Sequestration in Disaster Relief

The upcoming 2013 budgetary fiscal cliff has prompted some in Congress to consider sequestration in disaster relief in order to save money. Sequestration is simply defined as automatic spending cuts.

The Congressional Research Service has published a report, “Stafford Act Declarations 1953-2011: Trends and Analyses, and Implications for Congress.”(Bruce R. Lindsey and Francis X. McCarthy, August 31, 2012)

The Stafford Act gives the president the authority to issue declarations for federal assistance to states and towns in the event of natural and man-made disasters.

Suddenly, there is skepticism that declarations are not issued just to provide disaster relief. Some believe that declarations are political instruments before and during election years. There is also heightened worry about the spending associated with such disasters. In 2011 99 major disasters were declared, with an average of 56 per year since 2000. Between 1953 and 2011 the average was 35 per year.

Under the Stafford Act grants can be given for fire management, emergencies, and major disasters. In the case of disaster declarations, floods, storms, hurricanes, and winter storms are included. According to CRS," most emergency declarations are for snow related events, followed by hurricanes, droughts, and fires.

A group in Congress wants to shift some financial responsibility to the states while another group argues that limiting federal help would impede speedy recovery.

FEMA, upon request from a governor, makes a damage report and a recommendation to the president if a declaration is needed. The president can approve or deny any request.

Congressmen are worried about the federal cost. 75% is paid by the federal government and 25% by the state and local governments. Congressmen are interested in" offsetting some portion of disaster assistance spending by implementing budgetary mechanisms that might trigger a sequestration." (CRS, p. 1)

Some contend that disaster relief is given to" marginal incidents" and that the federal government is too generous in its interpretation criteria of disaster or emergency. Because the federal government is so “open in describing factors considered for declarations has led a formerly discretionary program evolving into a form of entitlement.”

A governor cannot request a declaration unless the state is overwhelmed by a disaster. If the governor’s request is denied federal assistance, it is called a" turndown." The first disaster declaration was issued by President Eisenhower on May 2, 1953, for damages caused by a tornado in Georgia.

The qualification formula for a fire threshold for any state is the greater of $100,000 or 5% multiplied by $1.30, multiplied by the state population. Cumulative fire cost threshold is $500,000 or 3x5% x $1.3, multiplied by the state population.

CRS reported that16 states qualified for the minimum $100,000 while California has a minimum for a single fire of over $2.2 million. (FEMA, Fire Management Assistance Grant, September 2011, p. 24)

According to CRS analysis based on data provided by FEMA, Texas has received the most fire management grants (234), California (120), Oklahoma (78), Florida (57), and Washington (53). (CRS, p. 4)

The state of New York has benefitted from the most emergency declarations (18), Maine and Massachusetts (14 each), and New Hampshire and Texas (11). Emergency declarations are for winter storms, hurricanes, and drought." FEMA does not use specific categories to classify disaster types." (CRS, p. 8)

Major disasters beneficiaries can be state and local governments and nonprofit organizations. Grants are given to repair and/or restore public infrastructure such as roads and buildings, for temporary housing, unemployment assistance, crisis counseling, recovery programs, such as disaster loans for a specific community.

"The states that have received the most major disaster declarations are Texas (86), California (78), Oklahoma (69), New York (65), and Florida (63). (CRS, p. 10)

Presidential denials for major disaster declarations have averaged almost 11 per year during the last decade. (CRS, p. 9)

Increases in disastrous weather events and changes in federal policies may explain the perceived increase in major disaster declarations. It may appear that more weather events occur, when in reality we have better tracking technology. To validate this hypothesis, a well-researched link between historical weather patterns and major disaster declarations should be established.

Recovering from a disaster is much more expensive due to increased population size and increased standard of living. In the period1953-2011 the US population has doubled in size. Population density pushed habitation into areas previously uninhabited which may have been affected by severe weather previously but nobody recorded it or needed help. (CRS, p. 12)

Some members of Congress complained that political motivations are reflected in the number of disaster declarations. Around the clock news bias the president to issue increased disaster declarations in the year prior and during an election. Public scrutiny may have major consequences on how the president handles a disaster. He may appear uncaring if he does not intervene.

Policy changes include federal legislation and various FEMA declaration policies. Because states are cash strapped, they may be eager to apply for disaster aid. The $1 per capita formula for preliminary assessment had been used by FEMA since 1986. The number was changed in 1999, adjusting for inflation. The Inspector General said, in the 13 years, adjusting for inflation would have resulted in 36% fewer disaster claims, saving federal government money. (CRS, p. 23)

The Disaster Recovery Act of 2011, if passed, would amend the Stafford Act and authorize the president to declare a catastrophic incident if a panel of experts would determine that federal assistance is needed. An expert panel may:

 

      -          Make more objective decisions
      -          Slow down the process
      -          Infringe on the President’s authority

The President may still declare a disaster in spite of the panel’s recommendations. (CRS, p. 25) Could this panel become another Obamacare style recovery death-panel if their expert opinion becomes politicized?

Suggestions have been made to offer low interest recovery loans. In such a case a state could resolve a disaster without federal assistance.

-          By repealing section 320 of the Stafford Act, states would have to meet certain levels to qualify for assistance.

-          Section 404 of the Stafford Act gives the President the power to contribute 75% of the cost of a disaster. Section 404 could be amended to give only 50% if a state does not meet certain “mitigation standards.” Would that not dictate to states how they should govern?

Several other amendments to the Stafford Act have been suggested in order to limit the number of declarations issued or the amount of help provided to the states by the federal government:

-          no administrative adjustment of the cost-share

      -          no federal assistance to states without programs such as housing assistance
      -          discontinue all assistance for snow removal.

The federal government wants to pay less and less for the increased declarations of natural disasters. It appears less willing to help American disaster victims while it is more willing to help disaster victims and causes in other parts of the world. Lindsey and McCarthy state,” it is unclear whether the fiscal responsibility for victims in time of need resides primarily with the federal or the state government.” No matter how much taxes we pay to the state or the federal government, we are ultimately on our own.