NU Online News Service, May 31, 9:21 a.m. EDT

The House passed a bill under expedited procedures that would extend the National Flood Insurance Program until July 31.

The bill also includes a provision demanded by the Senate that will phase out subsidies on second homes over four years, effective July 1.

The bill is H.R. 5740. The Senate passed its 60-day extension on May 23.

Based on commitments by the Senate leadership, the House action raises the likelihood that legislation reauthorizing the program until Sept. 30, 2016 could be passed by Congress before it leaves for its summer recess Aug. 3, according to an industry lobbyist.

Senate Majority Leader Harry Reid, D-Nev., has indicated that he hopes the full Senate will act on S. 1940—the Senate’s five-year extension—within two weeks of returning from its Memorial Day recess June 4.

That would set the stage for reconciling S. 1940 with H.R. 1309, the House’s five-year extension passed last July.

If the House had not acted by Thursday, the current reauthorization of the NFIP would have run out May 31. A lapse was avoided, though, when the House passed the 60-day extension by voice vote after 7:30 p.m. yesterday.

The first market reaction to the House vote will be a 25 percent increase in flood-insurance rates for any property that is not a primary residence.

Sen. Tom Coburn, R-Okla., demanded this provision as his price for allowing the 60-day extension to be approved in the Senate. He also demanded that the current extension for the current program be the last short-term one.

Ray Lehmann, director of public affairs at the R Street Institute, says the definition as contained in the bill passed last Thursday in the Senate includes all non-primary residences, not just vacation homes.

The first set of 25 percent increases would come on July 1, and then—presuming the five-year reauthorization is passed—increases would be scheduled annually until the property's rates reach full actuarial rates, Lehmann says.

The Congressional Budget Office projects that an end to subsidies on non-primary residences will yield revenues of $2.4 billion over 10 years. The NFIP is currently approximately $18 billion in debt.

“We’re pleased the House acted to avoid a lapse while also passing these meaningful reforms,” says Matt Gannon, assistant vice president for federal affairs for the National Association of Mutual Insurance Companies

“These subsidy cuts are just part of the reforms on which there is broad consensus, but more work still needs to be done,” he adds.

“Congress can be proud of this responsible debt-reduction measure, but they can’t stop now,” he says.

After the House vote yesterday, Rep. Judy Biggert, R-Ill., chief sponsor of the House version of the bill, said, “The good news here is that the Senate has expressed a commitment to take up a long-term flood reform bill in June. I welcome that development and look forward to working with the Senate to ensure that we send a final long-term reform bill to the president this summer.”