An amendment to water resources legislation that would freeze flood insurance premiums for five years could force the Federal Emergency Management Agency to come back to Congress for permission to increase borrowing, a taxpayers group said Monday.
Louisiana Democrat Mary L. Landrieu plans to offer her amendment that would suspend the premium increases to the bill (S 601) pending before the Senate that would authorize federal flood control, navigation and environmental restoration programs.
Majority Leader Harry Reid, D-Nev., said senators were close to an agreement on amendments that will be considered that could clear the way for passage of the bill on Tuesday.
"We hope by noon tomorrow we can have a consent agreement finalized to do away with the cloture vote," he said, adding that a vote to limit debate will be held at noon if there is no agreement.
Landrieu is seeking to freeze premium increases that she says could increase the cost to homeowners by as much as 20 percent to 25 percent a year.
The increases stem from a flood insurance overhaul (PL 112-141) signed into law last year, which allowed subsidized premiums to rise until they accurately reflect the level of risk for a property. Later this year, market rates would apply for all new property purchases and next year new flood maps that would result in higher rates are scheduled to take effect. The changes were aimed at reducing taxpayer subsidies of flood insurance.
Steve Ellis, vice president of budget watchdog group Taxpayers for Common Sense, said Landrieu's amendment "made an already bad bill even worse."
An aide to Landrieu said the amendment "does not have a cost" because it would mandate no new spending on flood insurance. The proposal also enjoys backing by senators from Middle Atlantic states that were battered last year by Hurricane Sandy.
But without the higher premiums, FEMA could be forced to seek another increase in its borrowing authority to pay future claims, ultimately putting taxpayers at risk, Ellis said.
"From our perspective, that would just be irresponsible," Ellis said. "If there is an affordability issue, it shouldn't just focus on waiving the rate increases ... we're talking about a program that is severely, severely in debt to the taxpayers."
Since Hurricanes Katrina and Rita in 2005, the flood insurance fund has not been able to bring in enough money from premium payments to cover the claims it pays out. After Superstorm Sandy hit last fall, the program's debt was again threatening to surpass the amount it is allowed to borrow from the Treasury Department.
In January, Congress increased borrowing authority for the flood insurance program (PL 113-1) to $30.4 billion from $20.7 billion to cover the costs related to Sandy.
National Flood Insurance Program officials said last month that more than 140,000 claims have been filed for damage done by Sandy and that the program has doled out more than $7 billion to pay those. Still processing and paying many of the claims from Sandy, the program had borrowed $24 billion from Treasury, as of the latest count. That leaves the fund with $6.4 billion more to borrow before Congress would need to consider stepping in again to raise the program's debt limit.
Sen. Tom Coburn, R-Okla., was among senators who opposed increasing FEMA's borrowing authority earlier this year without offsetting it.
Coburn is concerned that Landrieu's amendment would "continue subsidizing local issues by national taxpayers -- and it would cross-subsidize low and high risk owners," an aide said.
Aides to Landrieu said they did not expect the amendment to jeopardize passage of the water bill.
Written by: Congressional Quarterly News Staff, Anne L. Kim contributed to this report.
Original Publication URL: www.cq.com/doc/news-4274441?pos=rcplybb
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