Harvey May Affect FY 18 Funding

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Hurricane Harvey may find a way to reach all the way from Texas to Capitol Hill.  The need to enact FY 18 Appropriations before October 1 to keep the Federal government up and running; the need to address the national debt ceiling by September 29 to avoid loan defaults; and the need to reauthorize of the national flood insurance program that expires September 30 all will be affected by Harvey’s impacts.

Congress needs to decide whether to include Harvey relief funding as part of the expected FY 18 Omnibus Appropriations measure or whether to try to move funds as a supplemental funding bill.  Of course, there would be political wrangling as Superstorm Sandy states recall the difficulty of gaining their own supplemental funds a few years ago.  In either event, FEMA can make nearly $3 billion in immediate emergency response funds available but notes that there are also 30 other disasters being covered in the US today.  Congressional action could take several months and additional Federal funds may not become available until December.

Meanwhile, the National Flood Insurance Program is up against a September 30 funding expiration deadline.  Already nearly $25 billion in debt, the Program has about 250,000 policyholders in Harris County, TX which encompasses Houston.  Without an infusion of funds, the Program is not expected to be able to cover all of the anticipated claims.  The House has already passed a five-year reauthorization package but the Senate has not been able to reach agreement on the provisions of a bill.

Finally, no one really expects the Federal Government to default on its loans.  As in the past, the Treasury will take what is referred to as “extraordinary measures” to avoid hitting or exceeding the debt ceiling on September 29.  Such measures generally mean a temporary rearrangement of Federal retirement accounts or suspension of Federal lending to state and local governments.

The issue here, as with appropriations and flood insurance, is timing.  Harvey’s appearance is a distraction from these critical issues as well as a new factor to be considered in legislative decision making.  There are only 12 legislative days left in this fiscal year when both the House and Senate are in session.  The fiscal year ends at midnight on September 30.