Uncertain Present

First, the good news: current forecasts (Colorado State University, Weather Tiger, etc.) are not (yet) certain the upcoming hurricane season will be above-average, like the last one. Florida has also, so far, avoided frequent flooding that battered it last year, and other parts of the country this year.

But the bad news is sobering. Odds are, two hurricanes hit Florida this season. Worse, the State's ability to respond remains uncertain. Last year's disaster cascade likely stressed — and in some cases exceeded — nameplate capacity of Florida's CEMP segments. Yet there is no evidence of testing the M&R system for impairment risks and recoverability.

Indeed, recent legislative actions probably made both worse. Florida Senate Bill 180, pending in the House, treats the M&R system as a Jenga tower — pulling out pieces it think unimportant, like local adaptive actions (like "lookbacks" or moratoria). The Executive Branch plays, too; pulling already-promised FEMA funding to localities, as if local readiness carries no weight.

The worst-case scenario? Even an average hurricane season could overwhelm M&R capacity — not because of internal system failures alone, but because communities and markets are less willing or able to support Florida's emergencies, than in the past.

Supply chains for critical materials — especially imported construction goods — face higher costs and longer delays due to Trump's tariffs and immigration policies. Absent more rigorous metrics, we should prepare for real cost of a given scale of recovery for 2025 events to be twice that for 2024. That effectively halves the $7 billion liquidity in the Florida Hurricane Catastrophe Fund (FHCF), making "post-event" catastrophe bonds a near certainty.

Negative industry assessments of Florida's approach to insurance was raising the risk premium on its catastrophe bonds well before Trump's policies that "point to a complete loss of faith in the strongest bond market in the world," as a Financial Times article put it, so "a risk premium will sit on US assets that was not there before." Unless something like FDGO in at least under consideration before FHCF has to try funding 2025 hurricanes, its bonds will face steep downgrades. That could come as even Treasuries are being downgraded, interest rates rise, etc. In such a situation, FHCF could be lumped with the many issuers of municipal bonds likely downgraded to junk bond status.

This is no longer just a weather problem. It is a governance problem — one that Florida cannot afford to ignore. The attachment outlines a proposed annual FDGO report, for discussion.