FEMA loses nearly $900 million if sequester cuts hit

October 29, 2012

The Federal Emergency Management Agency has a $14.3 billion budget to coordinate the national response to disaster situations like Hurricane Sandy. Should the sequester take effect, the White House estimates that the agency would lose about $878 million, largely from programs that provide direct relief to disaster victims. That said, whether or not the sequester goes into effect, Congress has also provided new emergency funding for disaster relief thanks to the debt-ceiling deal.

Here's a closer look at how the sequester would hit some of FEMA's biggest programs:

Disaster relief, FEMA's biggest budget item by far, takes the heaviest hit: It loses 8.2 percent of its budget, which comes out to a $580 million cut. But other, smaller programs would also lose funds: Under the sequester, the Pre-Disaster Mitigation Fund, which sends states and local communities funds to prepare for disaster situations, would have $3 million cut from its $36 million budget.

Even if the sequester doesn't take effect, federal disaster relief still faces a hard cap for funding. Under last year's Budget Control Act, lawmakers agreed to $917 billion in cuts over 10 years that would occur regardless of what happened with the supercommittee and the sequester. The cuts began in October 2011, and they're happening through new spending caps on both security and non-security spending.

Congress make an exception to these new spending limits for disaster relief funding. But there's a hard cap on any funding increase as well. According to the Congressional Research Service, disaster relief funding "cannot exceed the average funding provided for disaster relief over the 10 previous fiscal years, excluding the highest and lowest funding years. OMB estimated this figure to be $11.3 billion for the 10 years between FY2002 and FY2011."

So even in the advent of an unprecedented disaster, Congress would have to pass new legislation to bypass these funding limits for disaster relief after a certain point. And recent natural disasters have already shown what a political mess that can be.

Hurricane Irene and the tropical storm Lee drained the Federal Emergency Management Agency of disaster relief funds. But House Republicans wanted to boost their funding only if Congress made equivalent spending cuts elsewhere, leading to a political stalemate that FEMA headed off only by rearranging its finances to get the agency through the end of the fiscal year.

The new emergency funding gives FEMA more breathing room. But the cap also reflects the interest in prompting the agency to manage its finances better and prevent states from becoming "overly reliant" on the federal government. The problem is, disasters are only becoming costlier and more extreme with time. That's led some to question whether it makes even any sense to set disaster funding levels based on past events, and the new funding limits could make that process even messier.

*Update: This post has been revised slightly to reflect that the Budget Control Act has provided new emergency funds for FEMA disaster relief, though they are still capped.

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Brad Plumer · October 29, 2012