When Hurricane Harvey’s floodwaters recede, the Federal Emergency Management Agency will face a new battle: securing money for an already-struggling flood program, under a White House that has threatened to slash funding for natural disaster recovery.
Even before Harvey made landfall, FEMA’s National Flood Insurance Program was underwater.
The federal program, which insures homes in flood-prone areas, was $25 billion in debt. The debt comes coupled with an astronomical Harvey cleanup bill, a conservative Congress, a proposed budget that would cull hundreds of millions from FEMA funding, and a rapidly changing climate—costs that could leave FEMA in an even deeper financial hole when the next natural disaster strikes.
James Lee Witt, the FEMA director under President Bill Clinton, said the agency’s Harvey’s response had been strong in the first days of the disaster.
“Administrator Brock Long I think has done a great job with FEMA, and with supplying the resources Texas needs,” Witt told The Daily Beast. “I haven’t seen anything yet that I could say they have not done.”
But the next disaster recovery efforts will take place over 1,000 miles away, in Washington, D.C., where Congress will decide on emergency funding when they return from recess.
“I think the big challenge is going to be when Congress gets back next week, to get that supplemental appropriation done,” Witt said, “because this event is going to cost billions of dollars and it’s going to take many years in recovery.”
That recovery bill has been cited as potentially exceeding $100 billion. And some of FEMA’s flooding programs were already feeling the financial strain.
Approximately 400,000 homes in Harvey-affected areas are protected under FEMA’s National Flood Insurance Program, according to CNN. The program, which is available and sometimes mandatory for residents in flood-prone areas, pays out up to $350,000 for damages to homes and their contents. But a series of disastrous storms in recent years have all but depleted the program, which now finds itself $25 billion in debt, with less than $2 billion cash in its coffers, and permission to borrow another $6 billion. The funds fall short of the $9.2 billion the program paid out after Hurricane Sandy, and the $17.7 billion it paid after Hurricane Katrina.
Some of the program’s money woes can be attributed to its partnership with private insurance companies. FEMA does not directly issue the flood insurance. Instead, homeowners buy plans through private insurers, and FEMA compensates the companies for any payouts they might award after a flood.
But damages from Katrina and Sandy sent the FEMA program into debt, while its private partners profited. A Frontline report found that, from 2011 to 2014, private insurance companies made an average $325 million each year through the National Flood Insurance Program—almost 30 percent profit pre-tax. That figure skyrocketed after major flooding. After Hurricane Sandy in 2012, the companies pulled in $400 million in profits. (A March 2016 audit [PDF] by the Department of Homeland Security tore into FEMA for lacking “proper oversight” of its private partners, placing it “at risk for fraud, waste, abuse, or mismanagement.”)
The program also faces a Sept. 30 reauthorization deadline in Congress, after which new homeowners will not be able to buy flood insurance. The Sept. 30 cutoff coincides with a budget deadline that would shut off funding to the federal government, a looming time limit that could complicate Congress’ efforts to authorize Harvey recovery spending.
Despite bipartisan pledges to fund the recovery effort, negotiations could turn tense, especially as Texas’ two Republican senators, Ted Cruz and John Cornyn, voted against recovery spending in New York and New Jersey after Hurricane Sandy, a move legislators from those states have not forgotten.
“Ted Cruz was one of the leaders of trying to keep New York and Long Island and New Jersey from getting the funding we needed, and now he’s the first one in asking for aid for Texas,” New York Rep. Peter King, a Republican told Long Island’s News 12. “But as badly as I feel toward Ted Cruz, and what a hypocrite he is, I’m not going to take it out on the people of Texas.”
Witt said he anticipated the recovery funding to pass.
“I’m very optimistic. I think the president has committed to being there for the long haul,” he said. “I think the state and local governments will get reimbursed for their costs, but more important is to get the supplemental done so they can literally start the recovery efforts soon.”
But even if FEMA gets the funding it requests, its ability to afford the next storm is still in question. In a budget proposal in May, Trump proposed cutting 9 percent of funding to FEMA and other agencies that work in disaster preparation and recovery. The cuts would mean slashing $667 million from FEMA’s grant program for state and local governments, and would require those governments to match 25 percent of all federal funding they received.
All these cuts come at the expense of an agency that expects to see skyrocketing costs as storms intensify with climate change: a phenomenon on which Trump and his administration have been quiet or outright skeptical.
“Weather patterns have changed. Scientists all agree. We need to start building better and safer communities based on the scientific knowledge we have,” Witt said, citing rising sea levels in Florida and Louisiana, a spike in tornadoes this year, and a series of major thunderstorms that dumped up to 10 inches of rain in just a few hours.
“If you look at this event, and other events we’ve had this year, and you don’t think climate change is happening, you’ve got your head stuck in the sand.”