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Flood risk funding boost welcome, but NFIP overhaul still needed

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A boost in funding for flood risk mapping and mitigation included in the omnibus spending bill signed by President Donald Trump last week is a positive sign, but experts say additional work will need to be done to shore up the National Flood Insurance Program.

The $1.3 trillion spending bill extended the NFIP through July 31, leading to some concerns about the fact that the NFIP was decoupled, meaning separated, from must-pass funding of the federal government, which was extended through the end of the 2018 fiscal year on Sept. 30. But others choose to view the decoupling from a more positive perspective.

“The obvious takeaway is that because it is going to have a date that is different from the continuing resolution, it means Congress will have to act independently of the overall government funding to extend the NFIP,” said R.J. Lehmann, senior fellow for the conservative R Street Institute think tank in Washington. “That, one would hope, makes it likely that you get a real long-term reauthorization with reforms. Otherwise, it’s very simple just to wrap it into the overall continuing resolution of the government and just keep kicking the can down the road. We know from 2008 to 2012, they did that over and over and over again. That’s the precedent you want to avoid — making it too easy just to extend without changes.

“It’s not a guarantee,” he continued. “For sure they could just end up doing another short-term reauthorization. I don’t think they would have decoupled if there wasn’t a sense from Senate Banking (committee) leadership that they want to try to do something. Whether they succeed or not we’ll see, but if they didn’t want to try, you would have seen it wrapped up with the rest.”

A straight reauthorization for the NFIP was included in the bill, meaning no changes to the program itself, but separately Congress appropriated additional funds for flood risk mapping and mitigation despite requests by the Trump administration to reduce such expenditures.

For example, the omnibus bill included $249 million in funding for the Federal Emergency Management Agency’s Pre-Disaster Mitigation program, which provides grants to state and local governments to implement a sustained predisaster natural hazard mitigation program with the goals of reducing overall risk to the population and structures from future hazard events while also reducing reliance on federal funding in future disasters. That funding level was more than three times the average amount received by the program over the last 15 years, said Laura Lightbody, director of the flood-prepared communities’ initiative of the Pew Charitable Trusts in Washington.

In addition, FEMA’s Flood Hazard Mapping and Risk Assessment Program received $262.5 million, an $85 million-dollar increase from the previous year.

“Neither of those programs has seen this large of an appropriation over the last 10 years,” she said. “These are significant amounts dedicated to preparing communities before disasters strike aimed at reducing losses and damages.”

“I think last year’s disaster costs were a bit of a wakeup call,” Ms. Lightbody continued, adding that Congress provided more than $130 billion through supplemental appropriations for 2017 hurricane costs. “I think that sticker shock, coupled with the continued debt of the flood insurance program, was a wakeup call. Hopefully, it means Congress is starting to see the value that mitigation brings.”

“A trillion dollars in additional spending has us pretty concerned, but on this particular issue, yes, I think more money was needed for mapping,” Mr. Lehmann said, adding that the additional funding for mitigation could be used for buyouts of homes vulnerable to repeated flooded.

But any reform package should include concrete solutions to address the issue of repetitive loss properties, which are an “obvious driver of increasing claims,” he said. “Until you do something to bring down the exposure to those properties, you’re going to have a real problem in the program.”

These properties have historically accounted for between 25% and 30% of the program’s losses, Ms. Lightbody said.

NFIP reforms must also include language that clarifies that people who buy private flood insurance should receive the same treatment as those who purchase it through the NFIP if they’re trying to obtain federally backed mortgages that require flood insurance.

“We would oppose any long-term reauthorization that didn’t include those two elements,” Mr. Lehmann said. “There are other elements we’re totally open to hearing peoples’ proposals on, but we feel like those two things are essential.”

Another critical issue is what to do about the NFIP’s nearly $25 billion in debt, which Rep. Maxine Waters, D-Calif., ranking member of the House Financial Services Committee, has repeatedly advocated for but conservatives have resisted.

“I will say it is impossible that the NFIP will ever pay off its debt, the way it’s currently structured,” Mr. Lehmann said. “That should be taken as a given. But we don’t forgive the debt until you fix the program, because otherwise you’re just going to repeat the same mistakes in the future.”