Trump's FEMA Overhaul Would Make States Pay Larger Disaster Bills. Can They Afford Them?

It’s eight pages long and a year behind schedule — but promises to transform how America pays for its climate disasters.

“President Trump’s America First Resilience Strategy” arrived on June 23, some 15 months after an executive order mandating its publication. Its ostensible purpose: to articulate the manner and means by which federal, state, and local governments “advance the resilience of the nation” against a wide range of hazards — though climate change and extreme weather are conspicuously absent from that list.

In practice, the document signals the federal government’s retreat from disaster payouts and resilience investments. The strategy explains that Washington “should not be the sole source of national resilience, or the nation’s default insurer” and scolds states for failing to pull their weight, claiming they have “excessively” relied on federal grants and assistance to manage “known, predictable, or recurring disruptions.”

While thin on details, the strategy aligns with the May 7 recommendations issued by President Trump’s Council to Assess the Federal Emergency Management Agency (FEMA), a body created by executive order in January 2025 and co-chaired by the secretaries of Homeland Security and Defense. Confirmed by the Senate last Friday, new FEMA chief Cameron Hamilton — the agency’s first permanent head in the second Trump administration — is now positioned to implement those proposals. If adopted, they could radically overhaul how disaster finance and federal risk mitigation payments are structured, forcing states to shoulder a greater share of recovery and adaptation costs.

Experts say a too-rapid shift could leave states and localities dangerously exposed. “I do not think you can just let this happen at the flip of a switch, because these state and local governments are not prepared, and in some instances won’t have the budgets in place to be able to hire the types of assistance that they need,” says Alice Hill, former Special Assistant to President Obama and Senior Director for Resilience Policy at the White House. “We’re going to have a gulf right now where there could be dire results.”

Moreover, a withdrawal of federal support has the potential to drain state-and-city rainy day funds — and erode their ability to pay debts over the long term, with serious implications for the nation’s US$4.5trn municipal bond market.

The stakes are so high, even state governors are ringing the alarm bell. “States and communities cannot manage increasingly frequent and costly disasters alone,” wrote Colorado Governor Jared Polis in a statement to Climate Proof. “My central concern with the Trump Administration’s proposed changes is that they appear to shift responsibility and costs to states without assurances of help, while simultaneously proposing to raise the thresholds communities must meet to receive federal assistance.”