FEMA’s disaster relief fund is running low on cash. What happens now?
Homes and businesses destroyed by wildfire are seen on August 14, 2023 in Lahaina, Hawaii. (Photo by Justin Sullivan/Getty Images)
WASHINGTON — The Federal Emergency Management Agency’s disaster relief fund is in desperate need of cash, with the agency projecting at least a $4 billion deficit in the weeks ahead — even as the government responds to devastating fires in Hawaii and hurricane season continues.
FEMA, however, won’t simply stop the response and recovery activities funded by the disaster relief fund when the account’s balance becomes low. Unlike many other accounts within the federal government, FEMA is able to pause funding on some projects and divert that money to lifesaving and life-sustaining activities.
FEMA is preparing to lean on that Immediate Needs Funding safety net, as Congress debates whether to provide the agency with $12 billion in additional funding that the Biden administration asked for last week, with the prospect that more may be needed hinted at by the agency’s administrator.
That back-up plan of sorts allows FEMA to temporarily pause “funding for long-term recovery projects and hazard mitigation projects that FEMA does not have in its system,” according to a Congressional Research Service report.
“These INF restrictions do not affect individual assistance, or public assistance programs that reimburse emergency response work and protective measures carried out by state and local authorities,” according to CRS.
FEMA used that Immediate Needs Funding back in August 2017 after Hurricane Harvey made landfall in Texas and Hurricane Irma began approaching the coast.
FEMA implemented immediate needs after the disaster relief fund’s balance dropped below $2.8 billion. The agency lifted the framework on Oct. 2, 2017 after Congress refilled the disaster relief fund, according to CRS.
FEMA also used immediate needs funding to help with low cash flow in the disaster relief fund during fiscal years 2003 through 2006 and in fiscal 2010, according to CRS.
Warning to Congress
FEMA Administrator Deanne Criswell warned Congress last month that the agency’s disaster relief fund would begin running a deficit as soon as August. That hearing came before several new disaster declarations, including one for the deadly wildfires in Hawaii.
Criswell said during a briefing from the White House on Wednesday that FEMA has “enough funding to support the ongoing response efforts because we take events like (the wildfires on Maui) into consideration.”
But, she said, if FEMA doesn’t receive more funding from Congress, the agency would have to delay “some of the recovery projects and push them into next year.”
Given the widespread destruction of the Hawaii wildfires as well as dozens of other natural disasters this year, Criswell said, the agency may need more than the $12 billion the Biden administration has requested from Congress.
“We may potentially need more beyond that, and my team is assessing that now,” Criswell said.
A FEMA spokesperson said in a statement Wednesday that once the disaster relief fund reaches a “critical threshold,” FEMA will begin using its Immediate Needs Funding guidance “to prioritize available funding to critical ongoing disaster operations and reserve funding for initial response and recovery activities for a new significant event.”
“Under INF, new obligations for non-lifesaving and life-sustaining activities would be paused until the DRF is sufficiently funded,” the spokesperson said. “This would allow FEMA to continue its focus on response and urgent recovery efforts without interruption. To be clear, all obligations will be met, but reimbursement for non-lifesaving or life-sustaining expenses will be delayed.”
The spokesperson said that FEMA plans to “work with stakeholders to communicate how INF may affect their projects.”
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