Dear Representative:

 

We urge you to support H.R. 4973, the “Flood Insurance Reform and Modernization Act of 2006.” Our organizations have long been critical of the National Flood Insurance Program (NFIP), and this legislation helps move the NFIP to higher fiscal ground after Hurricanes Katrina, Rita, and Wilma inundated the program. The claims resulting from these storms have forced the NFIP to borrow an estimated $23.5 billion from the U.S. Treasury, far more than the total program has paid out over its more than 35-year history. While federal taxpayers have no option but to meet this obligation, it is incumbent on Congress to reform and revise this program to ensure that taxpayers will not be unfairly burdened by future hurricanes. H.R. 4973 moves the program in the right direction, but we urge Congress to strengthen taxpayer protections when Senators and Representatives meet in conference. Simply put, the availability of subsidized flood insurance in flood-prone areas encourages high risk development, forcing taxpayers to bail out property owners.

 

While increasing the NFIP’s borrowing authority, H.R. 4973 also begins the process of eliminating subsidies to vacation homes, second homes, and nonresidential properties. Furthermore, the bill directs the Federal Emergency Management Agency to update and improve flood maps and to continually revise them. We strongly believe that reforms should increase the number of carrots and sticks – particularly sticks – to ensure the program does not prey upon taxpayers in the future. To that end we support amendments that would accelerate the transition to actuarial rates for vacation homes, second homes, and nonresidential properties (Rep. Pearce’s Amendment) as well as shift new purchasers of pre-FIRM properties to actuarially sound rates (Rep. Garrett’s Amendment).

 

Staring at a soon-to-be $25 billion hole that could deepen as the next hurricane season gets

underway, taxpayers are left with the unenviable task of footing the bill for broken promises.

Unfortunately, the massive flooding associated with these hurricanes has exposed the dire need to

reform this program. By improving the performance of the NFIP, we hope that one day the program can be shifted to the marketplace as is envisioned for the federal terrorism reinsurance program. H.R. 4973 represents a small step in that direction and we hope Congress will act in conference to put the NFIP on a much sounder fiscal footing so taxpayers don’t continue to get soaked for federal subsidies. Please contact Steve Ellis, Taxpayers for Common Sense, 202-546-8500 ext. 126 or Kristina Rasmussen, National Taxpayers Union, 703-683-5700 or Elizabeth Wright, 202-467-5300 to discuss this legislation further.

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Sincerely,

 

Jill Lancelot

President/Co-Founder

Taxpayers for Common Sense Action

 

John Berthoud

President

National Taxpayers Union

 

Thomas Schatz

President

Council for Citizens Against Government Waste

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