I will freely admit my ignorance of the situation in California so I will stipulate to everything you just said for the purposes of this post. In that case, yes, we should certainly strengthen California's defenses. If one storm can cause that much property damage, maybe some of of our defense budget should be rerouted to that which is likely to damage us. If one is deserving of priority, however, I still go with New York for the moment, but only because the infrastructure there is already damaged and in need of being replaced. While we are in there changing out components anyway we may as well upgrade them to avoid having to fix them next time a storm comes up the coast. California may be vulnerable now, but so is New York, but it is in that regard fully functional.
Also, the wide scale infrastructure projects could be very good for the economy if well handled.