Disaster Prep Funding Shifts to States: Local Towns Lose Direct Federal Access Under New Formula

The “Building Resilient Infrastructure and Communities for All Act of 2025” is making a significant change to how the federal government funds projects designed to prevent damage before a disaster hits. Think of this as the money that builds stronger seawalls or moves critical infrastructure out of a flood zone. The big takeaway? The control over that money is shifting dramatically from local towns and cities to state governors.

The New Gatekeepers: State Governors

Previously, local governments could apply directly for this pre-disaster hazard mitigation aid under the Stafford Act. Now, Section 2 of this bill cuts out that direct line. Instead, the federal government will allocate funds directly to the states, and the states will decide which projects get the green light. If you’re a city manager or a local utility trying to get funding to upgrade your water treatment plant against rising sea levels, you no longer go straight to the feds; you have to go through your State Capitol. The only projects the President can approve are those recommended by the Governor, unless there are “extraordinary circumstances” that allow an override—a term that is notoriously vague and ripe for political maneuvering.

Formula Funding: Who Gets What?

To keep things predictable, the bill introduces a mandatory three-part formula for distributing the bulk of the money to states. First, every eligible state gets an equal share (33%). Second, 33% is distributed based on population, meaning bigger states get a bigger slice. Third, the final 33% goes to states based on their vulnerability—how much their critical infrastructure is at risk from natural hazards. This formula brings a welcome level of transparency and predictability compared to the old system. It also ensures that Indian tribal governments get a guaranteed minimum floor of $75,000,000 in aid, which offers a stable, reliable funding source for essential tribal mitigation efforts.

What This Means for Your Town’s Projects

While local governments lose the ability to compete directly for federal funds, the bill does include provisions to ensure the money reaches the ground level. For any project the state selects, the state must pass down at least 50 percent of the funds it received to the local government or entity actually carrying out the work. For example, if the state gets $10 million for a project to reinforce a local dam, the local water authority implementing the work is guaranteed at least $5 million of that money. However, the catch is that states are no longer required to use a competitive process when selecting which local projects to fund. This means the Governor’s office gains significant power to prioritize projects based on internal state policy or, potentially, political preference, rather than a transparent competition among local applicants.

Double-Dipping is Okay (For Once)

One clear benefit for project managers is the clarification that seeking funding under this pre-disaster section won't hurt your chances of getting aid later on under Section 404 of the Stafford Act (which deals with mitigation after a disaster). This removes a potential hurdle and encourages local planners to seek early funding without worrying about jeopardizing future post-disaster recovery aid. It’s a smart move that recognizes that mitigation is often an ongoing process, not a one-time fix.