Congress this summer plans to take on the nation's flood insurance program with the goal of lowering costs and risks for both homeowners and taxpayers.
The House Financial Services Committee last month passed seven measures that are part of a legislative package to reauthorize the National Flood Insurance Program, which will run out of funding on Sept. 30.
The Senate is expected to begin consideration this month.
The program, run by the Federal Emergency Management Agency, is grappling with significant debt. It owes $24.6 billion to the Treasury, according to the Government Accountability Office, including $1.6 billion borrowed after major flooding in 2016. Much of the debt was acquired from Superstorm Sandy in 2012, along with hurricanes Rita and Katrina in 2005.
The GOP-led House hopes to reform the NFIP in order to increase revenue collection so it no longer has to borrow after every major flood. At the heart of the GOP reauthorization plan is the goal of privatization. One of the Republican measures would open the program to private insurers, with the goal of eventually ending federal involvement and taxpayer funding.
"We know for a fact the program is in debt," House Financial Services Committee Chairman Jeb Hensarling, R-Texas, said before his panel approved the bills. "We know for a fact the program is running an actual annual deficit. So, it begs the question: Should there be a permanent taxpayer subsidy? I say no."
Another measure is aimed at reducing spending on properties that repeatedly flood by offering help with floodproofing or possibly demolition and relocation. Those who own "repetitive loss properties" and refuse to floodproof or move would eventually lose federal help.
Repeatedly flooded properties cost the program billions of dollars and make up about 30 percent of NFIP claims and half of its debt, according to a report from the Pew Charitable Trusts.
"What we are trying to say is, make your own decisions, but not with the use of taxpayer dollars to subsidize something that is not going to work," a GOP aide explained. "Eventually, your house is going to get out of this program."
The House bills will be combined as one measure for consideration by the chamber in the coming weeks, Republican aides told the Washington Examiner.
The Senate is also expected to take up the NFIP reauthorization this summer. Support from Senate Democrats will be required for passage thanks to the 60-vote filibuster rule. That means the package will require much more bipartisan buy-in.
Senate Banking Committee Chairman Mike Crapo, R-Idaho, told the Washington Examiner he is aiming for a July committee consideration of an NFIP reauthorization bill that he is writing alongside the panel's top Democrat, Sen. Sherrod Brown, of Ohio.
"We are working to try to find a way to get the maximum support for the strongest bill we can," Crapo said. "My hope is to be able to resolve it both in terms of developing a bill and having a markup next month, but I'm not setting a deadline."
Several senators have already introduced NFIP reform proposals.
Last month, a bipartisan group of six senators from flood-prone states introduced legislation that would cap flood insurance premium increases at 10 percent, down from the current 25 percent. The bill would forgive the interest on NFIP's debt and provide low or no interest loans for floodproofing.
The bill excludes opening the flood insurance market to private companies.
Four of the bill's cosponsors sit on the Banking Committee, notably Sen. John Kennedy, R-La. The panel seats 12 Republicans and 11 Democrats, so Kennedy is critical to passing a measure out of the committee.
A second bipartisan bill introduced by Sens. Bill Cassidy, R-La., and Kirsten Gillibrand, D-N.Y., would transition the flood insurance program to the private sector, among other reforms.
The bill would reauthorize the NFIP for a decade, which would end the repeated short-term extensions that have led to uncertainty in the housing market.
Sens. Tim Scott, R-S.C., and Brian Schatz, D-Hawaii, introduced a bill in late June that would improve protections for repetitive loss properties. Unlike the House provision addressing this problem, the Scott-Schatz bill does not focus on the individual homeowner, but instead "asks local leaders to proactively mitigate against flood risk rather than taxpayers paying to rebuild the same properties over and over again," according to the senators.
Provisions in the bill include requiring communities to analyze properties that flood repeatedly "to determine the specific areas that should be priorities for voluntary buyouts, drainage improvements or other mitigation."