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How Do The Feds Manage Disaster Relief?

by Countable | 8.28.17

What’s the story?

Federal disaster relief was a fairly non-controversial issue for many decades, but like many issues that require massive federal funding, disaster relief has become more controversial in the last dozen years.

Understanding the controversy means understanding how the federal government manages disaster relief. Once we get there, then we can have a robust conversation about how, if and why federal disaster relief should be different.

FEMA’s Disaster Relief Fund

The Federal Emergency Management Agency (FEMA) is funded through the annual budget (appropriations) process, as an agency of the Department of Homeland Security. Part of that money goes into what is called the Disaster Relief Fund (DSF). This fund is meant to cover non-catastrophic disasters, up to $500 million per event.

The special thing about the DSF funds are that they are "no-year" money, meaning the funds do not expire and balances can be carried over from year to year. Theoretically, this allows FEMA to save money for a rainy day, so to speak, when they have years with less need of funds.

If the number of disasters in a given year exceed the funds in the DSF, then Congress can vote to allocate additional funds to replenish the Fund. These additional allocations are not subject to the Budget Control Act (BCA), meaning they don’t have to be offset by spending cuts, but they are part of the annual appropriations process.

Emergency Funding

Seems oxymoronic, talking about emergency funding for disaster relief, doesn’t it? But major disasters like we’re seeing with Hurricane Harvey, can run well over a hundred billion dollars in federal aid. Hurricane Katrina cost $160 billion. The federal government has yet to find a way to save for that level of catastrophe, so when they happen Congress has to approve supplementary appropriations bills.

These are massive funding bills for disaster recovery and relief efforts. These bills are also not subject to BCA spending caps, which means they do not have to be offset by spending cuts.

Disaster Preparedness

FEMA also funds programs focused on what is called "pre-mitigation disaster preparedness". These programs help communities plan ahead to hopefully reduce destruction and loss of life from future disasters.

Community Development Block Grants

In addition to disaster relief through FEMA, the federal government funds long-term relief and preparedness efforts through the Department of Housing and Urban Development’s (HUD) Community Development Block Grant Program (CDBG).

The CDBG program supplements other funding through FEMA, etc., and particularly helps low-income communities to continue working on full recovery from disasters after the initial crisis period.

National Flood Insurance Program

The National Flood Insurance Program (NFIP) provides government support for flood insurance in targeted areas. Private insurers won’t cover flood insurance in flood-prone areas on their own, given the potential for significant and repeated losses, so the NFIP backs the insurance up to a specified limit, guaranteeing that the approximately 5 million enrollees can afford to repair or rebuild after a disaster.

The program was self-funded from premiums and other revenue until 2005, when Hurricane Katrina blew the program out of the water, followed by Hurricane Sandy, the 2016 floods in Louisiana and others. The NFIP borrowed from the Treasury to cover losses and is now nearly $25 billion dollars in debt.

Without the NFIP large swaths of coastal areas in the southeast U.S. would be uninhabitable by the majority of residents, who are mostly low-income. The insurance costs would simply be too high.

Emergency Aid for Hurricane Harvey

The first challenge raised by Harvey will be getting an emergency appropriations bill passed. Fingers are already being pointed across the aisle at Texas congress members who voted against emergency funding after Hurricane Sandy.

The congress members, including Sens. Ted Cruz and John Cornyn, have defended their stance, arguing that the Hurricane Sandy bill was full of "pork". Opponents -- notable among them, New Jersey Gov. Chris Christie -- attacked those voting against the bill at the time for their “callous indifference”.

An aid package for Hurricane Harvey will undoubtedly pass Congress, but the rancor will continue. Should massive emergency disaster packages have to be balanced by spending cuts in other areas? What role should states and local communities play in covering the costs of disaster relief?

Why does it matter?

The 2018 Fiscal Budget

President Trump’s budget proposal included a complete elimination of the Community Block Grant Program’s $3 billion budget, as well as $90 million in cuts to FEMA’s Pre-Mitigation Disaster Grant Program, $667 million to state and local program’s focused on disaster preparedness and $190 million to the National Flood Insurance Program’s Flood Hazard Mapping and Risk Analysis Program, which updates flood maps to keep current with changing realities.

Presidential budgets never pass as they are. Congress always tinkers with them, or rejects certain aspects wholesale. When Congress returns from recess, however, they have very little time to pass an annual budget and raise the debt ceiling before current funding runs out. The size of the Harvey disaster and the questions it poses about ongoing disaster funding will likely change the conversation significantly from what it might have been mere weeks ago.

The National Flood Insurance Program also expires at the end of September. After that, current flood insurance policies would remain in effect. But new policies could not be written, jeopardizing sales of houses with federally backed mortgages, which must carry flood insurance. Congress could simply extend the program as is, or wrestle with changes. The former is more likely, given timing.

What do you think?

Does the current structure of the federal government’s disaster relief funding make sense? How would you change it? Do you support the president’s budget proposals or not? If Congress decides to prioritize disaster funding in the annual budget, should they offset it with spending cuts? If so, what should be cut? What changes would you make to the National Flood Insurance Program?

Tell us what you think in the comments and then use the Take Action button to tell your reps what you think!

— Asha Sanaker

(Photo Credit: Defense.gov / Creative Commons)

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