The widespread destruction caused by Hurricane Florence reinforces the urgent need for lawmakers to reassess state laws and repeal burdensome state-level regulations that can slow disaster response and recovery efforts.
The good news is that many states have learned from past mistakes and have adopted innovative policies. In fact, more than 25 states have adopted laws that now make is easier for disaster relief workers to avoid government bureaucracy during those critical days and weeks following a tragedy.
In response to natural disasters in previous years, policymakers many times focused their efforts on appropriating money to pay for reconstruction. Of course, this is a needed response. However, temporarily repealing burdensome state regulations and tax policies is another essential tool that policymakers have at their disposal to significantly speed up response times for indispensable disaster relief workers.
During natural disasters, many utility and infrastructure companies bring in equipment and personnel from outside the state on a temporary basis to help expedite the overwhelming task of repairing damaged facilities. This may also involve the need for out-of-state companies to bring in their resources that previously had no connection to the state to clean up, make repairs, or perform other activities. These out-of-state trucks and utility crews supplement in-state capabilities. The companies and employees should not be penalized for doing everything they can to respond quickly and assist those who are suffering.
But by bringing additional resources into a state, an out-of-state company could subject itself and its employees to state or local business licensing or registration requirements, as well as state and local taxes and fees. This includes unemployment insurance taxes, state and local occupational licensing fees, sales and use taxes, and ad valorem taxes on equipment used or consumed during the disaster.
Companies and employees who want to help those affected by disasters should be focused on the task at hand, not wondering whether they need to hire a team of tax lawyers and accountants to navigate a labyrinth of state and local laws.
A state’s tax requirements are intended for businesses and individuals who have a connection to that state as part of regular business, or who intend to reside in the state. When the goal is a swift response to a natural disaster to hasten the return to normalcy for those Americans who are suffering, it is outrageous that companies or individual employees rendering critical assistance are subjected to onerous state tax and regulatory requirements.
For many states, legislative action is needed to ensure first-responder companies and their employees focus solely on the needs of the state and its citizens during a disaster. The American Legislative Exchange Council developed model policy to serve as a tool for state legislators. The policy simply grants companies and employees who are engaged in disaster recovery a broad but temporary exclusion from tax and regulatory barriers to entry.
As encouraging as it is that more than 25 states have adopted this model policy, it is even more exciting that policymakers from the broadest possible range on the political spectrum are supporters. Gov. Paul LePage of Maine, a conservative stalwart, shares this in common with former governor and progressive hero Martin O’Malley of Maryland. The ALEC model policy is the definition of good, old-fashioned common sense.
Policymakers are responsible for ensuring states have appropriate response plans in place for natural disasters. As discussions about disaster response plans continue, legislators should carefully consider the lessons learned from past tragedies and look for ways to speed up response. They can start by removing burdensome tax and regulatory requirements that impede relief workers coming across state lines from doing their jobs, delivering help to those who need it most. For the family who is living in temporary shelter, and for the mother and her children hoping for the lights to come back on, big government bureaucracy needs to step aside so that help can arrive on time.
Jonathan Williams is the chief economist of the American Legislative Exchange Council (ALEC) and the vice president of its Center for State Fiscal Reform. Williams also co-authors ALEC’s annual Rich States, Poor States study on state economic health.
