The Fiscal Impacts of Wildfires on California Municipalities

53 Pages Posted: 5 Jun 2020

See all articles by Yanjun Liao

Yanjun Liao

University of Pennsylvania - The Wharton School

Carolyn Kousky

University of Pennsylvania

Date Written: May 27, 2020

Abstract

This paper provides some of the first empirical estimates of the impact of natural disasters on the subcomponents of municipal budgets. We combine detailed municipal financial data from 1990-2015 with data on historical wildfire perimeters in California. We find that wildfires increase both revenues and expenditures. Sales taxes temporarily increase and property taxes increase to a permanently higher level; this appears due to state law that limits reassessments of property until time of sale. Wildfires also cause a long-term increase in local spending on preparedness and planning. The overall impact of wildfires on municipal budgets is negative and substantial.

Keywords: wildfires, natural disaster policy, municipal budgets, Proposition 13

JEL Classification: H71, H72, Q54, R51

Suggested Citation

Liao, Yanjun and Kousky, Carolyn, The Fiscal Impacts of Wildfires on California Municipalities (May 27, 2020). Available at SSRN: https://ssrn.com/abstract=3612311 or http://dx.doi.org/10.2139/ssrn.3612311

Yanjun Liao (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States
19104 (Fax)

Carolyn Kousky

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

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