Fight likely in Congress over Hurricane Sandy funds

Washington — The Federal Emergency Management Agency says it has enough money to respond to the devastation wrought by Hurricane Sandy. But others say more money will be needed, and storm victims may not be able to get all the help they need — unless Congress steps in.

Securing more money for FEMA to help storm victims could be quite a fight in a budget-cutting Congress.

Democrats, especially those in storm-tossed states, may be willing to vote for more funds.

“My understanding is that FEMA has sufficient funding at the moment, but this recovery is still in the beginning stages, and it will take time for us to know exactly what FEMA needs,” said Rep. Rosa DeLauro, D-3rd District, a member of the House Appropriations Committee. “I will work with FEMA and my colleagues to make sure we can help those affected rebuild and come out of this stronger than ever.”

Rep. John Larson, D-1st District, said, “I will be working with the rest of the delegation to ensure that Connecticut gets everything it needs as Congress works with governors and states to rebuild.”

“And I hope,” he added, “that the needs of the nation will overcome the partisan gridlock we’ve seen too much of this last year.”

But other lawmakers who are trying to save other programs from cuts or want to trim FEMA’s reach may object to new funding.

“There is no indication FEMA will need additional funds,” said Jennifer Hing, a spokeswoman for House Appropriations Committee Chairman Hal Rogers, R-Ky.

The Obama administration has already declared large parts of New York, New Jersey, Connecticut, New Hampshire, Virginia and West Virginia major disaster areas that are eligible for a flood of federal help, and other declarations are expected.

FEMA Administrator Craig Fugate says his agency’s $3.6 billion emergency fund will be enough to meet all needs.

But others are less certain.

On Wednesday, Rep. Chaka Fattah, D-Pa., a member of the House Appropriations Committee, said he will introduce legislation to provide $12 billion in additional FEMA emergency assistance funds.

“The American people deserve, and insist on, the kind of first-rate recovery response that FEMA can provide,” said Fattah, who represents a Philadelphia-based district impacted by the storm. “But we cannot do it on the cheap.”

The issue of whether FEMA has enough money to help all of Sandy’s victims and reimburse local governments for the costs of responding to storm is expected to come up in a lame duck session of  Congress after the Nov. 6 elections.

A big worry for the insurance industry is whether FEMA will have enough money to meet its obligations under the federal flood insurance program.

Homeowners’ policies don’t cover flood damage. So homeowners who live on federally designated flood plains — areas near the coastline and other bodies of waters — are required by their mortgage lenders to buy flood insurance.

Flood insurance policies are sold by insurance companies, often through independent agents. But they are underwritten by FEMA, which pays out all claims.

FEMA has about $920 million in its flood insurance account, and another $2.9 billion left in borrowing authority from the U.S. Treasury. That means the flood insurance program can pay out about $3.8 billion in claims.

But John Prible, vice president of federal affairs for the Independent Insurance Agents & Brokers of America, is concerned that’s not enough money.

“My hunch is that this is going to exceed the $3.8 billion, in which case there’s no other option but that Congress ask for more or some consumers will not be paid their claims,” Prible said.

There were huge fights in Congress when Hurricane Katrina decimated the flood insurance fund, forcing Congress to give FEMA $21 billion in borrowing authority to pay all claims.

Prible estimated that Sandy will cost $7 billion to $15 billion in homeowner policy losses, and an as yet undetermined amount in flood insurance claims.

He said Congress will not like appropriating more money for FEMA.

“But (lawmakers) are going to like it a lot less if their constituents’ claims are not paid,” he said.

Prible also said the reputations of insurance companies and insurance agents who sell flood insurance policies are on the line because policyholders will be “furious” at the industry, as well as at the federal government, if claims are not paid.

“A fight (in Congress) is definitely coming,” Prible said. “But right now everybody is trying to remain calm.”