In the wake of the devastation caused by Hurricane Florence, Congress has begun to discuss plans for new disaster spending.
Indeed, the newly released Federal Aviation Administration reauthorization bill contains $1.7 billion for Community Development Block Grants—money that is not subject to the budget caps.
Until FEMA exhausts the Disaster Relief Fund, Congress should not provide emergency funding to respond to Hurricane Florence, and especially not through the Community Development Block Grant.
The Community Development Block Grant is a poorly targeted program intended to assist low-income communities. Examples of past grants include $80,000 toward construction of a brewery and tasting room in Wisconsin, $205,000 to build an apiary in northern Michigan, and $25,000 in grants to a t-shirt store in upstate New York.
It’s hard to argue that these programs do anything to help low income communities, and they certainly fall outside of what qualifies for emergency funding to respond to a hurricane.
Funding the Community Development Block Grant through the emergency designation is clearly a gimmick intended to backfill the programs low level of base funding.
Last year, President Donald Trump called for $44 billion in supplemental disaster aid be paid for through cuts to other federal programs. This is the responsible approach to emergency funding. Congress should follow the president’s lead.
The federal natural disaster-spending regime is unsustainable and need of significant reform.
After spending $136 billion in late 2017 on emergency relief and other spending efforts following the 2017 hurricanes, FEMA’s Disaster Relief Fund had almost $25 billion in its coffers as Florence hit. This fund was also set to receive an additional $7.4 billion on Oct. 1 when the new fiscal year begins. The Disaster Relief Fund is FEMA’s main tool to clean up and rebuild after a disaster.
Another major program that comes into play when hurricanes strike is the National Flood Insurance Program, which, as its name suggests, covers the costs of rebuilding after flooding.
Unfortunately, the Disaster Relief Fund and the National Flood Insurance Program both contain serious deficiencies that go unaddressed in the FAA bill’s “disaster recovery reform” sections.
The Disaster Relief Fund’s struggles date back to the Stafford Act of 1988. Before this legislation took effect, states and local governments had far greater responsibility for responding to natural disasters.
The 1988 law significantly shifted the task of disaster-response to the federal government by requiring it to cover at least 75 percent of the costs associated with presidentially designated national disasters. Furthermore, regulations put in place by the Stafford Act set a very low bar for states to qualify for FEMA services.
Such a low threshold allows some states to receive FEMA aid for disasters that incur no more than $5 million in costs. Since the federal government will pay for even very small disasters, this discourages state and local authorities from saving and adequately planning for disasters, leading to more federally declared disasters.
The National Flood Insurance Program suffers from similar fundamental issues. It is not actuarially sound, as the revenue it receives from policyholders is not able to cover the costs of insurance claims. The result is that the program’s finances keep going further and further into the red.
The flood insurance program reached its $30.4 billion borrowing limit in the face of the 2017 hurricanes. Congress bailed the program out with $16 billion in additional borrowing authority in order for it to be able to keep paying claims. Yet Congress failed to fix the underlying problem of subsidizing this kind of insurance.
Such subsidized guarantees encourage the continued habitation of and development in flood zones, despite the known dangers. So not only is the program costing taxpayers an arm and a leg, it encourages people to put their families, homes, and businesses in harm’s way.
Since federal disaster programs have exhibited such severe problems, Congress has gotten in the habit of bailing them out and adding all sorts of extra spending in disaster packages. And right on cue, Congress wants supplemental disaster funding in an FAA bill and is considering even more emergency spending in short order.
FEMA should first exhaust the Disaster Relief Fund before Congress even considers providing extra emergency funding to respond to Hurricane Florence. Regardless, such funding, even when justifiable, should never be provided through Community Development Block Grant.
While the FAA bill does have some potentially good reforms that would make disaster recovery more flexible and that would increase the focus on mitigating future disasters, even here Congress is not tightening the purse strings but loosening them in several cases.
Congress must curtail its habit of relying on emergency spending for non-emergency causes. The Disaster Relief Fund and the National Flood Insurance Program must be reformed to better prepare the federal, state, and local governments as well as individuals for disasters.
