An Examination of Federal Disaster Relief
Under the Budget Control Act
Bruce R. Lindsay
Analyst in American National Government
William L. Painter
Analyst in Emergency Management and Homeland Security Policy
Francis X. McCarthy
Analyst in Emergency Management Policy
November 8, 2013
Congressional Research Service
7-5700
www.crs.gov
R42352
CRS Report for Congress
Pr
epared for Members and Committees of Congress
An Examination of Federal Disaster Relief Under the Budget Control Act
Summary
On August 2, 2011, the President signed into law the Budget Control Act of 2011 (BCA, P.L. 112-
25), which included a number of budget-controlling mechanisms. As part of the legislation, caps
were placed on discretionary spending for the next ten years, beginning with FY2012. If these
caps are exceeded, an automatic rescission—known as sequestration—takes place across most
discretionary budget accounts to reduce the effective level of spending to the level of the cap.
Additionally, special accommodations were made in the BCA to address the unpredictable nature
of disaster assistance while attempting to impose discipline on the amount spent by the federal
government on disasters. The BCA created an allowable adjustment specifically to cover disaster
relief (defined as the costs of major disasters under the Stafford Act), separate from emergency
appropriations.
The limit established by the BCA on adjustments to the caps for disaster relief is based on the
average funding provided for disaster relief over the last ten years, excluding the highest and
lowest annual amounts, calculated by the Office of Management and Budget. If Congress spends
less than that average on disaster relief in a given fiscal year, the caps can be further adjusted
upward by the unspent amount in the following year. The existence of this “allowable
adjustment” for disaster relief has changed the way that the Disaster Relief Fund is structured,
and resulted in a Disaster Relief Fund with substantial funding at the start of FY2013, a departure
from historical precedent.
On October 29, 2013, Hurricane Sandy came ashore, causing loss of life and billions of dollars in
damage. The Administration proposed a relief package that exceeded the allowable adjustment for
disaster relief under the BCA. The Administration requested, and Congress for the most part
agreed, to designate the Hurricane Sandy supplemental as emergency spending outside of the
limited disaster relief adjustment made available under the BCA. The history of the legislative
response to this disaster demonstrated that while the BCA included an accommodation to provide
dedicated additional funding for many disasters, catastrophic events such as Sandy remain a
challenge to those developing long-term budgeting strategies.
This challenge could be compounded by the fact that by design, the methodology used by OMB
to calculate the allowable adjustment could not capture the full range of disaster relief spending,
and that the structure of the formula for calculating the average provides smaller allowable
adjustments in future years. The sizeable initial disaster relief expenditures for Hurricane Katrina
and the other 2005 storms will begin to lose relevance in calculating the allowable adjustment for
disaster assistance for FY2016, and will no longer impact calculations for the allowable
adjustment in FY2017. Once FY2005 and FY2006 rotate out, there will be a corresponding drop
in the allowable disaster assistance adjustment.
In the face of these challenges, Congress could choose to continue to use emergency funding to
meet unbudgeted disaster relief needs, or change the allowable adjustment mechanism, the
formula for calculating the allowable adjustment. Another potential option would be to take other
steps to mitigate the impact of federal disaster relief spending on the budget, including altering
the underlying laws, if Congress believes further legislative controls for federal disaster relief
expenditures are a priority.
This report will be updated as needed.
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An Examination of Federal Disaster Relief Under the Budget Control Act
Contents
Introduction ...................................................................................................................................... 1
An Overview of Disaster Spending: Federal Disaster Assistance and the Stafford Act
Prior to the Budget Control Act .................................................................................................... 2
The Disaster Relief Fund ........................................................................................................... 2
Budgeting for the DRF ........................................................................................................ 2
Supplemental Appropriations .............................................................................................. 4
Funding History .................................................................................................................. 5
Disaster Spending under the Budget Control Act (BCA) ................................................................ 7
OMB Reporting and Calculations .................................................................................................... 9
The BCA and Disaster Relief in Practice: Hurricane Sandy ............................................................ 9
Analysis and Potential Policy Implications ................................................................................... 10
Timeframes for Congressional Action ..................................................................................... 10
Potential Implications of the Rising Number of Stafford Act Declarations ............................ 11
Funding Relief Efforts in Severe Disaster Years Going Forward ............................................ 12
Offsetting the Cost of Disaster Relief ............................................................................... 13
Calculating the Disaster Relief Allowable Adjustment ........................................................... 14
Expenditures Omitted from the 10-Year Average ............................................................. 14
Pre-BCA Disaster Assistance Spending ............................................................................ 15
Disaster Relief Spending Under the BCA ......................................................................... 16
Other Types of Excluded Stafford Assistance ................................................................... 17
Concluding Observations ............................................................................................................... 18
Figures
Figure 1. Disasters Costing FEMA $500 Million Dollars or More ................................................. 4
Figure 2. Disaster Relief Fund, Administration Requests and Appropriations ................................ 6
Tables
Table 1. Selected Examples Supplemental Funding for Large-Scale Disasters ............................. 11
Contacts
Author Contact Information........................................................................................................... 19
Acknowledgments ......................................................................................................................... 19
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An Examination of Federal Disaster Relief Under the Budget Control Act
Introduction
Federal funding provided by Congress for declared emergencies and major disasters has grown
considerably in the past decade, driven principally by the hurricane season of 2005.1 As concern
over the size of federal budget deficits and the national debt has grown, so has congressional
attention to both the amount of funding the federal government provides to states and localities
for disaster assistance, and the processes the federal government uses to provide that assistance.
Although funds have been reallocated at times from one account to another to provide for
disaster-related assistance, disaster relief funding has historically not been fully offset. In
addition, assistance for large-scale disasters has usually been funded outside traditional budget
constraints.
Among its provisions, the Budget Control Act (P.L. 112-25, hereafter the BCA) provides a
mechanism that has changed the way Congress approaches spending on major disasters declared
under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (P.L. 93-288,
hereafter the Stafford Act),2 allowing for a less crisis-driven debate and providing somewhat
greater transparency.
The first section of this report addresses the pre-BCA funding mechanism for major disaster
declarations, both through annual requested amounts and through supplemental appropriations to
meet greater, unanticipated costs. This section also explains the workings of the President’s
Disaster Relief Fund, a “no-year” fund that finances spending under the Robert T. Stafford
Disaster Relief and Emergency Assistance Act (P.L. 93-288).
Next, this report provides a basic overview of how that funding mechanism has evolved under the
BCA, and how Hurricane Sandy was addressed under that mechanism. Finally, the report
explores a number of other issues pertinent to disaster relief funding in the BCA-regulated
environment, including:
• Time frames for congressional action after a large-scale disaster strikes;
• The implications of the rising number of Stafford Act declarations;
• Funding disaster relief efforts in severe disaster years;
• Offsetting the cost of disaster relief;
• Calculating the allowable adjustment for disaster relief;
• The degree to which different types of disaster relief are included in OMB’s
methodology for calculating the 10-year average on disaster relief spending; and
• The possible implications of excluding Stafford Act assistance for emergencies
and fires from the allowable adjustment calculation.
1 Data and information on disasters can be found at NOAA: National Climate Data Center, National Climate Data
Center Billion Dollar U.S. Weather/Disasters Page, NCDC Billion Dollar U.S. Weather/Climate Disasters page, June
17, 2011, http://www.ncdc.noaa.gov/oa/reports/billionz.html.
2 42 U.S.C. 5121 et seq. For further analysis on Stafford Act disaster assistance see CRS Report RL33053, Federal
Stafford Act Disaster Assistance: Presidential Declarations, Eligible Activities, and Funding, by Francis X. McCarthy.
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An Overview of Disaster Spending: Federal Disaster
Assistance and the Stafford Act Prior to the Budget
Control Act
The Stafford Act authorizes the President to declare a major disaster in response to a governor’s
request for federal assistance.3 The declaration enables federal agencies to provide assistance to
state and local governments overwhelmed by the incident. While the majority of federal
assistance for major disasters to states and localities is provided through the Federal Emergency
Management Agency (FEMA), other federal agencies and offices also may provide assistance
once a major disaster has been declared under the Stafford Act. These agencies include the U.S.
Army Corps of Engineers, the Department of Transportation, and the Department of Education
among others. The assistance provided by these agencies may be funded through their own
budgets, but in many cases is requested and paid for by FEMA. In some circumstances federal
agencies have the authority to provide assistance regardless of whether a disaster is declared
under the Stafford Act.
This report focuses primarily on the Disaster Relief Fund, as it has been the most commonly used
tool to fund disaster relief efforts. If recent history is a guide, this may not always be the case.
The Disaster Relief Fund
As mentioned previously, the majority of disaster assistance is provided by FEMA. Once the
declaration has been issued by the President, FEMA provides various forms of disaster relief
through the Disaster Relief Fund (DRF). The DRF is a no-year account4 that is used to fund
response activities and pay for ongoing recovery programs. The DRF is also used to reimburse
other federal agencies for work FEMA has requested, and pay for costs associated with declared
emergencies, fire management assistance grants, and major disasters.5
Budgeting for the DRF
The budgetary practice used to fund the DRF generally consists of funding the DRF through
annual appropriations acts and begins with the Administration’s formulation of the budget request
for the account. Prior to the BCA, the data points used to determine budget requests were: (1)
funding levels currently available in the DRF; (2) the five-year rolling average of “normal”
disaster costs;6 (3) pending recovery costs; and (4) the estimated monthly “recoveries” of
3 For further analysis on emergency and disaster declarations see CRS Report RL34146, FEMA’s Disaster Declaration
Process: A Primer, by Francis X. McCarthy.
4 While most appropriations expire after a set period of time, no-year appropriations are available until expended. This
is helpful in disaster recovery since infrastructure repair and mitigation projects can stretch out over several years.
5 Fire Management Assistance Grants (FMAGs) and emergencies under the Stafford Act are discussed later in the
report.
6 Normal disasters are declared incidents that cost less than $500 million dollars. Disasters costing over $500 million
are considered outliers and are removed from the calculation.
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unobligated funds.7 The current budgetary practice is the same; however, a ten-year rolling
average of normal disaster costs is being used rather than a five-year rolling average.8
Based on these data points, since FY1998 the Administration’s request for the DRF has been $1.3
billion or more each year. The average budget request for the DRF between FY2000 and FY2011
was roughly $2 billion. Yet the average spend-out rate9 for the DRF over that same period was
$350 million dollars per month, or $4.2 billion a year.10 Without resources beyond the request and
regular appropriation, the DRF would have faced a shortfall in its budget in an average operating
year.
There are two factors that contributed to these chronic shortfalls in the DRF: the decision not to
budget for high-cost disasters in the annual appropriations process, and the unpredictability of the
distribution of disaster events over time.
According to data provided by FEMA, since 1992 there have been 20 declared disasters that have
cost $500 million dollars or more (see Figure 1). However, disasters costing more than $500
million are considered atypical events—outliers—when FEMA requests its annual appropriations
for each new fiscal year. This guideline has been used for over a decade without being adjusted
for inflation.11 It could be argued these incidents occur too frequently to be considered as outliers
and ought to be included in calculating necessary budget levels for current and prospective
disaster costs.
7 These may occur, for example, when funds remain unspent after a project is completed for less than the estimated cost
or when a project for which funds have been obligated changes its scope and certain budgeted costs become ineligible.
8 This methodology was described during discussions with FEMA Congressional Affairs.
9 The spend-out rate refers to the amount of money paid out of the account for a given period of time.
10 Based on a CRS discussion with FEMA staff from the Office of the Chief Financial Officer.
11 Using OMB’s GDP deflator, a $500 million disaster in FY2013 equates to a $423 million disaster in FY2005.
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Figure 1. Disasters Costing FEMA $500 Million Dollars or More
1996-2013
Source: Based on data provided to the authors by FEMA’s Legislative Affairs Division.
Note: KRW denotes Katrina, Rita, and Wilma. Figures based on FEMA expenditures for disaster assistance.
Figure 1 does not provide data on funding data provided by other agencies. Spending on recovery continues for
many of these events; these amounts represent a snapshot of disaster costs as of February 2013.
Moreover, additional budget authority has been needed when a series of major disasters occur
over a limited period of time. For example, in FY2008, additional budget authority for disaster
assistance was needed for wildfires, floods, and hurricanes. In that year, while two hurricanes—
Gustav and Ike—each exceeded the $500 million threshold, other disaster events, along with
ongoing disaster recovery needs from previous events, compounded the demand for federal
funding.
Supplemental Appropriations
Congress generally provides additional budget authority to the DRF when its balance is deemed
insufficient to provide for assistance and recovery projects.12 This is done through supplemental
appropriations legislation.13 The use of supplemental appropriations vehicles is of concern to
some because traditionally they have been designated as emergency appropriations—allowing
amounts to be provided in excess of discretionary spending limits. In addition, they often move
12 Congress also appropriates disaster funds to other accounts administered by other federal agencies pursuant to federal
statutes that authorize specific types of disaster relief.
13 For further analysis on emergency supplemental appropriations see CRS Report R40708, Disaster Relief Funding
and Supplemental Appropriations for Disaster Relief, by Bruce R. Lindsay and Justin Murray.
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through Congress on an expedited basis, not undergoing traditional markup processes, and
sometimes under terms that limit floor debate and the amendment process.
Some critics of past policies have asserted that it is a common tactic for Administrations to
request lower funding levels than needed for the DRF in order to mask potential disaster costs and
project smaller deficits in their initial budget documents, allowing supplemental appropriations to
fill the gap later.14
Funding History
The combined effect of unbudgeted high-cost disasters and clusters of disasters, as well as
possible intentional underfunding of the DRF is reflected in Figure 2, a funding history of the
DRF from FY1991 through FY2012.15 The darker bars show the Administration’s initial budget
request level for the DRF, while the tan bars show enacted annual and supplemental
appropriations for those fiscal years.
Funding data in Figure 2 from FY1998 to FY2002 appears to undermine the assertion that the
DRF appropriations were kept lower than needed, in that adequate funding was requested to meet
disaster needs. However, when those years are more closely examined, the Administration’s
request for regular appropriations was actually less than $500 million in each of these years,
supplemented by an emergency appropriation requested as part of the initial annual budget.
Essentially, the budget process began with a built-in extra-budgetary funding for disaster relief
that would be tallied outside the discretionary spending allocations that govern the annual
appropriations process. This practice continued until the FY2003 request.
14 For example, see Office of Management and Budget, A New Era of Responsibility: Renewing America’s Promise,
Washington, DC, February 26, 2009, p. 36, http://www.gpoaccess.gov/usbudget/fy10/pdf/fy10-newera.pdf.
15 Supplemental funding for disaster assistance has traditionally been designated as emergency funding. This may have
created an incentive to fund the DRF at a lower amount to evade budget caps.
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Figure 2. Disaster Relief Fund, Administration Requests and Appropriations
(From FY1991 to FY2012, budget authority in billions)
Source: CRS data using Administration budget documents and appropriations statutes.
Note: Figures have been rounded. Amounts reflect requests and appropriations in a given fiscal year, without
regard to emergency designations under budget control legislation or linkage to particular disasters.
Administration requests from FY1991 to FY1997 represent the previous average spending
amount of $320 million during the disaster-quiescent 1980s, with the exception of 1994 when the
request level reflected the estimated spending for the Midwest flooding of 1993. Based on the
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increased disaster activity of the1990s and outlier events such as the Mississippi flooding,
Hurricane Andrew, and the Northridge earthquake, requested amounts were recalibrated for
FY1998 to better address the growth in disaster spending on an annual basis.
Disaster Spending under the Budget Control Act
(BCA)
As a result of the concern over the size of the deficit and rising level of national debt, Congress
has implemented measures to limit federal spending. These include the Budget Control Act of
2011 (BCA), which includes a mechanism that recognizes the unexpected nature of disasters and
the periodic need for disaster relief funding beyond what the budget might envision, as well as
measures to limit spending.
On August 2, 2011, the President signed into law the Budget Control Act of 2011 (P.L. 112-25),
which established a range of budget-controlling mechanisms and allowed the national debt ceiling
to be raised.16 Among other provisions of the legislation, caps were placed on discretionary
spending from FY2012 through FY2021. If these caps are exceeded, an automatic cancellation of
budget resources—known as sequestration—would take place across most discretionary budget
accounts to reduce spending down to the cap.17
The BCA allows for adjustments to the cap in a handful of situations, essentially raising it to
allow for certain categories of spending. One of those adjustments is for emergencies, which is
familiar to many observers of the budget process, but a new category of spending was defined in
law for “disaster relief,” allowing it to be treated separately from other emergencies.
Under the BCA, the discretionary spending limit can be adjusted upward to make room for an
uncapped amount of emergency spending and adds the following definitions to existing budget
law:
(20) The term “emergency” means a situation that—
(A) requires new budget authority and outlays (or new budget authority and the outlays
flowing there from) for the prevention or mitigation of, or response to, loss of life or
property, or a threat to national security; and
(B) is unanticipated.
(21) The term “unanticipated” means that the underlying situation is—
(A) sudden, which means quickly coming into being or not building up over time;
(B) urgent, which means a pressing and compelling need requiring immediate action;
(C) unforeseen, which means not predicted or anticipated as an emerging need; and
(D) temporary, which means not of a permanent duration.18
16 For further analysis of the Budget Control Act see CRS Report R41965, The Budget Control Act of 2011, by Bill
Heniff Jr., Elizabeth Rybicki, and Shannon M. Mahan.
17 Given the failure of the Joint Select Committee on Deficit Reduction to propose budget reductions by January 2012
and in the absence of a “grand bargain” for deficit reduction, OMB ordered budget sequestration on March 1, 2013. For
more information on the sequestration, see CRS Report R42972, Sequestration as a Budget Enforcement Process:
Frequently Asked Questions, by Megan S. Lynch.
18 Budget Control Act of 2011, P.L. 112-25, §102.
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Prior to enactment of the BCA, supplemental appropriations for disaster relief were often
designated as emergency spending, and for a limited period even some of the annual
appropriations requests included an emergency designation.
However, the enactment of the BCA distinguishes disaster relief spending, though often
unanticipated, as separate from emergency spending. A separate allowable adjustment is created
for disaster relief spending that some have interpreted as a limit on certain types of disaster relief
funding. “Disaster relief” is specifically defined under the BCA as follows:
(iii) For the purposes of this subparagraph, the term ‘disaster relief’ means activities
carried out pursuant to a determination under section 102(2) of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act (42 U.S.C. 5122(2)). [Determination of a
major disaster19]
(iv) Appropriations considered disaster relief under this subparagraph in a fiscal year
shall not be eligible for adjustments under subparagraph (A) [the unlimited adjustment for
emergency spending] for the fiscal year.20
The limit established by the BCA on adjustments to the caps for disaster relief is based on the
average funding provided for disaster relief over the last ten years, excluding the highest and
lowest annual amounts, calculated by the Office of Management and Budget.21 If Congress
spends less than that average on disaster relief in a given fiscal year, the caps can be further
adjusted upward by the unspent amount in the following year. It is important to note that this
adjustment limitation is not a restriction on disaster assistance per se—rather it is a restriction on
how much the caps can be adjusted upward in a given fiscal year to accommodate the assistance.
Also, spending within the cap or within the adjustment does not require offsets.
As mentioned earlier, not all disaster relief flows through FEMA’s DRF. In FY2012, the
allowable adjustment was used to pay for disaster relief programs under the Army Corps of
Engineers, Department of Agriculture, Department of Housing and Urban Development, and
Department of Transportation, as well as the DRF.
Because of the way “disaster relief” is defined in the BCA, not all of the DRF’s activities are
eligible for funding under the allowable adjustments. FEMA operating expenses, funding for Fire
Management Assistance Grants and emergencies under the Stafford Act are not eligible for
funding under the adjustment, and are therefore funded through ordinary discretionary
appropriations to the DRF that fall within the discretionary budget caps.
Hurricane Sandy provided the first case where demand for disaster relief exceeded the allowable
adjustment. For discussion of how this was resolved, see the BCA and Disaster Relief in Practice:
Hurricane Sandy later in this report.
19 Under a major disaster declaration, state and local governments and certain nonprofit organizations are eligible (if so
designated) for assistance for the repair or restoration of public infrastructure such as roads and buildings. A major
disaster declaration may also include temporary housing, other needs assistance, unemployment assistance, and crisis
counseling for families and individuals.. The governor of the impacted state requests the types of assistance considered
necessary to address the needs of the state.
20 Budget Control Act of 2011, P.L. 112-25, §101. 125 Stat. 245.
21 Ibid.
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OMB Reporting and Calculations
The Office of Management and Budget (OMB) manages the sequestration process and the limits
on adjustments available to raise the spending cap. The BCA requires OMB to annually calculate
the adjusted 10-year rolling average of disaster relief spending that sets the allowable cap
adjustment for disaster relief. These calculations are included in the final sequestration report and
sequestration update report issued under Section 254 of the Balanced Budget and Emergency
Deficit Control Act of 1985 as amended (BBEDCA).22 OMB has not made any other estimates of
“disaster relief” spending other than those called for by the BCA.
OMB’s methodology for calculating the initial allowable adjustment was tied to the language of
the BCA’s definition of “disaster relief,” which included only amounts that were appropriated or
authorized through legislation that specifically referenced Section 102(2) of the Stafford Act. In
its initial sequestration report under the BCA structure, OMB illustrated this by comparing two
similar education programs targeting students in hurricane-affected areas.23 One program had
appropriations language specifically referencing the major disaster declaration (which was
counted as disaster relief), and one program that had language only mentioning the hurricanes
rather than the disaster declaration (which was not counted as disaster relief). In making its
calculation, OMB included funding provided through both annual and supplemental
appropriations bills for 29 individual accounts managed by 11 agencies and departments.
OMB makes a similar calculation each year, taking into account the latest information available
on disaster funding for the 10 previous fiscal years, and excluding the highest and lowest years.
The available adjustment changes as the average rolls forward.
It is worth noting, however, that the cap is calculated in nominal dollars and does not adjust for
inflation. This will become more significant over time if inflation rises, and if the allowable
adjustment begins to decrease as projected in 2016.
The BCA and Disaster Relief in Practice: Hurricane
Sandy
As a result of the process outlined above, OMB calculated the initial allowable adjustment for
disaster relief for FY2012 as $11.3 billion.24 $10.5 billion of that adjustment was used, leaving
$799 million in carryover. When this carryover was added to the recalculated rolling average of
$11 billion for FY2013, the allowable adjustment for disaster relief under the BCA for FY2013
rose to $11.8 billion.25
22 2 USC 904
23 Office of Management and Budget, OMB Report on Disaster Relief Funding to the Committees on Appropriations
and the Budget of the U.S. House of Representatives and the Senate, Washington, DC, September 1, 2011, pp. 2-3.
24 Office of Management and Budget, OMB Report on Disaster Relief Funding to the Committees on Appropriations
and the Budget of the U.S. House of Representatives and the Senate, Washington, DC, September 1, 2011, p. 1.
25 Office of Management and Budget, Sequestration Update Report to the President and Congress for Fiscal Year 2013,
Washington, DC, August 20, 2012, p. 16. The amounts have been rounded in this report.
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In FY2012, $6.4 billion of the allowable adjustment went to the DRF, and that in turn was
calculated into the rate of spending provided for in P.L. 112-175, the continuing resolution for
FY2013. No other disaster relief designations were carried forward in P.L. 112-175. It was this
adjustment that provided a significant balance for the DRF at the beginning of FY2013, which in
turn may have reduced the urgency of the debate on Hurricane Sandy supplemental funding.26
P.L. 113-2, the Disaster Relief Appropriations Act, 2013 (that provided supplemental funding for
Hurricane Sandy), used the remaining $5.4 billion of the allowable adjustment to provide
additional resources for the DRF.27 As a result, FY2013 was the first year the entire allowable
adjustment for disaster relief was used for a single account.
Analysis and Potential Policy Implications
A number of policy questions are before Congress as the country recovers from its first large-
scale disasters with the BCA in effect. These include:
• Time frames for congressional action after a large-scale disaster strikes;
• The implications of the rising number of Stafford Act declarations;
• Funding disaster relief efforts in severe disaster years;
• Offsetting the cost of disaster relief;
• Calculating the allowable adjustment for disaster relief;
• The inclusiveness of all types of disaster assistance in OMB’s methodology
for calculating the 10-year average on disaster relief spending; and
• The possible implications of excluding Stafford Act assistance for
emergencies and fires from the allowable adjustment calculation.
Timeframes for Congressional Action
As demonstrated in Table 1, while it may have taken some time to provide relatively smaller
incidents such as the Nisqually Earthquake with supplemental funding, in the past, Congress has
generally responded to the needs of disaster victims by appropriating additional funds for disaster
relief in a matter of days as with the September 11th terrorist attacks and Hurricane Katrina. It
should be noted however, the actions represented in Table 1 were emergency spending actions
that were not subject to offsets.
26 One sign of the DRF’s healthy balance was the relative size of the DRF within the Supplemental (P.L. 113-2). While
DRF funding has traditionally been the driver of most disaster supplementals, the $11.5 billion for the DRF barely
exceeded the $11 billion for DOT and was far less than the $16 billion provided to HUD’s Community Development
Block Grant Program.
27 The majority of the supplemental funding in P.L. 113-2 was designated as emergency funding. $5.4 billion for the
DRF was designated as disaster relief, and $3.5 billion for Army Corps of Engineers construction activities counted
against the discretionary budget caps. $41.6 billion to address both the immediate losses and damages caused by
Hurricane Sandy were designated as emergency funding. For more information on supplemental funding for Hurricane
Sandy see CRS Report R42869, FY2013 Supplemental Funding for Disaster Relief, coordinated by William L. Painter
and Jared T. Brown, and CRS Report R40708, Disaster Relief Funding and Supplemental Appropriations for Disaster
Relief, by Bruce R. Lindsay and Justin Murray.
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Table 1. Selected Examples Supplemental Funding for Large-Scale Disasters
Days from
Date of
Incident to
Event
Declaration
Date of Request
Date of Enactment
Enactment
Hurricane Sandy
October 30, 2012
December 7, 2012
January 29, 2013
91
Hurricane Katrina
August 29, 2005
September 1, 2005
September 2, 2005
3
Hurricane Isabel
September 18, 2003
September 30, 2003
12
9/11 Terrorist Attacks
September 11, 2001
September 12, 2001 September 18, 2001
7
Nisqual y Earthquake
March 1, 2001
July 24, 2001
114
Hurricane Floyd
September 16, 1999
September 21, 1999 October 20, 1999
34
Northridge Earthquake January 17, 1994
February 12, 1994
26
Midwest Floods*
June 11, 1993
July 14, 1993
August 12, 1993
62
Hurricane Andrew
August 23, 1992
September 8, 1992
September 23, 1992
31
Hurricane Hugo
September 20, 1989
September, 29, 1989
9
Source: CRS Report R40708, Disaster Relief Funding and Supplemental Appropriations for Disaster Relief, by Bruce
R. Lindsay and Justin Murray.
Note: The rightmost column reflects the number of days it took to enact the first supplemental appropriation
after the incident was declared a major disaster. Some incidents (such as Hurricane Katrina) received more than
one administration request for increased funding, as well as more than one supplemental appropriation for
disaster relief. A supplemental request date for Hurricanes Isabel and Hugo, as wel as the Nisqual y and
Northridge Earthquakes, could not be identified.
The timeline for Hurricane Sandy, the first catastrophic disaster under the BCA structure, was
markedly different than in years past. In general, prior to the BCA the Administration would
make a supplemental request as the balance in the DRF was close to being drawn down. In some
instances, as the funds became depleted, FEMA implemented its Immediate Needs Funding (INF)
guidance which is used when the DRF balance is low to meet the urgent needs of disaster
survivors and prioritize funding in order to extend the remaining balance of the DRF.
In the case of Hurricane Sandy, the DRF had a relatively high balance when the disaster occurred
compared to previous years. The high balance is attributed to the combination of the CR and the
BCA mechanism, which appropriated a larger amount of funding to the DRF than has been
historically provided to the account. This may have decreased the urgency to enact legislation to
replenish the DRF. It may have also allowed Congress a longer time period to determine how the
funds for Hurricane Sandy should be targeted through the supplemental appropriations bill as
they observed the initial response and needs associated with it. This is in contrast to Hurricane
Katrina, where a large supplemental appropriation was initially provided to FEMA and was
rescinded and redistributed to other programs as needs became clearer.
Potential Implications of the Rising Number of Stafford Act
Declarations
Since FEMA’s first full year of operations (1979) there has been a steady increase in the number
of emergency and major disaster declarations. It is unclear what is causing the increase. On the
one hand, it could be the result of more incidents. On the other hand, it could be the result of an
increase in incidents for which a request for assistance is made (in other words, there is no
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increase in the number of incidents; rather, there is an increase in requests for federal assistance).
The result could also be caused by a combination of the two, as well as by some other
undetermined cause. However, while the number of declarations is often a focus for criticism, it is
the costs within the declared events (determinations on eligible disaster spending) that can drive
the higher disaster spending amounts.
The BCA does not provide a means for limiting or reducing federal expenditures on disaster
assistance. If declarations continue to increase unabated, the federal budget may have to absorb
more and more of the costs associated with disaster assistance. Some might argue that in addition
to the existing BCA structure, other policies designed to reduce federal expenditures for
assistance should also be pursued. These policy options include strengthening declaration criteria,
reducing the federal cost-share for incidents, and creating incentives that would encourage states
to pursue more robust preparedness and mitigation measures.28
Funding Relief Efforts in Severe Disaster Years Going Forward
Congress provided additional budget authority for disaster assistance in 10 appropriation laws
following the hurricanes of 2005. While OMB removed the $37 billion spent on disaster relief in
2005 as an outlier when calculating the allowable adjustment for disaster relief to the cap,
response and recovery to these storms went well beyond that first year. Appropriations for
recovery from these storms between FY2006 and FY2010 were still substantial—$32 billion was
spent in FY2006, in great part because of those ongoing recovery efforts.
The sizeable initial disaster relief expenditures for Hurricane Katrina and the other 2005 storms
will begin to lose relevance in calculating the allowable adjustment for disaster assistance for
FY2016, and will no longer impact calculations for the allowable adjustment in FY2017.29 Once
FY2005 and FY2006 rotate out, there will be a corresponding drop in the allowable disaster
assistance adjustments. The reduction in the allowable adjustment will be more significant if
disaster spending is below the 10-year average in the intervening years. In a scenario where
disaster spending stays at the 10-year average level, the allowable adjustment will fall by $2.2
billion from FY2015 to FY2016, and then by another $2.9 billion from FY2016 to FY2017—a
reduction of 41% in just two years. Moreover, as the Administration and Congress work to spend
under the adjustment, the cap could continue to decrease, increasing the likelihood that the cap
will be inadequate to accommodate catastrophic disaster needs.
Prior to Hurricane Sandy, there were at least four possible outcomes to meeting disaster
assistance demands beyond the allowable adjustment for disaster relief:
1. Designation of disaster assistance as emergency funding,
2. Congress raising additional revenue to finance additional disaster relief spending,
3. Renegotiation of the underlying budget control laws, or
28 For further analysis on emergency and major disaster declarations see CRS Report RL34146, FEMA’s Disaster
Declaration Process: A Primer, by Francis X. McCarthy. For further analysis on FEMA cost-shares see CRS Report
R41101, FEMA Disaster Cost-Shares: Evolution and Analysis, by Francis X. McCarthy.
29 For details on the amount of assistance provided to the Gulf Coast after the 2005 and 2008 hurricane season, see CRS
Report R43139, Federal Disaster Assistance after Hurricanes Katrina, Rita, Wilma, Gustav, and Ike, coordinated by
Bruce R. Lindsay and Jared C. Nagel.
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4. Discretionary spending cuts, either specific program cuts or through across-the-
board means, to offset the cost of additional assistance.
In the wake of Hurricane Sandy, the Administration submitted a request to Congress for more
than $60 billion in relief, well in excess of the available allowable adjustment. At the time
Congress was confronted with a significant fiscal challenge, with a sequestration under the BCA
already looming, as well as expiration of multiple tax cuts—a combination colloquially known as
“the fiscal cliff.” The Administration (and ultimately Congress) chose to pursue the first option,
designation of the additional assistance as emergency funding without offsets, citing legislative
authority and historical precedent. There was no public legislative initiative to raise additional
revenue to pay for disaster assistance. Renegotiation of the underlying budget laws was limited to
measures delaying sequestration, rather than altering the allowable adjustment for disaster
assistance.
Offsetting the Cost of Disaster Relief
Amendments were offered in both the House and the Senate to offset the cost of the Disaster
Relief Appropriations Act—including the funding for the DRF. H.Amdt. 4 (which would have
offset $17 billion in the immediate disaster assistance with an across-the-board cut in
discretionary spending) was not agreed to by a vote of 162-258.30 S.Amdt. 4 (which would have
offset the entire $51 billion in disaster assistance) was not agreed to by a vote of 35-62.31
In the fall of 2011, there was also extensive public debate over the possible requirement of offsets
for disaster assistance.32 Those opposed to the use of offsets argue that their use could politicize
disaster assistance by allowing policymakers to target certain programs for the needed spending
reduction. Assistance to disaster victims could be delayed while Congress debates the issue.
Opponents have also argued that emergency funding for other endeavors, such as war funding,
has not faced the same requirement.
Those in favor of offsetting disaster assistance argue that offsets do not deny disaster victims aid;
they merely provide a way of doing so without increasing the deficit. Proponents also argue that
the concern over delayed disaster assistance is without merit. Efforts were made to reduce the size
of the FY2013 disaster supplemental, as well as to remove emergency funding designations for
mitigation programs, to ensure that such funding would count against the discretionary spending
limits set by the BCA. Supporters argued that additional funds could be provided later in the
process.33 However, opponents of that approach argued that the supplemental funds were
important for morale and the confidence of states and local communities that they would receive
help in initiating their recovery.
Across-the-board cuts may seem more appealing to some Members rather than finding specific
offsets for disaster assistance. Although the net accounting effect is the same over the medium
term, across-the-board cuts do not require a specific congressional action that may provoke allies
30 Roll No.14, January 15, 2013.
31 Record Vote Number 3, January 28, 2013.
32 For more information on the use of offsets for disaster assistance see CRS Report R42458, Offsets, Supplemental
Appropriations, and the Disaster Relief Fund: FY1990-FY2013, by William L. Painter.
33 Anne L. Kim and Kerry Young, “Senate Democrats Apply Pressure as GOP Pushes for Storm Aid Amendments,”
CQ News, December 20, 2012.
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of (and stakeholders in) a given program. The potential risks incurred by an across-the-board
rescission regardless of the possible effect on national priorities should not be discounted,
however, especially when one considers that a full offset for the Disaster Relief Appropriations
Act would have been over $50 billion—almost 140% of the size of the sequestration applied
under the BCA to the non-defense budget in March 2013.
Calculating the Disaster Relief Allowable Adjustment
Expenditures Omitted from the 10-Year Average
As previously mentioned, under the BCA, future spending caps on disaster relief and OMB’s
methodology for calculating the allowable adjustment are based on Section 102(2) of the Stafford
Act. As a result of OMB’s interpretation of the definition, when OMB reviewed appropriations
for inclusion in the “disaster relief” calculation, if the Stafford Act was not explicitly cited those
amounts were omitted—even when the funding was clearly for response to incidents declared as
major disasters (see OMB quotations below). In some cases the legislative text included
“pursuant to the Stafford Act.” In other cases this specific language was omitted. It is not likely
that precision in the language contemplated that the wording would one day be the basis of a cap
on disaster spending.
OMB’s review resulted in this construction: when the legislative text stated the funding was
pursuant to the Stafford Act, OMB included that amount in the 10-year average. On the other
hand, when the legislative text made no reference to the Stafford Act—whether it referred to the
declared incident or not—OMB did not include that amount in the 10-year average. OMB
illustrated such omissions in the Report’s methodological description. According to OMB:
... in determining the amount that was “provided for disaster relief” in fiscal year 2005, OMB
included in the calculation the funding that the Congress appropriated ... to the Department
of Education “Hurricane Education Recovery” account for “assisting in meeting the
educational needs of individuals affected by hurricanes in the Gulf of Mexico” because the
appropriations language specified that it was “for students attending institutions … located in
an area in which a major disaster has been declared in accordance with section 401 of the
Robert T. Stafford Disaster Relief and Emergency Assistance Act.”34
The OMB Report further states:
OMB did not include in its calculations those amounts ... Congress appropriated in response
to a presidentially-declared major disaster when such amounts were not specifically
designated in statute to carry out activities pursuant to the Stafford Act and the Act itself was
not specifically referenced. For example, OMB did not include in its calculations for fiscal
year 2009 the appropriations ... Congress provided in December 2009 to the Department of
Education “Innovation and Improvement” account “for competitive awards to local
educational agencies located in counties in Louisiana, Mississippi, and Texas that were
designated by ... [FEMA] as counties eligible for individual assistance due to damage caused
by Hurricanes Katrina, Ike, or Gustav” because the amounts were not specified as being for
34 Office of Management and Budget, OMB Report on Disaster Relief Funding to the Committees on Appropriations
and the Budget of the U.S. House of Representatives and the Senate, September 1, 2011, p. 2,
http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/disaster_relief_report_sept2011.pdf.
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activities undertaken pursuant to a major disaster declaration under the Stafford Act and the
[Stafford] Act was not specifically referenced.35
OMB took this position despite the fact that it has not always been the practice to include a
specific reference to the Stafford Act in supplemental appropriations for assistance in response to
major disasters. An example of past practice is presented below.
Pre-BCA Disaster Assistance Spending
In the Disaster Relief and Recovery Supplemental Appropriations Act, 2008,36 Title I, Chapter 1
outlines relief funds provided through the Department of Agriculture, including the following
provisions (emphasis added):
NATURAL RESOURCES CONSERVATION SERVICE
EMERGENCY WATERSHED PROGRAM
For an additional amount for the “Emergency Watershed Protection Program”,
$100,000,000, to remain available until expended, for disaster recovery operations.
FARM SERVICE AGENCY
EMERGENCY CONSERVATION PROGRAM
For an additional amount for “Emergency Conservation Program”, $115,000,000, to remain
available until expended.
RURAL DEVELOPMENT PROGRAMS
RURAL DEVELOPMENT DISASTER ASSISTANCE FUND
For grants, and for the cost of direct and guaranteed loans, for authorized activities of
agencies of the Rural Development Mission Area, $150,000,000, to remain available
until expended, which shall be allocated as follows: $59,000,000 for single and multi-
family housing activities; $40,000,000 for community facilities activities; $26,000,000
for utilities activities; and $25,000,000 for business activities: Provided, That such funds
shall be for areas affected by hurricanes, floods, and other natural disasters occurring
during 2008 for which the President declared a major disaster under title IV of the
Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1974: Provided
further, That the cost of such direct and guaranteed loans, including the cost of modifying
loans, shall be as defined in section 502 of the Congressional Budget Act of 1974: Provided
further, That the Secretary of Agriculture may reallocate funds made available in this
paragraph among the 4 specified activities, if the Secretary notifies the Committees on
Appropriations of the House of Representatives and the Senate not less than 15 days prior to
such reallocation.
In addition, for an additional amount for grants, and for the cost of direct and guaranteed
loans, for authorized activities of the Rural Housing Service, $38,000,000, to remain
available until expended, for single and multi-family housing activities: Provided, That such
35 Ibid., p. 2.
36 Division B of P.L. 110-329, 122 Stat. 3585 et seq.
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funds shall be for areas affected by Hurricanes Katrina and Rita: Provided further, That the
cost of such direct and guaranteed loans, including the cost of modifying loans, shall be as
defined in section 502 of the Congressional Budget Act of 1974.
Of all the appropriations listed, only the provisions in bold would be counted by OMB for
purposes of calculating the cap on the adjustment for disaster relief as defined under the Budget
Control Act. Only the Rural Development Disaster Assistance Fund appropriation specifically
noting the declaration of a major disaster under the Stafford Act meets the standard described in
OMB’s report. The other provisions, mentioning the storms that were the root cause of the
declaration, or the intent that the funds be for “disaster recovery” would likely not be adequate to
meet the OMB methodology for accounting for disaster relief spending.
Disaster Relief Spending Under the BCA
In the “minibus” legislation, P.L. 112-55, provisions providing disaster relief under some of these
same accounts were written as follows (emphasis added):
Section 735. There is hereby appropriated for the ‘Emergency Conservation Program’, for
necessary expenses resulting from a major disaster declared pursuant to the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.),
$122,700,000, to remain available until expended: Provided, That the preceding amount is
designated by the Congress as being for disaster relief pursuant to section 251(b)(2)(D) of
the Balanced Budget and Emergency Deficit Control Act of 1985: Provided further, That
there is hereby appropriated for the ‘Emergency Forest Restoration Program’, for necessary
expenses resulting from a major disaster declared pursuant to the Robert T. Stafford Disaster
Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.), $28,400,000, to remain
available until expended: Provided further, That the preceding amount is designated by the
Congress as being for disaster relief pursuant to section 251(b)(2)(D) of the Balanced Budget
and Emergency Deficit Control Act of 1985: Provided further, That there is hereby
appropriated for the ‘Emergency Watershed Protection Program’, for necessary expenses
resulting from a major disaster declared pursuant to the Robert T. Stafford Disaster Relief
and Emergency Assistance Act (42 U.S.C. 5121 et seq.), $215,900,000, to remain available
until expended: Provided further, That the preceding amount is designated by the
Congress as being for disaster relief pursuant to section 251(b)(2)(D) of the Balanced
Budget and Emergency Deficit Control Act of 1985.
All of this funding would be considered by OMB as disaster relief due to the citations of major
disasters under the Stafford Act, as well as the specific proviso in bold declaring congressional
intent that it be categorized as such.
It could be argued that a more precise 10-year average of disaster assistance would include all
spending for major disasters regardless of whether the legislative text referred to the Stafford Act.
As we saw above, not all immediate assistance for Hurricane Katrina—which was declared a
major disaster on August 29, 2005—was captured in making calculations for the disaster relief
allowable adjustment. Furthermore, large incidents like Katrina often receive assistance from the
federal government years after the incident—the appropriations impact the budget for disaster
assistance as large infrastructure and mitigation projects are completed and reimbursed, yet
because this funding was appropriated without direct reference to a Stafford Act declaration, it is
not factored into the calculation for disaster relief.
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There are at least two changes that could be made that would help ensure a more accurate
calculation of the 10-year average spent on disaster relief for use as a cap adjustment under the
BCA.
First, Congress could opt to provide the Stafford Act designation in all future appropriations
legislation. That appears to be the new practice. However, it is useful to note that at the time of
appropriation to some accounts, it is not clear if funding will pay for costs associated to a major
disaster. For example, Department A has a mission-critical facility destroyed by a tornado, and
uses current-year funding to restore operations. The appropriation does not signal that disaster
cost, and therefore it may not be captured in future calculations.
Second, Congress could amend the BCA to require that OMB recalculate “disaster relief”
amounts based on a broader methodology. In the example above, an appropriation to pay for the
cost of restoring operations might not be eligible to be called disaster relief if the tornado was not
designated as a major disaster.
Both of these changes would likely result in a higher, and arguably more accurate yearly total of
disaster relief, and a larger allowable adjustment for disaster relief under the BCA than under
current practices, if the underlying calculation of the allowable adjustment was not changed.
Other Types of Excluded Stafford Assistance
The BCA excludes other types of assistance provided under the Stafford Act. These are
emergency declarations provided under Section 102(1) and Fire Management Assistance Grants
provided under Section 420(a). Emergency declarations authorize activities that can help states
and communities carry out essential services during emergency situations.37 Emergencies can also
be declared prior to an incident, at the request of the governor, to save lives and prevent loss.38
For example, emergency declarations have been declared prior to a hurricane making landfall to
help state and local governments take necessary measures (evacuation assistance, placement of
response resources, etc.).39 Unlike major disasters, the President does have the authority to
declare an emergency without a governor’s request when the incident involves a subject area
where the “Federal government exercises exclusive or primary responsibility and authority.”40
Compared to major disaster declarations, emergency declarations are generally considered a
minor expense (congressional notification is required when spending for an emergency exceeds
$5 million); however, numerous declarations can be declared in a year and, like major disasters,
they are funded through the DRF. In 2005, 68 emergency declarations were declared, 50 of which
were for each individual state to help relocate Hurricane Katrina victims who were displaced by
the storm. In addition, since Hurricane Katrina, the federal government has increased its efforts to
pre-position resources before a hurricane makes landfall. If this trend continues, the cost
associated with emergency declarations may increase due to the more comprehensive
preparations.
37 For example, food, sheltering and medical care.
38 For example, evacuations and setting up shelters.
39 Recent examples of pre-event declarations include emergency declarations prior to Hurricanes Katrina, Rita, and
Gustav making landfall (emergency declarations 3212, 3260, and 3290 respectively).
40 44 CFR 206.35(d). This category would likely include acts of terrorism.
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In the OMB report, the spending levels on disaster relief from the DRF in OMB’s accounting are
less than the total amount expended from the DRF in the years reported. This difference may
include the omission of expenditures for emergency declarations and declarations for the Fire
Management Assistance Grant Program.41
Declarations for the Fire Management Assistance Grant Program include equipment, personnel,
and supplies to states and localities for the mitigation, management, and control of fires that
threaten to become a major disaster.42 As with emergency declarations, declarations for the Fire
Management Assistance Grant Program are relatively modest in cost when compared to major
disaster declarations. A review of declarations under the Fire Management Assistance Grant
Program shows the most expensive year was 1998, in which 53 declarations were made,
accounting for obligations of roughly $105 million.43
Because emergency and fire declarations derive funding from the DRF, it could be argued that
excluding them from the ten-year average calculation for disaster relief generates an artificially
low result. It could be further argued that including emergency and fire declarations would more
accurately forecast federal disaster expenses.44 Although it is likely that including all federal
assistance for emergency and disaster relief would increase the ten-year average, the size of the
increase would depend on the new methodology used to calculate the amount of assistance
provided.
Concluding Observations
Enactment of the BCA resulted in several key changes in the way disaster assistance is funded.
The structure of the appropriation for the DRF has changed to reflect the availability of resources
that do not count against the allocation for annual appropriations, allowing for prefunding of
disaster needs. This in turn led to a more deliberate development of a supplemental appropriation
in the face of a major disaster with abnormally high cost and broad scope.
The bulk of the debate over the impact of disaster relief on the federal budget tends to occur in
moments of crisis, such as in the past when the DRF was on the brink of depletion, or when a
major incident like Hurricane Katrina or Sandy seems ready to overwhelm the budgetary
structures in place. It is difficult to assemble a clear picture of the issue on such a short time
frame in the wake of a disaster.
In FY2013, the federal response to Hurricane Sandy led to a certain legislative response in the
shape of supplemental appropriations and reforms to the Stafford Act. To some, the legislative
intent of the BCA was to eliminate or reduce the use of the emergency designations to pay for
disaster assistance by creating the disaster relief designation. They argue that in the case of
assistance for Hurricane Sandy, Congress circumvented the use of offsets by designating the
incident as an emergency.45 Opponents of the use of emergency designations for disaster
41 OMB did not respond to CRS inquiries about the details of its methodology.
42 42 U.S.C. 5187.
43 DHS/FEMA, Calendar Year Summary of Obligations, 1988-2010.
44 Recent years have seen increasing wildfire activity. FY2011 was the highest number of FMAG declarations with
114. Over the past two years there have been 77 such actions. Source: http://www.fema.gov./disasters/grid/year.
45 Patrick Louis Knudsen, Courting Disaster: Two Gaping Loopholes in the Debt Deal That Will Drive Up Spending,
(continued...)
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assistance may conclude that while the BCA may have helped budget the DRF at more
sustainable levels, disaster assistance for larger incidents should be offset to lessen their
budgetary impact. Proponents, on the other hand, might argue that emergency designations are
still needed for larger, arguably catastrophic incidents.
Two years after the passage of the BCA, Congress may choose to consider whether its
mechanisms have produced the intended result more broadly, or in the specific area of disaster
relief. Exploring the actual costs of governmental assistance in the wake of floods, fires,
explosions, and storms, and understanding how the local, state, and federal governments fund
those relief efforts is a valuable first step. A more accurate accounting for the size of that burden
and how it is shared across the levels of government would appear to be essential.
The funding and budget control functions do not operate in a vacuum, however. Controlling
disaster costs cannot be done without addressing the laws that establish the role of the federal
government in disaster response and recovery, and the expectations of state and local
governments and the American people.
Author Contact Information
Bruce R. Lindsay
Francis X. McCarthy
Analyst in American National Government
Analyst in Emergency Management Policy
blindsay@crs.loc.gov, 7-3752
fmccarthy@crs.loc.gov, 7-9533
William L. Painter
Analyst in Emergency Management and Homeland
Security Policy
wpainter@crs.loc.gov, 7-3335
Acknowledgments
The authors are grateful for the assistance of Justin Murray, Information Research Specialist, in preparing
this report.
(...continued)
The Heritage Foundation, November 7, 2012, http://www.heritage.org/research/reports/2013/01/hurricane-sandy-relief-
bill-and-bloated-deficit-spending.
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