The Congressional Budget Office says efforts to delay flood-insurance rate hikes—as proposed in a Senate bill under consideration—would add $2.2 billion to the National Flood Insurance Program's debt over 10 years, raising concerns that the bill will run into strong opposition in the House.
Indeed, an industry official says that the CBO score, released Tuesday, is sending supporters of the Senate bill scurrying for legislative language providing an offset for the cost.
"I am not sure why reducing premiums then adding on an assessment makes the end result any more attractive to policyholders, but it's a clue that waiving the budget point of order in the Senate isn't going to be easy," the official says.
The CBO "scored" the legislation as costing $900 million over five years, according to R Street Senior Fellow R.J. Lehmann. Lehmann says he did not know about the efforts underway to offset the cost, but adds, "I am not surprised."
There is no score over 10 years, but it results in an additional $2.2 billion deficit to the program over that period, Lehmann says. "That part does not score because of technical issues related to the need for more borrowing authority, which CBO does not count until Congress approves an increase in the NFIP borrowing authority," Lehmann says
A procedural vote Wednesday on whether to clear the Senate bill for floor action was postponed, likely until next week, after the Senate decided to take up an extension of long-term unemployment benefits instead.
The Senate bill is the Homeowner Flood Insurance Affordability Act, S. 1846.
According to an industry lobbyist, the report "ensures that the House Financial Services Committee will demand jurisdiction over the bill before it hits the House floor; then amend it to reduce the impact on the underlying legislation, the Biggert-Waters Act of 2012."
Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, said on a conference call sponsored by SmarterSafer.org Wednesday, "What we're seeing is the worst Washington has to offer, as short sighted-political gains trump good long-term policy.
He said that a stable, financially viable flood-insurance program benefits everyone –taxpayers, communities and homeowners who face a risk from flooding.
But, he said, "The delay legislation threatens to return the program to one that was broken and incapable of meeting its obligations."
He said NAMIC wants Congress to instead provide targeted relief for only those homeowners who truly face a hardship as flood-insurance rates transition to risk-based levels.
In a statement, Lehmann says, "While it is reasonable for Congress to address hardships that could make flood insurance unaffordable for lower-income homeowners, a blanket delay would mean continuing to subsidize beach homes for the wealthy, as well"
He says the Senate "should be careful not to throw the baby out with the bathwater. To avoid that fate, Senate leadership must allow an open amendment process, so that more targeted compromises may be considered."
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