Concerns about federal resources are growing as lawmakers from both parties urge Congress to return to Washington before the November election to approve additional disaster funding. Fiscal conservatives in the House have resisted this, and Speaker Mike Johnson stated over the weekend that he had no plans to reconvene his members.
Washington’s ability to pay for recovery from the recent disasters is a significant concern, said Elizabeth Zimmerman, who previously led FEMA’s disaster response office during the Obama administration. “It could be very devastating to the financial aspects of what the federal government has,” she added.
The two hurricanes raise urgent questions about whether “FEMA and the federal government have the funds to respond to any disaster that arises that they must support,” noted Zimmerman, now a senior executive adviser at IEM disaster consultants.
Department of Homeland Security Secretary Alejandro Mayorkas has indicated that FEMA’s disaster fund could run out of money next month, which would hinder its ability to fund the rebuilding of critical public infrastructure, including roads and water-treatment facilities necessary for restoring normalcy. The agency’s flood insurance program, covering nearly 2 million policies in areas hit by Hurricane Helene or threatened by Hurricane Milton, may also face financial shortfalls, potentially requiring borrowing from federal taxpayers, as highlighted by credit-ratings agency AM Best.
Furthermore, the Small Business Administration (SBA) “will run out of funding in a few weeks” for providing low-interest disaster loans to homeowners and businesses for repairs and rebuilding, President Biden warned last Friday in a letter to Congress.
Even a small disaster program managed by the Federal Highway Administration is facing a budget shortfall that could limit its ability to rebuild federal roads damaged by Helene or Milton.
The SBA’s disaster-loan program provided $45 billion in loans — primarily to homeowners — from 2001 through 2022. If the SBA cannot provide loans following Helene and Milton, it would hinder recovery efforts and further deplete FEMA’s disaster fund as households may turn to FEMA for emergency aid.
Biden exacerbated the pressure on FEMA by recently agreeing to cover 100% of the costs for debris removal and emergency measures after Helene, deviating from the typical cost-sharing approach where states cover 25% of the expenses.
FEMA is also confronted with immediate priorities around saving lives in hurricane-stricken areas. Its Daily Operations Briefing released Monday indicates that Urban Search and Rescue operations are “not mission capable,” with only four teams currently available.
Over 200 counties, impacting 31 million people across six states, have been declared federal disaster or emergency areas due to Helene or Milton. Helene has resulted in at least 230 fatalities after it inundated much of Florida’s Gulf Coast and left a trail of destruction through states like Georgia, North Carolina, and Tennessee.
Milton poses an even more dire scenario, threatening a direct hit on Tampa Bay, one of the nation’s most vulnerable areas to storm surge. The region of over 3 million residents hasn’t faced a major hurricane since 1921, with regional planners warning that such a disaster could incur hundreds of billions of dollars in losses.
“This is not a good situation,” said National Weather Service Director Ken Graham, commenting on Hurricane Milton’s potential impact as it approaches landfall Wednesday.
Warnings from Biden, Mayorkas, and experts regarding disaster funding sharply contrasts with earlier optimism regarding financial stability before Milton targeted Florida’s Gulf Coast.
During a press briefing on Monday, a senior FEMA official attempted to reassure the public about the agency’s immediate capabilities without directly addressing its long-term recovery plans. “We are supporting the life-saving requirements that we have,” said FEMA acting Associate Administrator for Response and Recovery Keith Turi, referring to responses for Helene and Milton. “If there’s a point where we need to take additional measures… then we’ll take those measures when appropriate.”
Turi further mentioned that FEMA was relocating three search-and-rescue teams from California to the Southeast and receiving assistance from the Coast Guard.
The situation facing federal disaster programs is prompting calls for Congress to end its election-season recess early and approve additional disaster aid.
On Sunday, Johnson reiterated his refusal to summon the House back before its scheduled return on November 12. “We will help people in these disaster-prone areas,” Johnson told Fox News. “It will all happen in due time.”
A Triple Fiscal Crunch
Current strains result from longstanding weaknesses in disaster programs, now exacerbated by the growing damage from disasters linked to climate change and increased development.
“The frequency and severity of disasters continue to escalate each year, with the number of federal disaster declarations on the rise,” remarked Carrie Speranza, president of the International Association of Emergency Managers.
Carlos Martín, director of the Remodeling Futures program at the Harvard Joint Center for Housing Studies, observed that FEMA is grappling with funding not just long-term rebuilding costs but also immediate emergency expenses.
“When you start questioning that, and it becomes uncertain whether the federal government will fulfill its traditional role, that’s immensely concerning,” Martín stated.
FEMA’s multibillion-dollar Disaster Relief Fund faced issues early in August when it nearly depleted its resources, leading to the agency implementing restrictions that temporarily halted $9 billion intended for rebuilding projects.
Although FEMA lifted these restrictions on October 1 when Congress allocated $20 billion for the current fiscal year, the agency could rapidly deplete those funds and might have to reinstate restrictions if additional financial support isn’t forthcoming in the coming months.
Mayorkas cautioned last week that FEMA “does not have the funds to make it through the [hurricane] season,” which concludes on November 30.
White House press secretary Karine Jean-Pierre mirrored this sentiment on Monday, stating: “The FEMA disaster relief fund faces a shortfall at the end of the year.”
“The cost of recovery is going to be substantial,” said Zimmerman. “These response efforts incur significant expenses, particularly with search-and-rescue operations.”
FEMA’s National Flood Insurance Program (NFIP) risks running out of funds due to flaws established in 1968 when Congress initiated the program without requiring insurance premiums to reflect actual flood damage potential. This inadequacy forced FEMA to borrow $20.5 billion from the U.S. Treasury post-Hurricanes Harvey, Irma, and Maria in 2017.
FEMA has been compelled to pay billions of dollars in interest on this debt, which it claims it cannot repay, limiting FEMA’s borrowing capacity to an additional $10 billion for settling insurance claims.
“I don’t think the NFIP needs to draw from its borrowing capacity for Helene,” said Sridhar Manyem, senior director of industry research at AM Best credit ratings agency. “However, Milton could change that entirely.”
Hurricane Milton “could deplete the NFIP and require the government to allocate more funds for payments to NFIP policyholders,” warned David Blades, Associate Director at AM Best.
FEMA has stated it can pay $14.8 billion in NFIP claims “without seeking additional assistance from Congress.”
The only disaster to surpass this amount was Hurricane Katrina, which resulted in claims over $16 billion and caused more than 1,300 fatalities in New Orleans and beyond. Like Katrina, Milton has reached Category 5 intensity over the warm Gulf of Mexico waters and is anticipated to remain hazardous even if its wind speeds diminish slightly before landfall.
Jeremy Porter, head of climate implications research at the climate risk modeling firm First Street, offered a more promising perspective: Helene and Milton “are not likely to exhaust NFIP’s borrowing authority,” primarily because relatively few residents in the heavily impacted areas of Georgia and North Carolina hold national flood insurance policies.