex
ante(beforehardshipoccurs)Totheextentthatpartiesexpecttoreceive
governmentassistanceafteralossaformoffreeorlowcostinsurancethey
mighthavelessincentivetoengageinmitigationorbuyinsurancebeforea
disasteroccurs.Becauselessinsuranceispurchased,thegovernmentsincentive
toprovideassistanceafteradisasterisreinforcedoramplified11.
Inthisrespect,governmentsacrossCanadaareunintentionallyguiltyofdepressingany
possiblecatastrophicinsurancemarket.
Insurance as Discretionary Spending
Empiricalevidencealsoshowsthathomeownerswithinsurancepoliciesarelikelytocancel
themiftheymakenoclaimafterthefirstyearsofholdingit.Thiswaseventhecasein
designatedSpecialFloodHazardAreaswherehomeownersarerequiredtopurchase
insuranceasaconditionforfederallybackedmortgages.Aftermajorfloods,many
homeownerswerefoundtobenon-compliant12.
Failure of the US Insurance Model
MandatoryinsuranceintheUnitedStateshaslargelybeenafailureinitscurrentform.As
statedpreviously,manyhomeownersarenon-compliantandarenotfoundtobesountilafter
adisasterhasoccurred.
ThisoccursdespitethefactthatfloodinsuranceintheUnitedStatesisheavilysubsidizedbytaxpayersandactslargelyasawealthtransfertoaffluentAmericans13.KennethGreenofthe
USnon-profitEnvironmentalTrendsarguesthatsubsidizedfloodinsuranceencourageseven
moredevelopmentinriskyareasthanwouldotherwiseoccur.
AccordingtoErwannMichel-KerjanintheUSNationalTaxJournal,
Highlysubsidizedpremiumsorpremiumsartificiallycompressedbyregulations,
withoutclearcommunicationontheactualriskfacingindividualsand
businesses,encouragedevelopmentofhazard-proneareasinwaysthatare
costlytoboththeindividualswholocatethere(whenthedisasterstrikes)aswellasotherswhoarelikelytoincursomeofthecostsofbailingoutvictims
11Kunreuther,HowardandPauly,Mark.InsuringAgainstCatastrophes.December29,2006.
https://hcmg.wharton.upenn.edu/files/?whdmsaction=public:main.file&fileID=1703 12Kunreuther,HowardandPauly,Mark.InsuringAgainstCatastrophes.December29,2006.
https://hcmg.wharton.upenn.edu/files/?whdmsaction=public:main.file&fileID=1703 13Stossel,John.TaxpayersGetSoakedbyGovernmentsFloodInsurance.ABCNews.September20,2012.
http://abcnews.go.com/Business/Insurance/story?id=94181
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followingthenextdisaster,eitheratastatelevelthroughexpostresidual
marketassessmentsorthroughfederaltaxesinthecaseoffederalreliefortax
breaks14.
TheCatoInstituteadstothedamningevidenceagainstsubsidizedfloodinsurance.
Defendersofgovernmentinsuranceprogramsclaimthattheyreduce
dependenceonfreedisasterassistanceandpromoteefficientrisk
managementbypropertyownersandfarmers.Butgovernmentpoliciesarethe
causeof,notthecurefor,thelimitedsupplyandnarrowscopeofprivate-sector
disasterinsurance.Demandforprivatecoverageislowinpartbecauseofthe
availabilityofdisasterassistance,whichsubstitutesforbothpublicandprivate
insurance.Moreover,agovernmentthatcannotsaynotogenerousdisaster
assistanceisunlikelytoimplementaninsuranceprogramwithstrongincentivesforriskmanagement.Thesubsidizedratesandlimitedunderwritingandrisk
classificationoffederalgovernmentinsuranceprogramsaggravateadverse
selection,discourageefficientriskmanagement,andcrowdoutmarket-based
alternativesStategovernmentsalsointrudeoninsurancemarketsbycapping
rates,mandatingsupplyofparticulartypesofinsurance,andcreatingstate
poolstoprovidecatastropheinsuranceorreinsurancecoverageatsubsidized
rates.Byreducingboththesupplyanddemandsidesofprivateinsurance
protection,governmentinterventionleadstogreaterrelianceonpolitically
controlleddisasterassistanceandhighercostsfortaxpayers
15
.
SeniorplayersinCanadasinsuranceindustrytoldtheCTFthatthedesignationofSpecial
FloodHazardAreasishighlypoliticized,asUSCongressmeninflood-proneareaslobbyto
redrawmapstoincludeareaswithlittletonoriskoffloodinginordertoeasethepremiums
onthoseactuallyatrisk.
Flood Insurance for Albertans and Canadians
No Watertight Solution
TheCTFsthirdconditionforaresponsiblerecoveryisthattaxpayersandpropertyownersbe
protectedinthefuturetoensurethatpaymentsmadetoprivatepropertyownersareone-
timeonly,withfuturepropertydamagecostsexternalizedtothepropertyowner.
14Michel-Kerjan,Erwann.DisastersandPublicPolicy:CanMarketLessonsHelpAddressGovernmentFailures?
TheNationalTaxJournal.2008. http://opim.wharton.upenn.edu/risk/library/07-04.pdf 15TheCatoInstitute.CatoHandbooktoCongress:PolicyRecommendationsforthe107
thCongress.September
9,2009.http://www.cato.org/pubs/handbook/hb107/hb107-40.pdf
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Thestatusquoofthegovernmentdefacto-insuringpropertyattheexpenseofthetaxpayer
clearlydoesnotmeetthiscondition,wellintentionedbutunbelievablestatementsaboutthe
currentaroundofaidaside.
Asdiscussedabove,theAmericanmodelofheavysubsidizedandpoliticizedfloodinsuranceis
rifewithproblems.Nonetheless,insuranceremainstheonlypracticalwayofexternalizingthe
costofpropertydamagefromnaturaldisasters.
Mandating Flood Insurance for At-Risk Owners
Greenarguesthatifitisimpossibletoentirelyabolishtaxpayersubsidiesfordisasters,thenit
shouldbeminimizedthroughrisk-basedinsurancepremiums.
MarkBrowneandMartinHalekproposeseveraloptionsthattheyconsidercapableofsolving
theproblemsofinsurancecompaniesnotofferingpoliciesortaxpayersbeingforcedto
subsidizedamages.Theyrecommendasthebestpossibleoptionthatthe(US)federal
governmentmandatethatprivatepropertyownerspurchasefloodinsuranceontheprivate
marketwithpremiumsthatreflectthefullrisk16.
SimilartotheUnitedStatesNationalFloodInsuranceProgram,thiswouldrequirethe
governmenttodesignatewhichareasareatriskandthereforesubjecttothemandatory
purchaseofinsurance.AsevidencedbytheAmericanexperience,agovernmentbody
responsibleforthisdesignationwouldinevitablybesubjecttopoliticalpressuresand
interference,regardlessofstatedsafeguards.ItwouldfurtherrequirethegovernmenttoestablishandfundalargenewbureaucracysimilartotheAutomobileInsuranceRateBoard.
Iffloodinsuranceforat-riskpropertyownersistobemademandatory,thebestwayto
safeguardagainstpoliticalinterferenceandthecreationofnewbureaucraciesistobase
mandatesonpropertieswhichhavemadeclaimsundertheDisasterRecoveryProgram
(DRP).
BasinginsurancemandatesonwhichpropertieshavemadefloodclaimsundertheDRPwithin
thelasttenyearswouldsuccessfullyincludemostat-riskproperties,andsafelyexcludethose
propertiesnotindanger.Thiswouldeliminatepoliticalinterferenceentirelyandrequire
minimalbureaucracytoadminister.Inshort,ifyouvereceivedfloodassistanceinthepastten
years,youneedtohaveinsurance;ifyouhavent,youdont.
16Browne,MarkandHelek,Martin.Managingfloodrisk:adiscussiononthenationalfloodinsuranceprogram
andalternatives,inPublicInsuranceandPrivateMarkets.2010.
http://www.environmentaltrends.org/single/article/managing-flood-risk.html#sthash.vaCXLxtX.dpuf
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Asdiscussedabove,therehavebeenmajorissueswithinducingprivateinsurersintothe
marketforfloodcoverage;chiefamongthesebeingthatdemandforinsuranceisverylimited,
evenwhenheavilysubsidized.
Thiswouldlikelybesolvedintheeventthatinsurancewasmademandatoryforat-risk
properties,andenforced.Likeautomobileinsurance,makingaproductmandatorycreatesa
marketwhereonewouldotherwisenotexist.
Insurancepremiumsshouldbedeterminedstrictlybyactuarialcalculationsthatreflectrisk.
Ownersinhigh-riskareaswouldpayinsurancepremiumscommiseratewiththatrisk,while
ownersinsaferareaswouldpayless.
Aninsuranceprogrambasedonactuarialcalculationsofriskwillinevitablymeanthatthe
pricesignalwillbetoogreatforsomeownersinhigh-riskareas.Wherethisisthecase,one-
timegovernmentassistanceshouldhelptheseownerstorelocate.Thecostofrelocation
howevermeansthattheprovincemustmovequicklytoindicateitsintensionstowardan
insuranceprogram.Financiallyincentivizinghomeownerstorelocateaftertheyhaverebuilt
wouldbeinefficientandunreasonablyhardonfamilies.
Thegovernmentsplantoincentivizehomeownersinfloodwaystomovebyprovidingthem
withthefull,propertytaxassessedvalueoftheirhomesisgenerous,buteffectivelywithout
limit.Therefore,ahardandstillgenerouscapof$500,000shouldbeplacedonany
relocationassistance.
Recommendation
Mandatethatallat-riskpropertyownerspurchaseprivateoverlandfloodinsurance
withpremiumsbasedonactuarialcalculationsofrisk.Determiningat-risk
propertiesshouldbebasedonclaimsundertheDRPwithinthelasttenyears.
Providerelocationassistancetoownersinhigh-riskareasuptothe2013tax
assessedvalueuptoahardcapof$500,000.
Thegovernmentshouldindicateitsintentionstowardsaninsuranceprogram
immediatelyinordertoallowpropertyownerstomakedecisionsbetweenrebuildingandrelocating.
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Federal Natural Disaster Insurance Mandate
Thefederalgovernmentprovidesalargemeasureofaidintheeventofnaturaldisastersfor
bothpublicandprivateproperty.ShouldAlbertabetheonlyprovinceinCanadatoputin
placearesponsibleinsuranceprogramtoexternalizedisastercosts,Albertanswouldfind
themselvespayingintotheprogram,whiledrawingmuchlessthantaxpayersinother
provinces.Furthertothis,taxpayersandpropertyownersinotherprovinceshavejustasmuch
needoffinancialprotectionfrommajornaturaldisastersasareAlbertans.
Therefore,thefederalgovernmentshouldimmediatelybeginworktowardsthe
establishmentofafederalnaturaldisasterinsurancemandate.
Recommendation
Workwiththefederalgovernmenttotowardstheestablishment
ofafederalnaturaldisasterinsurancemandate.
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VI-Paying for the Recovery
Municipal Public Infrastructure
Federal and Provincial Support
Inadditiontomassivedamagedonetoprivateproperty,publicinfrastructurehassuffered
millionsindamages.TheCityofCalgaryestimatesthepreliminarycostofdamagestobe
$256.5million17.HighRiver,Canmoreandmanyothersmallcommunitiesfacesignificant
publicinfrastructurerepairbills.
UnderthefederalgovernmentsDisasterFinancialAssistanceArrangements(DFAA),boththe
provinceandmunicipalitieswillbeabletorecoup90%ofpublicinfrastructurecosts18.While
thefederalgovernmentwillnotreimbursethecostsuntilthefinalcostistallied,the
remainingtabwillbeonly10%.
However,Calgaryandothermunicipalitieswilllikelynotfaceanydirectcosts.Premier
RedfordhasbeenclearthattheCityofCalgaryandothermunicipalitieswillnothavetopick
upthebillforinfrastructuredamagesandthecostsofcityemployeeovertime19.Additionally,
theCityhas$295millioninitsFiscalStabilityReservetohelpitcoveranytemporaryoutlays
beforebeingreimbursedbythefederalorprovincialgovernments.Inshort,Calgaryhasorwill
havethemoneynecessaryforrebuildinginitsareasofresponsibility.
Calgary and the $52 Million
TheCityofCalgarymayfinditprudenttorebuildsomepiecesofpublicinfrastructuretoa
betterstatethantheywerebeforetheflood.Anysuchadditionalcostswouldlikelyhavetobe
bornbytheCity.
TheCanadianTaxpayersFederationhassteadfastlyopposedattemptsbytheCalgaryCity
Counciltokeeptheover-collectionoftaxesmadeavailablebytheprovincenotraisingtheir
portionasmuchaswasexpectedbytheCity.Theremayhoweverbemeritinimprovingsome
infrastructureoveritspre-floodcondition.Assuch,theCTFhassupportedspendingthe$52milliononone-timeimprovementsinpublicinfrastructure,butwiththestrictconditionthatit
17CalgaryCantHandleFloodBillsAlone,NenshiSays.CBC.July3,2013.
http://www.huffingtonpost.ca/2013/07/03/calgary-flood-cost-nenshi_n_3541928.html 18DisasterFinancialAssistanceArrangementsRevisedGuidelines.PublicSafetyCanada.
http://www.publicsafety.gc.ca/prg/em/dfaa/ 19AlbertaPremierAlisonRedfordsatstaxesshouldntbehikedtopayforfloodrelief.CalgarySun,RickBell.July
7,2013.http://www.calgarysun.com/2013/07/07/alberta-premier-alison-redford-says-taxes-shouldnt-be-hiked-
to-pay-for-flood-relief
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isreturnedtotaxpayersin2014.Thatis,thatthe$52milliondoesnotbecomeapermanent
sourceofrevenueinthebudget,butratherbetreatedasaone-timeemergencylevy.
MayorNenshisinitialplanwastokeepthe$52millioninCityhandsfortwoyearstoneta
totalof$104million.Thiswascommendablyreducedtoone-yearasrecommendedbythe
CTF,butwithastronghintthattheCitywillpermanentlygrabthismoneyinfutureyears20.It
appearsthattakingonly$52millionnowbutleavingtherestonthetablewithnopromise
thatitwillbereturnedinfutureyearswasamovetoneutertheissuetemporarilyuntilthe
October2013municipalelectionsareover.
Recommendation
Calgaryshouldspendtheinitial$52milliononupgradesfrom
damagedpublicinfrastructure,withthestrictconditionthat
thetaxroomisreturnedtotaxpayersinfutureyears
Alberta
Public Infrastructure
Asstatedabove,thefederalgovernmentsDFAAislikelytocover90%ofAlbertasdamaged
publicandprivateinfrastructure.TheamountreimbursedtoAlbertawillnotbepaiduntilthe
finalbillisknown,soAlbertawillhavetocarrythesecoststemporarily.Forexample,thefederalgovernmentprovided$129millionforfloodrecoveryfollowingthe2005floods,but
theprovincedidnotreceivethismoneyuntilApril201321.Forthemostpart,thefederal
governmentwillonlyreimburseaprovincialgovernmentoncethefinalbillisknown.
Inthemeantime,thisleavesAlbertawithamassivefundingshortfallthatitmustmakeup.
Albertamustfindthemoneytobeginrebuildingforbothpublicinfrastructureandprivate
propertywithoutdelay.
20BallisinyourcourtCalgary,aftercitycounciltakes$52milliontaxbreakforfloodcosts.CalgarySun,Rick
Bell.July29,2013.http://www.calgarysun.com/2013/07/29/ball-is-in-your-court-calgary-after-city-council-takes-
52-million-tax-break-for-flood-costs 21AlbertaFloodunlikelytostymiefederalplanstoslaydeficit.June27,2013.
http://www.canada.com/news/Alberta+flooding+unlikely+stymie+federal+plans+slay+deficit/8589407/story.htm
l
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Total Costs
BMONesbittBurnsandtheAlbertaTreasuryBranchbothestimatetotaldamagesbetween$3
billionand$5billion.PremierRedfordherselfsaidthatthefinalbillwouldbewellover$5
billion22.
Thepercentagebreakbetweenpublicandprivatepropertyisnotyetknown23.Eventhough
thefederalgovernmentwillcovermuchofthecost,theprovincewillstillneedtofindatleast
$5billion.
WhileitisyetunknownhowfastthegovernmentofAlbertawillbeabletogetthemoneyout
thedoor,theCTFhasbuiltafiscalmodelontheassumptionthatAlbertawillspend
approximately$3billionin2013-14,$1billionin2014-15and$1billionin2015-16.Thisisin
additiontothe$200millionthattheprovincealreadybudgetsfordisasterspendingeach
year.AsMinisterHornerhimselfsaid,Itsnotanexactscienceatthispoint,butweregettingthere.24Thisfiscalmodelcanberefinedasmoredetailsemergeonthegovernments
disasterspendingplans.
New Deficit Projection
Sofar,theprovincedoesnothaveaplantopayforthis.Unlesstheprovincesgetsonesoon,
theentirecostwillbecarriedbyyetmoredebt.AsdiscussedpreviouslyinSectionIIIofthis
report,theprovincewasalreadyontracktoruna$5.1billiondeficitin2013-14beforethe
floodandspendthelastoftheSustainabilityFund.
InTable3,theCTFprojectsthatunlessthereisamajorreallocationofspendingresourcesto
payforfloodrecovery,thattheconsolidateddeficitwillballoonfromanalreadymassive$5.1
billionin2013-14,toamassive$8.1billion.Withoutmajorcorrectiveaction,thesesky-high
deficitswillremainfortheforeseeablefutureat$4.1billionin2014-15and$1.9billionin2015-
16.
22Wellover$5-billionneededtoreverseAlbertaflooddamage,Redfordsays.TheGlobeandMail.The
CanadianPress.August19,2013. http://www.theglobeandmail.com/news/national/well-over-5-billion-needed-
to-reverse-alberta-flood-damage-redford-says/article13862748/ 23Costsmount,devastationrises:thefloodinnumbers.TheGlobeandMail,JustinGiovannetti.June24,2013.
http://www.theglobeandmail.com/news/national/costs-mount-devastation-rises-the-flood-in-
numbers/article12792247/24Wellover$3Binfloodcostsfacingprovince.CalgaryHerald,JamesWood.July31,2013.
http://www2.canada.com/calgaryherald/news/story.html?id=28cdbd5a-9821-4691-81d1-4431704091a2
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Table 3: Updated Fiscal Outlook ($ millions)
Fiscal Plan Summary: Operating Budget 2013-14 2014-15 2015-16
Budget Updated Budget Updated Budget UpdatedTotal Revenue $38,612 $38,612 $41,911 $41,911 $44,998 $44,998
Less
Revenue received for capital purposes ($522) ($522) ($464) ($464) ($389) ($389)Investment income retained by the HeritageFund ($297) ($297) ($379) ($379) ($651) ($651)
Savings of resource revenue - - ($416) ($416) ($492) ($492)Allocation for the Capital Plan debt servicingcosts ($238) ($238) ($404) ($404) ($593) ($593)
Operational Revenue $37,555 $37,555 $40,248 $40,248 $42,873 $42,873
Operational Expenses
Operating expenses (net of in-year savings) $36,422 $36,422 $37,144 $37,144 $37,904 $37,904
Disaster / emergency assistance $200 $3,200 $200 $1,200 $200 $1,200
Amortization / inventory consumption / losson disposals $982 $982 $1,000 $1,000 $1,040 $1,040
General debt servicing costs $402 $402 $424 $424 $437 $437
Total Operational Expense $38,006 $41,006 $38,768 $39,768 $39,581 $40,581
Operational Surplus / (Deficit) ($451) ($3,451) $1,480 $480 $3,292 $2,292
Fiscal Plan Summary: Capital Budget
Capital Plan Spending $5,209 $5,209 $5,172 $5,172 $4,660 $4,660
Capital Plan Borrowing
Alternative financing (P3s) $344 $344 $206 $206 $114 $114
Direct borrowing $3,190 $3,190 $4,379 $4,379 $4,039 $4,039Withdrawal from Capital Plan financing
account $1,067 $1,067 - - - -Total Capital Plan Borrowing $4,601 $4,601 $4,585 $4,585 $4,153 $4,153
Funded Capital Plan
Revenue received for capital purposes $522 $522 $464 $464 $389 $389Retained income of funds and agencies forcapital purposes $84 $84 $118 $118 $118 $118
Disposals of capital assets $2 $2 $5 $5 - -
Total Funded Capital Plan $608 $608 $587 $587 $507 $507
Capital Plan Surplus / (Deficit) ($4,601) ($4,601) ($4,585) ($4,585) ($4,153) ($4,153)
Consolidated Surplus / (Deficit) ($5,052) ($8,052) ($3,105) ($4,105) ($861) ($1,861)
RebuildingAlbertaiscriticalhowever,andthemoneymustcomefromsomewhere.TheCTFsfirstconditionforresponsiblyrebuildingAlbertawas,
Thatthegovernmenthaveaplantopayfortherebuildingprogrambyredirectingexisting
spendingcommitmentstowardsthefloodtoensurethatthepre-flooddeficitof$5.1billiongrows
aslittleaspossible.
Tothisend,theCTFrecommendstheadoptionofits2013-14pre-budgetrecommendations
initsreport,RestoringtheAlbertaAdvantage.WhileRestoringtheAlbertaAdvantagehad
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theintentionofeliminatingtheprovincesdeficitthroughprudentspendingreductions,the
applicationoftheCTFsrecommendationswouldnowhavetheeffectofminimizingthe
inevitablegrowthinthedeficittoallowforabalancedbudgetinthefuture,withoutincurring
unnecessarydebt.Ratherthancutnetspending,thisplanwouldnowseespendingreallocated.
AsdetailedinTable5,thiswouldbeaccomplishedbya$2.7billionreductioninplanned
operatingfollowedbyatwo-yearfreeze,one-timeproceedsfromthesaleoftheAlberta
EnterpriseCorporation,andextendingthe2014-15and2015-16CapitalPlanoverthreeyears.
The$2.7billionreductioninoperatingspendingwouldbehalfimplementedovertheduration
ofthe2013-14fiscalyearwiththeotherhalfimplementedduring2014-15.Thiswouldbe
nettedagainsta$300millionpermanentincreasetothedisasterbudget.
Table 4: Summary of Proposed Changes to Budget Over 2 Years ($ millions)
Reducing Public Sector Employee Costs $1,570
10% wage rollback in Public Service, school boards & AHS $1,420
5% reduction in Public Service employees $150
Ending Corporate Welfare & Other Business Subsidies $141Eliminate bioenergy programs $66
Eliminate funding for carbon capture and storage programs $60
Eliminating the Alberta Multimedia Development Fund $15
Other Reductions $119
Eliminate the GreenTRIP funding $93
Eliminate Alberta promotion programs $10
Eliminate the Alberta Human Rights Commission $810% reduction in Legislative Assembly spending $7
Eliminate the Francophone Secretariat $1
Other Operating Reductions $882
Total Operating Reductions $2,711
Increase in Disaster/Emergency Assistance $300
Net Operating Reductions $2,411
One Time Savings $99
Eliminate the Alberta Enterprise Corporation $99
Savings from extending the Capital Plan $1,895
Net Spending Reductions $4,405
Table5outlinestheResponsiblyRebuildingAlbertafiscalplanwithanet$4.4billion
reductioninpost-floodspending.Thisisexcludinganincreaseinone-timefloodspendingof
$3billionin2013-14,andanother$2billionover2014-15and2015-16.Theresultisstilla$1.8
billionnetincreaseinspendingrelativetothepre-flood2013-14budget,withanetdecreaseof
$3billionin2014-15and$3.3billionin2015-16relativetoplannedspending.
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Thiswouldseetheconsolidateddeficitreducedfromanestimated$8.1billionto$6.9billion
thisfiscalyear.ExtendingtheCapitalPlan,implementingthesecondhalfofoperating
reductionsandfreezingoperatingspendingforafurthertwoyearswouldseeabelatedreturn
todeficitin2015-16.
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Reallocating Spending
Table 5: Responsibly Rebuilding Alberta Fiscal Plan ($ millions)Fiscal Plan Summary: Operating Budget 2013-14 2014-15 2015-16
Projection CTF Projection CTF Projection CTF
Total Revenue $38,612 $38,612 $41,911 $41,911 $44,998 $44,998
Less
Revenue received for capital purposes ($522) ($522) ($464) ($464) ($389) ($389)Investment income retained by the HeritageFund ($297) ($297) ($379) ($379) ($651) ($651)
Savings of resource revenue - - ($416) ($416) ($492) ($492)Allocation for the Capital Plan debt servicingcosts ($238) ($238) ($404) ($404) ($593) ($593)
Operational Revenue $37,555 $37,555 $40,248 $40,248 $42,873 $42,873
Operational ExpensesOperating expenses (net of in-year savings) $36,422 $36,422 $37,144 $37,144 $37,904 $37,904
Disaster / emergency assistance $3,200 $3,500 $1,200 $2,500 $1,200 $2,500Amortization / inventory consumption / losson disposals $982 $982 $1,000 $1,000 $1,040 $1,040
General debt servicing costs $402 $402 $424 $424 $437 $437
Savings from Operating reductions & freeze - ($1,356) - ($3,433) - ($4,193)
One-time savings - ($99) - - - -
Total Operational Expense $41,006 $39,852 $39,768 $37,635 $40,581 $37,688
Operational Surplus / (Deficit) ($3,451) ($2,297) $480 $2,613 $2,292 $5,185
Fiscal Plan Summary: Capital Budget
Capital Plan Spending $5,209 $5,209 $5,172 $5,172 $4,660 $4,660Capital Plan Borrowing
Alternative financing (P3s) $344 $344 $206 $206 $114 $114
Transfer from Contingency Account - - - - - -
Direct borrowing $3,190 $3,190 $4,379 $4,379 $4,039 $4,039Withdrawal from Capital Plan financingaccount $1,067 $1,067 - - - -
Deposit to Capital Plan financing account - - - - - -Extending the 3 year Capital Plan over 4years - - - ($1,895) - ($1,383)
Total Capital Plan Borrowing $4,601 $4,601 $4,585 $2,690 $4,153 $2,770
Funded Capital Plan
Revenue received for capital purposes $522 $522 $464 $464 $389 $389Retained income of funds and agencies forcapital purposes $84 $84 $118 $118 $118 $118
Disposals of capital assets $2 $2 $5 $5 - -
Total Funded Capital Plan $608 $608 $587 $587 $507 $507
Capital Plan Surplus / (Deficit) ($4,601) ($4,601) ($4,585) ($2,690) ($4,153) ($2,770)
Consolidated Surplus / (Deficit) ($8,052) ($6,898) ($4,105) ($77) ($1,861) $2,415
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TheCTFsrecommendationsforareastoreallocatespendinginTable5arebothspecificand
broad-based.Theseincludespecificprogramsandfundingitems,aswellasacross-theboard
actions.
EveryitemlistedinTable5isexplainedandelaboratedintheCTFsbalancedbudgetplan,
RestoringtheAlbertaAdvantageonpages21to41.
Asstatedabove,theitemslistedinRestoringtheAlbertaAdvantagewereintendedasaway
tobalancethebudgetbytheendoffiscalyear2013-14.TheCTFiscallingfortheapplication
ofthisplanasmuchasispossibleasawayofnowmitigatingtheinevitableincreaseinthe
deficit.
Recommendation
Reducenon-disasterrelatedoperatingspendingby$2.7billionduringthe2013-14and
2014-15fiscalyears,andfreezeremainingoperatingspendingfor2014-15and2015-16.
Extendthe2014-15and2015-16CapitalPlanoverthreeyears
Thiswillfreeupacumulative$4.4billionannuallyforemergencyfloodspendinganda
belatedreturntobalancedbudgets.
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VIII-Budgeting for Disasters
Disaster Spending History
Albertaspendsaconsiderablesumofmoneyeveryyearondisastersandemergencies,yetthe
vastmajorityofthosefundsareunbudgetedfor.Between2003-04and2011-12,Albertaspent
anaverageof$502millionondisasterandemergencyrelief,mostofwhichwasunbudgeted.
In2012-13,thegovernmentbudgetedjust$44millionfordisasters,butclosedtheyear
spending$596million.
InRestoringtheAlbertaAdvantage,theCTFrecommendedthattheprovinceofAlberta
annuallybudget$500millionfordisasterandemergencyspending.While2013-14willstandasananomalousspikeindisasterspendingthatcouldnothavebeenbudgetedfor(putting
theSustainabilityFundaside),itdoesaccentuatetheproblemofnotbudgetingforspending
thatissuretotakeplace.
ThegovernmentpartiallyacceptedtheCTFsrecommendationsinthisarea,increasingits
disasterbudgetfor2013-14fromitsplanned$17millionto$200million.
Chart 2: Disaster & Emergency Spending, 2003-04 to 2012-13
DisastersonthescaleoftheJune2013floodscannotbereasonablybudgetfor,butmostcan
be.DisastersonthisscalecouldbepaidforbydrawingdowntheSustainabilityFund,butas
notedabove,itwasallbutdepletedbeforetheflood.
Inordertoensurethatmostnaturaldisasterscanbebudgetedfor,theprovinceshouldbudget
atleast$500millionayearfordisasterandemergencyspending.
$0
$100
$200
$300
$400
$500
$600
$700$800
$900
MillionsofDollars
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Recommendation
Budget$500millionfordisasterandemergencyspending.
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VIII-Conclusion
A Pragmatic Solution
TheCTFhasseldominitshistorybeensupportiveofadeficit,believingstronglythattheyare
onlyeverjustifiedintimesofmajornaturaldisasterorwar.ThisisjustsuchacaseandtheCTF
recognizesthatthenecessityofrebuildingmakesabalancedbudgetintheshorttermmore
difficult.ThisisnottoexcuseAlbertasgovernmentfromwastingawaythe$16.8
SustainabilityFundduringgoodandfair-weatherdays,butitisrecognitionoftherealitythat
wearein,regardlessofhowwegothere.
ThisreportisanchoredintheCTFsmissionofLowerTaxes,LessWaste,andAccountable
Government,butitrecognizesthatintimesofmajorupheaval,governmentsliketheCTF
mustbepragmatic,andsometimeschangetheirplans.
JustastheCTFrecognizesdeficitstoinevitableintheshorttermasaresultofthistragedy,so
toomustthegovernmentcometotermswiththerealityofitsspendingtominimizean
alreadyburgeoningdeficit.
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IX-Appendix
Extended CTF Supporter Views
ThecommentsbelowareselectivelydrawnfromtheCTFssupportersurveyconductedinJuly
2013.TheyarenotintendedtoberepresentativeofCTFsupporterviews,buttoexpressa
broadrangeofopinions.
Thesearetheopinionsof64individualCTFsupportersandarenotnecessarily
representativeofotherCTFsupporters,CTFspokespeopleortheCTFasanorganization.
Livingnearfloodplainsmaybescenicandattractivebutshouldcomewithacost.Thehomeowner's
cost,notacosttohighanddrycommunities.Havingsaidthat,howisitthatasubdivisionwasever
allowedthereinthefirstplace?Theseareasshoulddesignatedparks,alwaysandforever. Capthepaymentsandthenadvisenofutureassistance,everifyouremaininafloodplain.
Disallowanybuildingorrebuildingonmajorfloodplains.Wherepossible(suchasHighRiver)construct
afloodwayliketheoneinWinnipeg.
Relocatethewholetownifanotherdisasterlikethatshouldhappenagain.
Helppeoplethatneedaroofovertheirhead,onconditionthattheyrelocate.Weneedtomitigate
futurerisktoallAlbertans,andthiswouldbemostresponsible.RebuildingaCEO'smulti-milliondollar
padisnotwhatthesocialsafetynetshouldbeusedfor(unlessyou'rebuyingtheirvotes).Let'shelp
thosewhoabsolutelyneedittosatisfytheirbasicneeds,buttherewasalevelofriskpeopletook,andaffordedtotake.Wecan'tsetaprecedenceofbailingpeopleout-because100yearsfromnow,you'll
beonthehookagain.
Introducelegislation-nomorebuildingofhomesorbusinessonfloodplane.Bebetterpreparedfor
emergencyandtakeactionsooner-beproactiveratherthenreactive.Createemergencydisasterfund
foranyfutureproblems.
Permanentlyevacuateallcitizensandremoveallstructuresthatarepresentlyonfloodplainsand
prohibitanyfuturedevelopmentsotheriverscanfloodnaturallyontotheseplains.Thisshouldhave
beendone40yearsagoifourgovernmentwasinanywayresponsible.
Turnfloodzonesintoparksonly.Somelimitedassistancebutonlyiftheymoveoffthefloodplains
Anounceofpreventionisworthapoundofcure...theyknowtheimpactareasfromthelastmajorflood
andtheyshouldnowbeproactiveininstitutingmeasuresorprogramstoprecludeanysimilardisasterin
thefuturebybuildingstructuresorwhatotherthingwouldlessenorremoveanythreatstolifeand
property.
Mandatefloodinsurancecoveragebytheinsurancecompaniesforthosethatliveinfloodplainareas.
Donotapprovebuildinginthesesareas;it'sjustataxgrabtodevelophigh-endhousinginanotherwise
verydesirableareatolive.
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Provideinformationtocitizensregardingpotentialfloodzones,etc.,andsuggestprivateinsuranceto
homeowners(there'sprobablyanopportunitynowforinsurancecompaniestostartofferingthat
service).
Wemustquitbuildinginvulnerableareas,stoprebuildinginvulnerableareasandmakeitmandatory
thatallresidentshaveabackflowvalvetopreventsewagebackup.Itisridiculoushowmanybusinesses
andhomesrepeatedlyfloodwithbackupandtheresidentsdonothavethatvalvewhenithappens
againthesecondorthirdtime.
Improvefloodwarningprocedures-whywasn'ttheresoonerwarnings?Eitherprohibitbuildingnear
possiblefloodareasorintroducea'buildatyourownriskbylaw.
Onlycoverhomeownersuptoaveragereplacementcostsforaveragehomesforexampleupto
$250,000.Expensivehomesonlyuptoaforementionedmaximums.
WhathappenedtotheSustainabilityFundthatwasdesignedtoassistAlbertansincasesof
emergencies?
Preventionisessential.Developmentmustnotbeallowedonafloodplain!Whyshouldwepayfor
damagewhenthisisanareathatweknowwillfloodinthefuture?
Iwouldprovidesomereliefforthoseaffectedbutwouldmakethemsignawaiverstatingthatinfuture
eventssuchasthistherewillbenogovernmentreliefforthoselivingwithin5070or100yearflood
areas.Thiswaivershouldbeattachedtothehomesothatsubsequentbuyersmustsignaswell.
NotsurewhatRedfordshoulddo,andwhileIfeelbadlyforthoseaffected,Ifeelverystronglythat
neithermytaxesnormyowninsuranceshouldbeincreasedtosubsidizecostsforanyonewhochooses
(andtheydidchoose)toliveinafloodplain.OnethingthatRedfordshoulddoisensurethat
municipalities(orprovincialorfederalagencies)cannotselllandforprivatedevelopmentinareasthat
areboundtobeaffectedbynaturalevents,suchasfloodingorerosion(Iamthinkingofthemillionaires'
homesinEdmontonthatsliddownthebanksafewyearago.)WhydidtheCityofEdmontonsellland
forprivatedevelopmentwhenthegeologicalreportstoldthemitwasinevitableanylargestructures
builtwithinacertaindistanceofthebankwouldinevitablyandeventuallyslide?Sameformunicipalitiessellinglandinfloodzones.
Amimmediatebanonbuildingpermitswithinhistoricalandpredictedfloodplainareasutilizingthe
mostscientificmethodologycurrentlyavailable.Historical(100year)eventswouldbethe'default'if
differingstudieswerepresented.
Holdlanddevelopersaccountablesomewhatforbuildinginthoseareas.Ithinkmunicipalitieswhogrant
permitsforbuildinginthoseareasshouldbeheldaccountableaswell.Iamtiredofpayingforthe
stupidityorpoorplanningofothers.Thesamethinghashappenedinothermunicipalitiesallowing
buildingpermitsnearwaterways.Edmontonhadhomesfallingintotheriverduetoriverbankerosion!
Doesanyonelearnanything?
Worktowardseliminatingtherisk.Quitsprinklingtaxpayer'smoneyonrecurringsymptoms.Either
stopdevelopment(andredevelopment)onfloodplains,orbuildsufficientdamsorwaterdiversionchannelstoeliminatethepossibilityoffutureflooding.
Donotfundthecostofrebuildinginplacesthatarepronetoflooding,donotraisetaxes,cutspending
andinvestigatetheactionsoftheRCMPinHighRiver.
Theyneedtopayforalldamagesbecausetheyalloweddeveloperstobuildonknownfloodplains.
Provideassistancetothosewhoagreetomoveawayfromthefloodplains,butonlytothelevel
providedinfederallegislation.Ihavenoquarrelwithpeoplechoosingtoliveonrivers;justdon'taskme
asataxpayertobailthemoutwhentheygetwet.Hundredsofmillionshavebeenpaidto'riverdwellers'
inrecentdecadesanditmakesnosensetocontinuesuchsupport.
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Donotallowbuildingonfloodplainsunlesstheownersexceptfullresponsibilityandhaveprivate
insurancecoverage.
Thefirstthingthatcomestomindisbuyerbeware.Peoplegravitatetoowningriversideproperties.
Whatisneededhereisthattheyarewellinformedthattheydosoattheirrisk.
Stopspendingmoneyoutofourrainydayfund.
Iwouldseriouslyconsidersomekindofflowmitigationontherivers(Highwood,Elbow),whichcaused
mostofthedamage.TheHighwoodhasnoflowmitigation(dams)anywhereandtheElbowonlyhas
theGlenmore,whichislocatedinsidethecitylimits.TheBowhastwodamsupstreamfromCalgaryand
itappearsthatthesemayhavehadapositiveeffectbylimitingdownstreamflow.
Insteadofspendingbillionsonrebuildinghomesonfloodplainsornearrivers,considerationshouldbe
giventomakingitmandatorytobuildfloodproofhomese.g.builtuponpillarslikeinFloridaorNew
Orleans.
Considerpeople'sincomeandchoicestheyhavemadetoliveinthesefloodplainsoratriskareas.The
affluentshouldnotreceiveeverything.Alsomaybeanassessmentontheirpropertyforthemoney
giventhatsomeoftheproceedsofthesaleoftheirhousegoestopayingbackthegovernmentor
insurancecompany.
Introducemandatoryprivatehomeownerinsurancetocoverfloodinsuranceassoonaspossibleand
makethisfloodmoneyaonetimedealthiswaytheresponsibilityfallsontothehomeownerifyou
choosetoliveinahighriskareathecostofyourinsurancewillreflectit.
Legislatenohomesorbusinessestobebuiltonfloodplains.
WhathappenedtotheSustainabilityFund?Thegovernmentshouldprovideallhabitablehomeswith
newfurnaces,hotwatertanks,electricalpanels,fridges,freezers,stoves,appliances,etcforthingsthat
arethenecessityoflife.Ifthehomesarenolongerhabitable,thegov'tshouldpaytotearthemdown
andremovethemandthehomeownershouldnotpayanypropertytaxesuntilanewhouseisacquired.
Thereshouldbenobuildingallowedonfloodplains;movepeopleoffthefloodplains;offermaximumof
$250,000forfloodlosesandofferitasaonetimepayoutastheyalreadyknewtheylivedonafloodplain.Peoplewholiveinanareathatisconsideredhigherriskforfloodingshouldbemadetopurchase
floodinsuranceandsignoffthattheyknowtheyareinanareaofrisk.Idon'tthinkallAlbertansshould
payforthefewwhodecidedtoputmilliondollarhomesonafloodplainand$250,000wouldatleast
givepeopleaffectedaroofovertheirheadtostartagain.
Don'tgetmewrong,Idofeelsorryforeveryoneinvolvedwiththefloods,(Ihavehadmanydisastersin
mylifewithnogovernmentaid)butbecausetheCityofCalgaryisbuiltbytwomainrivers,theyareon
thefloodplainandyesthatiswhytheinsurancecompaniesdon'tcoverthefloods.Don'tbuyaproperty
inthefloodplains;itisgoingtofloodsoonerorlater.
Assistancelevelforpropertydamageshouldberelatedtoincome.
Ifinsurancecompaniesdon'tcoverthistypeofdamage,startagovernmentinsuranceprogramthat
insuresproperty.Insurancecompaniesareinitforprofit.Givethemtheultimatum,eithercoverthecostorwewillstartagovernmentprovincialinsurance.
BuildingpermitsshouldnotbegiventoanyonewhowishestobuildintheFloodPlainareasandifthey
dotheyareresponsibleforeithergettingInsurancefortheirownproperties.Thegovernmentshould
notcoveranydamagesintheseareas.
Thisisaseriousissueconsideringourprovincesunfortunatemisuseofthe'rainydayfund'.Ourspending
isoutofcontrolandnowthisisshiftingtheissuetofloodassistanceandthatisbecomingan'issueof
theheart'.Andunfortunatelywhenthegovernmentisinvolvedthecostskyrockets.Redfordwillhaveto
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drawaspendinglineandhopefullynotputusfurtherindebt.Itmayunfortunatelybecomethegreat
excuse.
Givepeoplethefreedomtotakenecessarymeasurestosafeguardtheirownpropertyagainstflooding
aslongasitdoesnotaffectothers.Suchmeasuresmightbecementwallsasfencestoholdbackwater.
Thosewhochoosetoliveinfloodproneareasdosobytheirownchoiceandshouldbeartheirown
responsibility.Ifthefloodingisduetoimproperorpoorlydesignedlocalinfrastructure,thelocal
municipalityordevelopersshouldbearpartoftheresponsibility.Propercityandinfrastructureplanning
iscrucial.
IwouldhavefollowedtherecommendationsfromtheProvincialTaskForcethatwasformedafterthe
2005flood!
Buildproperdykesetc.infloodplainareas.Youwillnotstoppeoplefromlivingintheseareas.Forthe
lastseveralhundredyearscommunitieshavedevelopedclosetoawatersource,probablyoriginallyfor
theconvenienceofnothavingtocarrywatersofar.Thatmaynotbetheissueanymorebutthose
originalcommunitiesdidnotdryupandblowaway,thenexpandedtothecitieswecallhometoday.
Passlegislationtopreventdevelopmentonfloodplainsandtorequirepeoplealreadyonfloodplainsto
providefortheirownlosses
LimitthecoverageprovidedbytheAlbertagovernmentforpeoplewhobuiltonafloodplainbutcover
thosewhowereaffectedbythe3rd(mostrecent)andmostdevastating100yearfloodintwodecades.
ForceCalgaryandEdmontonaswellasallothermunicipalitiestoinsureforortakestepstomitigate
floodissuesinareaswheretheyhavebuiltonknownflood-plains
FirstorderofbusinessshouldbeeliminatingtheEmergencyOperationsAct.Damagesfromtheflood
wereaggravatedbytheinterferenceofvariousgovernmentagenciesnotallowingresidentsbackinto
theirhomestomitigateflooddamageinHighRiver.Totalcostofdamageswillbemanytimeswhatit
wouldhavebeenhadhomeownersbeenallowedaccesstotheirhomestopumpwateroutof
basementswithindaysoftheflood,asopposedtobeingforciblykeptfromtheirhomesforweeks.The
fewhomeownerswhochosetostayintown,andpumptheirbasements,endedupwithverylittledamage.Theresultofgovernmentoversteppingitsboundarieswillendupbeingaverycostlybilltothe
taxpayer.
ThisshouldbeconsideredanactofGod.Somepeopledoneedhelp,butlooktoseniors,invalids,
childrenandsinglemothersbeforeallelse.
Thegovernmentneedstostopsellinglandalongcreeks,rivers,etc,sopeoplearenotbuildingthere,
theyalsoneedtoputsomethinginplacetonotallowanyfuturebuildingalongcreeks,riversetc.
Ensurethatthere'sa'notification'onthepropertyregistrationwhenthehomeinafloodplainso
propertyownersknowwhattheyarebuying.Undernocircumstancesshouldthegovernmentgetinto
floodinsurance.Therearecompanieswithactuariesthatcandothat.Onlythoseinpostalcodeswith
risksshouldhavemandatorycoveragerequired.
Whereisthe$16billionoftheSustainabilityFund?Thatshouldbeusedandonlythat.Answersneedto
begivenonthis.
Ithinktherhetorichascastthedie-therewillhavetobepayments.Theyshouldonlygotothosewho
aremeanstestedandtoafixedamount.Anyonewhorebuildswithinthe200-yearfloodlevelmustsign
awaiversayingtheywillnevergetanythingagainandthewaivermustbeonthepropertyregistration
sothatanyonesubsequentlybuyingthepropertyisawareandmustalsosignthewaiverinorderforthe
transfertobemade.Anynewdevelopmentwithina200-yearfloodplainwithintheprovincemustbe
leviedafeeequalto1/3ofthevalueoftheconstructiontobepaidintoafloodinsuranceaccount.
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Helpthefolksaffectedtogetmortgagesfornewhomes,loanstogetrestarted,andthingsofthat
nature.Therearemanypeoplethatlosestuffinsituationsotherthanfloodsthatdonotgetfinancial
helpfromtheGovernment.It'snicetobuildontheedgeofthelakeoroverlookingarivervalleybutjust
becauseweareheregeologyisnotgoingtostop.LikewhenthehousessliddownthehillinEdmonton
andweareexpectedtopickupthetabforsomeonesniceview.
Allhomesbuiltonthefloodplainsshouldnotbecovered;thereisnoreasontobuildonanyfloodplains
inAlberta.
AlthoughIfeelbadforthoseaffectedbythefloodsifwekeepcoveringsuchthingsthereisnoincentive
forpeopletostopbuildingintheseareas.
Iwouldhelpthepeoplewhowereinsuredbutthattheinsurancewouldn'tcoverthecostsofsewer
backupduetooverlandflooding.$1billiondollarsforfloodvictimsistoomuchmoneytogiveaway
whenwearelosingteachersandotherservicesarebeingcut.Inmyhouse,wedonatemoneywhenwe
haveextramoneynowhenwearegoingfurtherintodebt.
Personswithhomesorbusinessesinoldplainsmustacceptthattheymaybesubjecttoaflood.Itislike
earthquakeinsuranceorhurricaneinsurancepoliciesofsuchgovernments.Asataxpayer,whyshouldI
havetopaytorebuildamilliondollarhome!Instituteameanstestontherebuildoffloodedhomes.
Californiadoesthatwithearthquakedamages.Idonotsupportatemporarytaxastheytendtoremain
inplace.Thegovernmenthastotakeastandofmoderaterelieftothosewhohavethemeanstorebuild
orrelocate.Sorry,butthetaxpayerscannotpayalltherebuildcosts.
Makethecitieshavetopayforaportionoftheirownrebuild.Mytaxdollarsshouldnotgotofixa
probleminaknownfloodplainwhenIdonotliveonone.
Provideprovincialassistancewithamaximumlimittoallthoseaffected;inthefuture,peoplewho
continuetoliveinorpurchasehomesinhigh-riskareas(byriversorinfloodplains)shouldnotbegiven
governmentassistance.Whyshouldallthecitizenspayfortheirfoolishness?Mostofthosehomeswere
valuedatorover$1million;theyarenotworththatnow.
Ibelievemajorstepsneedtobetakeninseveralarea'ssuchas;relocationoutoffloodzoneswherepossible,introductionofnewprivatefloodinsurance,(tryingasmuchaspossibletokeepthe
governmentoutofit),andnewlongtermcivilengineeringflooddiversionstepsneedtobetakenin
ordertolimitdamagethenexttimearound.
Letsseeadetailedbudgetofwherethismoneyiscomingfrom,whatisbeingcut,andwherewillthe
fundsbespent.Governmentshouldalsogetbacktoarainydayfund,andquitsendingourrevenues
downeast.
Forbidpeopleand/orbusinessesbuildingonfloodplainsandensurethepolicyisfollowed.
Municipalitiesmustbemadeaccountablewhenissuingbuildingpermits,Ifeeltheyneedtohelppayfor
thedamagecausedbytheirlackofpoliciesregardingbuildingonknownfloodplains.