WASHINGTON--Over time, the deficit in the National FloodInsurance Program can be expected to grow by $900 million annuallybecause the program was designed to be subsidized, according to anew Congressional Budget Office study.

Moreover, coastal properties tend to be more valuable than otherproperties nationwide, many have high values, and a "significantfraction" (23 percent) are either second homes or rentalproperties.

The study coincides with a decision by the House FinancialServices Committee to postpone action that had been scheduled fortoday on legislation extending the program and adding money toit.

According to the CBO study, the program currently has a $17.5billion deficit as of May, with an authorized debt limit of $20.8billion.

According to industry lobbyists, the current plan is for asubcommittee of the Financial Services Committee to hold a hearingJuly 17 on the legislation (H.R. 920) introduced by Rep. GeneTaylor, D-Miss., in February that would add wind and tornadocoverage to the NFIP.

After the hearing, there are plans to combine legislation passedby the House last year with the Taylor legislation and then act onit, according to two industry lobbyists.

The study said 40 percent of subsidized coastal properties inthe sample studied by the CBO are worth more than $50,000, and 12percent are worth more than $1 million. For inland properties, thecomparable figures are 12 percent and 3 percent, the studyfound.

The CBO analyzed 10,000 properties as part of its study.

Moreover, a "significant fraction" of subsidized policies arewritten for high-value properties. "That fact is attributable moreto the prevalence of such properties in the program than to adisproportionate allocation of subsidies to high-value properties,"the report said.

"Even so, for some categories, subsidized properties are morethan the unsubsidized properties," the report said.

The tendency toward above-average values in the NFIP isparticularly evident for some groups of properties, notablynonprincipal residences and nonresidential properties.

The study was sought by Sen. Judd Gregg, R-N.H., rankingminority member of the Senate Budget Committee.

Regarding the value of properties, the study found the medianvalue of owner-occupied housing in the U.S. is approximately$160,000; the median value for single-family principal residencesrange from about $220,000 to $40,000.

"Much of the difference [between coastal properties and themedian] is attributable to the higher property values in areas thatare close to water," according to the report.

The report said it is likely that "some or all" of the value ofthe subsidy offered by the NFIP program is likely to be included inthe property's value when it is sold.

Thus, when a subsidized property is sold, the buyer essentiallypays.