FEMA Seeks Comment on Potential Disaster Deductible Concept
The concept addresses recommendations to increase the disaster declaration threshold by instead buying down risk.
In response to recommendations from the Government Accountability Office (GAO) and the Department of Homeland Security’s (DHS) Office of Inspector General, FEMA has posted a notice of proposed rulemaking in the Federal Register seeking comment on the concept of a disaster deductible for states and local governments in lieu of raising the threshold for disaster declarations.
The concept of the deductible would be tied to a predetermined “level of financial commitment” as a condition of eligibility for financial assistance under the Public Assistance Program made available through presidential disaster declarations.
The overall goal is to reduce the burden on taxpayers through mitigation incentives and risk-informed decisions that promote resilience.
Faced with the recommendations from the GAO and Office of the Inspector General that would raise the threshold for disaster declarations, which the agency thought would be regressive and put many states in a precarious position, FEMA staff came up with the deductible concept but is seeking details from state and local emergency managers. “This is not a done deal; this is a concept that we’re asking the state and local emergency managers to weigh in on,” said FEMA Administrator Craig Fugate. “We still have to respond back to the GAO and Inspector General about how we are going to address their concerns that the threshold for getting a declaration is too low.”
FEMA has come under fire for making too many disaster declarations and is getting pressure to adjust the disaster declaration threshold, which is to be adjusted on annually based on per capita incomes and the consumer price index. For a time, FEMA had not adjusted the threshold, and if it had, the number of declarations declared by the current administration would have been roughly half the number.
Fugate used his home state of Florida as an example of what would happen if the threshold was updated to reflect current numbers. He said right now the Florida threshold is roughly $22 million. That would increase to $80 million under the Inspector General and GAO recommendations.
He said it would be especially punitive for large states like California, New York and Pennsylvania where the threshold would be so high that it would difficult to get a declaration for anything short of a catastrophic disaster.
“We had to address this,” Fugate said of FEMA, “but we thought this was a very regressive way of doing it so we took a different approach.
The idea is setting the deductible and using incentives to get the deductible lower. So the incentive is for states to take mitigation action and strategies to buy down future risk. “That way, rather than using a pure per-capita number, we’re actually starting to recognize states that have taken action, and saying states that haven’t should pay a greater percentage of a deductible before we kick in.”
Part of the motivation of the notice is to get from states ideas of some of the mitigation activities that would buy down risk. “We’ve looked at some modeling and we’ve done some preliminary work, but we didn’t want to go into specific detail until we listened to states and local governments about the kind of activities they think we should consider as mitigating factors,” Fugate said.