Controlling the Rising Cost of Federal Responses to Disaster

2167 Rayburn House Office Building

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0 Thursday, May 12, 2016 @ 10:00 | Contact: Jim Billimoria 202-225-9446

This is a hearing of the Subcommittee on Economic Development, Public Buildings, and Emergency Management.

Summary of Subject Matter
Official Hearing Transcript

Witness List:
  • The Honorable Carlos Curbelo, U.S. Representative, 26th District, Florida
  • The Honorable Joseph L. Nimmich, Deputy Administrator, Federal Emergency Management Agency | Written Testimony
  • Ms. Sallie Clark, Commissioner, El Paso County, Colorado; President, National Association of Counties, International Association of Emergency Managers | Written Testimony
  • Mr. Brian Koon, Director, Florida Division of Emergency Management; President, National Emergency Management Association | Written Testimony
  • Mr. Eric Nelson, Senior Vice President of Catastrophe Risk Management, Travelers Insurance, Build Strong Coalition | Written Testimony
  • Mr. Kevin Mickey, GISP, CTT+, Chair, Multihazard Mitigation Council, National Institute of Building Sciences | Written Testimony

  • Chairman Lou Barletta (R-PA)
    Subcommittee on Economic Development, Public Buildings, and Emergency Management
    Hearing on “Controlling the Rising Cost of Federal Responses to Disaster”

    May 12, 2016
    Opening Statement
    (Remarks as Prepared)

    At our first hearing in the 114th Congress, I stated that my top emergency management priority was pursuing life-saving and cost-reducing disaster legislation and launching a public policy debate about the costs of disasters – in terms of both the loss of property and human life.  We followed that hearing with several roundtables to help us understand what disasters cost this country, who pays those costs, and whether the problem is getting better or worse.

    Early last year, Ranking Member Carson and I introduced the FEMA Disaster Assistance Reform Act to call for the first comprehensive assessment of disaster costs and losses in over 20 years.  We also wanted to reform several disaster assistance programs to make them more efficient and effective.  In February the House passed this FEMA legislation and we hope the Senate will take up H.R. 1471 and pass it soon.

    The purpose of today’s hearing is to discuss what we have learned so far and begin exploring potential solutions, particularly the principles that should be driving those solutions.

    While there are significant variations from year to year, we have found that disaster losses have grown considerably over the past three decades.  As a result, the private sector and government are spending an ever increasing amount of money on disasters.  FEMA alone has obligated more than $178 billion since 1989 for over 1,300 presidential disaster declarations.

    In addition, the number of federal disasters is going up.  Slide 1 shows the steady increase in the number of presidential disaster declarations since 1953.

    Many have suggested, including the General Accountability Office, that the growth in the number of disaster declarations may be causing the increase in federal disaster costs.  But when we had the Congressional Research Service look more closely at the data, they found the growth in declarations is driven by small disasters and they represent a very small part of federal disaster spending. Slide 2  In fact, 75 percent of all declared disasters account for only 7 percent of costs.  In other words, we could eliminate three quarters of all federally-declared disasters and barely cut seven percent of federal disaster spending.  I would argue the amount saved by eliminating those disaster declarations certainly would not outweigh the benefit those declarations provide to helping our smaller, remote communities respond to and recover from disasters.

    In order to understand why disaster costs are going up, we need to look at the big disasters since that is where over 90 percent of the money goes.  Since we started looking into this issue, we have also found the role of the federal government in covering disaster losses has increased.  As we can see in Slide 3, federal disaster spending as a share of total disaster losses has grown from 23 percent during Hurricane Hugo in 1989 to 80 percent during Hurricane Sandy in 2012. 

    In recent years, significant disaster aid has been provided outside of FEMA’s disaster assistance programs.  The Slide 4 charts show how disaster aid programs outside FEMA have grown.  In fact, for Hurricane Sandy, there was less FEMA assistance than from either the Department of Housing and Urban Development or the Department of Transportation.

    We found that these additional disaster aid programs don’t have the same requirements and restrictions as the FEMA assistance.  FEMA assistance is tied to actual disaster damage, and is for individuals, governmental entities or certain non-profits performing government-like functions.  FEMA only spends money on eligible items for eligible applicants, no matter how much money FEMA receives.  FEMA mitigation funds must be used on cost-beneficial projects to ensure the federal investment is a wise one.  FEMA makes every effort to get money in the hands of applicants as fast as possible to enable rapid recovery from disaster impacts.

    In the most recent data provided by the Sandy Program Management Office from March 2016, it appears that these agencies have been slow in awarding and especially paying out funds.  Slide 5  Based on this data, only one-third of the CDBG-DR funds have been dispersed and only 13 percent of the FTA funds have been paid out.  This may be worth looking into in greater detail and certainly shows why a comprehensive look into disaster spending, as well as costs and losses, is needed.

    In an era of growing government debt, we need to ensure federal spending is necessary and cost-effective.

    Right after I became a Member of Congress in 2011, my own district was hit hard by Hurricane Irene and Tropical Strom Lee.  I remember in Bloomsburg, a family stayed in their home to try to move their possessions to an upper floor.  But Fishing Creek rose too quickly.  The house next to theirs was knocked from its foundation.  Water started gushing through their front windows as they called for help.  They had to be saved by a helicopter.  The woman there told me she can never live in that home again.

    I will never forget that preparing for natural disasters is about more than the loss of possessions; it’s our friends and neighbors lives that could be at stake if we do not plan in advance.  

    As we were rebuilding, I was amazed that much of the federal assistance was to rebuild in the same place in the same way, leaving people vulnerable to the next storm.  The federal government has a responsibility to respond after a disaster, but we also have a duty to be good stewards of the taxpayer dollar.  I look forward to the conversations we have today, the ideas we are going to hear about, and taking the next steps to reduce the costs of disasters.

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