Katrina, Rita Create Unexpected Boom

 

Despite dire forecasts that Gulf Coast governors would have to slash state budgets in the wake of  hurricanes Katrina and Rita one year ago, a new report finds that booming "hurricane economies" have fueled state revenue surpluses across the region.

State revenues in hardest-hit Louisiana and Mississippi swelled since the storms thanks to a spike in mostly sales tax revenues in the fiscal year that ended June 30, according to an Aug. 22 report from the Nelson A. Rockefeller Institute of Government and the Public Affairs Research Council of Louisiana (PAR).

Louisiana, which many fiscal analysts forecasted would be brought to its knees economically, now projects a $759 million state budget surplus over the next two years. Mississippi is projected to have a $70 million budget surplus. State revenues in Texas and Alabama, also hit by Katrina and Rita, were not as significantly impacted by the storms, the report found.

However, the report cautioned that state surpluses likely would be short-lived because they were based on unsustainably high consumer spending.

In the first release of a three-year study investigating recovery efforts in states along the Gulf of Mexico, the report found the greatest economic growth in inland communities largely out of range of Katrina's devastating 25-foot storm surge and flooding. Still, many of the hardest-hit communities, especially New Orleans, have not recovered economically, mostly because of local officials' failure to adopt comprehensive rebuilding plans and widespread worker and housing shortages.

"Without clear guidelines from community leaders about what areas will be rebuilt and when, many residents put off making a decision about whether to return, and the longer the delay, the more likely they are to stay where they are," said Richard P. Nathan, project investigator and co-director of the Rockefeller Institute.

The 62-page report detailed recovery efforts along the Gulf Coast and found communities fell into three categories — struggling, rebounding and growing.
 
  • Large swaths of abandoned neighborhoods and closed businesses still fill the hardest-hit communities one year after the storms. Those areas struggling include: New Orleans, Cameron and St. Bernard parishes in Louisiana; Waveland, Bay St. Louis, Biloxi and Gulfport in Mississippi; and Bayou La Batre in Alabama.
  • Some storm-ravaged communities suffered economically but now are moving solidly down the road of recovery. Rebounding areas include: Lake Charles and Jefferson Parish in Louisiana, Jackson County in Mississippi and Mobile in Alabama.
  • An influx of new residents, booming construction and increased consumer spending buoyed the economies in many communities. On the downside, those areas also are experiencing increased traffic congestion and homelessness, overburdened health-care systems and crowded schools. The fastest-growing areas include: East Baton Rouge and St. Tammany parishes in Louisiana; Jackson, Hattiesburg, and Laurel in Mississippi; and Gulf Shores in Alabama.
The joint project, " GulfGov Reports ", will issue an updated report in February with a focus on public education. The project also plans to issue reports on efforts to relieve housing and worker shortages.

"The shortage of affordable housing is becoming a huge crisis. That may be the key to everything, because you can't get people back to work and get communities moving forward without affordable housing," said Karen Rowley, special projects manager for PAR.
 
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