[Congressional Record Volume 151, Number 93 (Tuesday, July 12, 2005)]
[House]
[Pages H5646-H5649]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TREATMENT OF CERTAIN PAYMENTS UNDER NATIONAL FLOOD INSURANCE PROGRAM
Mr. BAKER. Mr. Speaker, I move to suspend the rules and pass the bill
(H.R. 804) to exclude from consideration as income certain payments
under the national flood insurance program, as amended.
The Clerk read as follows:
H.R. 804
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. TREATMENT OF CERTAIN PAYMENTS UNDER NATIONAL FLOOD
INSURANCE PROGRAM.
Chapter I of the National Flood Insurance Act of 1968 (42
U.S.C. 4011 et seq.) is amended by adding at the end the
following new section:
``Treatment of certain payments
``Sec. 1324. Assistance provided under a program under this
title for flood mitigation activities (including any
assistance provided under the mitigation pilot program under
section 1361A, any assistance provided under the mitigation
assistance program under section 1366, and any funding
provided under section 1323) with respect to a property shall
not be considered income or a resource of the owner of the
property when determining eligibility for or benefit levels
under any income assistance or resource-tested program that
is funded in whole or in part by an agency of the United
States or by appropriated funds of the United States.''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Louisiana (Mr. Baker) and the gentleman from Massachusetts (Mr. Frank)
each will control 20 minutes.
The Chair recognizes the gentleman from Louisiana (Mr. Baker).
General Leave
Mr. BAKER. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days within which to revise and extend their remarks
and include extraneous material on the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Louisiana?
There was no objection.
Mr. BAKER. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, it was just last year that the United States Congress
acted to reform the flood assistance programs of this country to ensure
that those who engaged in abusive practices and thereby were over
assessing the program for repetitive flood losses would no longer avail
themselves of that inappropriate opportunity.
Accordingly, as the House passed legislation, there was an unintended
consequence, however, pursuant to a ruling by the IRS which found that
there was no technical or legislative basis on which to exempt payments
made from the flood assistance program for the purposes of an
individual qualifying for additional governmental assistance.
I will translate that into something that is more appropriate. If,
for example, a person were to accept an assistance mitigation payment
to reduce the probability of future flooding, that income could then be
counted and disqualify that person from receiving food stamps, aid to
dependent children, perhaps Social Security, other health care
assistance. And that, of course, was not the intent of the legislation
as passed.
In fact, under the provisions of the Stafford Act, all other
emergency assistance granted by FEMA does not count toward qualifying
individuals for governmental assistance, or for that matter, as income
qualifying under the IRS for taxable liability.
The reason for this policy position is quite clear, the whole goal of
the effort was to incent people to make changes necessary to their
property so they would no longer call on the Federal Government for
flood mitigation assistance.
In one instance, an individual who was to receive significant
mitigation funding, had he accepted it, would have put him far over the
qualifying limits for even his Social Security benefits. That is not
the outcome that one would want to see as a result of trying to assist
a person with flooding problems.
Coming on the heels of Hurricane Dennis and many events across the
Gulf Coast of the past few months, it is now clear this action is not
only appropriate but necessary and does not violate precedent nor other
actions of the Congress with regard to other assistance programs.
For these reasons, I feel the adoption of H.R. 804 is highly
appropriate and responsive to the needs of our constituents.
Mr. Speaker, I reserve the balance of my time.
Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself such time as
I might consume.
Mr. Speaker, I agree that this is a very important improvement to
what was a very important piece of legislation.
At a time when people wonder about whether or not we are able to go
forward, it ought to be noted clearly there
[[Page H5647]]
are strong ideological and partisan differences over some issues, as
there should be in a democracy, but we have been able, from time to
time, to work together on things where there is a consensus of common
sense.
In this particular instance, the underlying legislation here was one
which was strongly supported by a coalition of environmentalists and
taxpayer groups who had a common understanding that in effect
encouraging people to continue to rebuild in areas that were going to
be flooded made no sense from either the environmental or the taxpayer
perspective.
There was also an unusually fruitful bipartisan collaboration that
brought us this bill. Our former colleague, the gentleman from Nebraska
(Mr. Bereuter), a senior member of the Committee on Financial Services,
worked very closely with a continuing Member, the gentleman from Oregon
(Mr. Blumenauer) and they did an excellent job of putting this piece of
legislation together.
And we now, having enacted the legislation, encounter something that
was unanticipated. This would clean it up. It would make a very good
piece of legislation better.
Mr. BAKER. Mr. Speaker, will the gentleman yield?
Mr. FRANK of Massachusetts. I yield to the gentleman from Louisiana.
Mr. BAKER. Mr. Speaker, I just wanted to express my appreciation to
the gentleman from Massachusetts (Mr. Frank) and to the gentleman from
Oregon (Mr. Blumenauer) for his cooperative work in this matter.
It has been bipartisan. I think it achieves a worthwhile policy goal,
and I express my appreciation.
Mr. FRANK of Massachusetts. Mr. Speaker, I yield as much time as he
would consume to the gentleman from Oregon (Mr. Blumenauer) who will be
my last speaker.
Mr. BLUMENAUER. Mr. Speaker, I appreciate the gentleman's courtesy in
permitting me to speak on this and the leadership of our friend, the
gentleman from Louisiana (Mr. Baker), who, as was mentioned along with
our colleague, the former Member, the gentleman from Nebraska (Mr.
Bereuter), will ironically will be in Washington D.C. this week.
I cannot think of a better gift for Mr. Bereuter, a recognition for
his long service to this House and to the people of Nebraska and the
country, to do this important clarification. I could not agree more
with my friend from Louisiana (Mr. Baker) how important it is to
clarify the intent of this legislation.
The whole thrust of it was to, in some cases, eliminate potential
abuse of the program. But more than an isolated case of abuse here and
there, there were a number of people who were trapped in a pattern of
flood and having to repair and did not know how to get out of it.
And the bill was designed, as my friend, the gentleman from
Massachusetts (Mr. Frank), pointed out, in cooperation with
environmental groups, with taxpayer groups, with industry, the
insurance industry, home building industry, financial institutions, to
try and make sure that we did the right job for both the taxpayer and
people who are in flood-prone areas.
The National Flood Insurance Program is critical to the lives of over
4 million policyholders. And many of the people eligible for flood-
mitigation assistance under the flood insurance program were caught in
this cycle of flooding and rebuilding and flooding again that could be
ended with mitigation assistance.
Now, I support strongly this legislation to remove a disincentive for
people living in flood-prone areas to accept the mitigation grant that
will help prepare them for floods before they happen, reduce damage for
future floods, and save lives for future disasters. Everybody wins if
this program works right.
The policyholders win because, as we pointed out, as the legislation
was moving forward, when we have the legislation, only 1 percent of the
property owners were responsible for 25 percent of the flood-loss
dollars.
By reducing the magnitude of this repetitive flood loss program, we
were able to make a huge difference to a wide range of people. The
Association of State Flood Plain Managers estimates that avoiding just
one 10 percent increase will save the 4.4 million policyholders about
$175 million each year.
Taxpayers will win if the mitigation program works right, because the
flood insurance payments are the tip of the iceberg. Because there are
many, many people in harm's way, who get part of their relief from
flood insurance, but we have disaster plains on the Federal Government
that far exceed them.
By making this program work right, we will save taxpayers money time
and time again. I appreciate the hard work the Financial Services
Committee has done in trying to fine-tune the flood insurance program,
continuing hearings to make sure that it works right, and here,
clearing up any ambiguity to make sure that we take any disincentive
for using the mitigation grants and solve that problem to make sure
that people take advantage of moving out of harm's way, saving money,
enhancing the environment.
Mr. FRANK of Massachusetts. Mr. Speaker, I yield back the balance of
my time.
{time} 1045
Mr. BAKER. Mr. Speaker, I yield 2 minutes to the gentlewoman from
Florida (Ms. Ginny Brown-Waite) who is a strong advocate of our flood
insurance program.
Ms. GINNY BROWN-WAITE of Florida. Mr. Speaker, I want to thank, on
behalf of my constituents, many of whom have to have flood insurance, I
would like to thank the gentleman from Louisiana (Mr. Baker) for
introducing H.R. 804.
As we all know from watching the television, hurricane season has
arrived again. Residents of the Gulf and east coast face familiar
anxieties associated with the hurricane season. They begin to cross
their fingers and hope their home will not be devastated by nature's
wrath and that their belongings will not be washed away.
What residents should not have to be crossing their fingers over is
whether the government is going to hit them with additional liabilities
after they receive help. Yet, under the National Flood Insurance
Program today, that is exactly what happens. The IRS considers NFIP
grants as income which means any person on means-tested assistance
loses. Residents who accept NFIP grants after their homes are destroyed
by floods are then slapped with reduced government benefits such as
health care, education or even nutrition assistance.
I commend the gentleman from Louisiana (Mr. Baker) for introducing
this legislation that prevents agencies other than the IRS from
considering NFIP grants as income and I implore my colleagues to
support this bill. Those who have been hit by floods should not have to
choose between NFIP assistance and food stamps.
Mr. BAKER. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I want to express my appreciation to all Members who
have had an interest and role in perfecting this legislation. Merely
for the purposes of establishing in the record as we close the chapter
I believe on the reform of the Flood Mitigation Assistance Program, but
every dollar of benefit paid is generated by premiums of flood
insurance paid into the fund by home and property owners. It is a
program which pays out benefits, and at any time, if there has been an
advance of funding by the Federal Government when funds on hand have
been deficient to pay existing claims, all dollars have been repaid
plus interest over the life of the program. So in fact it is a program
that functions in an efficient taxpayer-responsible manner.
And with the adjustments made over the past 18 months to the program,
I hope it brings to an end further Congressional review and oversight
of the important flood assistance programs as now constructed.
Mr. Speaker, the following is the revised cost estimate prepared by
the Congressional Budget Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 11, 2005.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services, House of
Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed revised cost estimate for H.R. 804, a
bill to exclude from consideration as income certain payments
under the National Flood Insurance Program. This estimate
supersedes our original estimate that was transmitted on
March 31, 2005.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Kathleen
FitzGerald.
Sincerely,
Douglas Holtz-Eakin,
Director.
Enclosure.
H.R. 804--A bill to exclude from consideration as income
certain payments under the National Flood Insurance
Program
If H.R. 804 were enacted, payments made under the National
Flood Insurance Program for flood mitigation activities would
not be
[[Page H5648]]
counted as income or resources when determining eligibility
for any federal means-tested program. The Federal Emergency
Management Agency (FEMA) awards grants to states and
communities, which in turn distribute funds to individuals
and businesses for activities that reduce the risk of
repetitive flood damage to buildings. Data from FEMA show
that the average approved award is about $75,000.
CBO expects that enacting this bil1 would increase the
number of persons eligible for certain means-tested programs
including Food Stamps and Medicaid. Currently, flood
mitigation grants are counted as income or resources. by
these programs and make some people ineligible for benefits
or reduce the amount of their benefit. (Certain other FEMA
grants are already excluded from income for benefit-
eligibility purposes.) Based on data from FEMA on the number
of flood mitigation grants awarded since fiscal year 1997 CBO
estimates that the increase in the number of people newly
eligible for these programs as a result of this legislation
would be small and that any increase in direct spending for
them would not be significant. Enacting the bill would not
affect revenues.
H.R. 804 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act, and
any increased spending by states for public benefits would be
minimal.
This revised estimate supersedes the estimate that CBO
transmitted on,this bill on March 31, 2005. Based on new
information on both the number of flood mitigation grants and
how they are distributed, CBO has lowered its estimate of the
number of instances where individual families receive such
grants. We previously estimated a cost of about $1 million a
year, but now estimate that such costs would be less than
$500,000 a year.
The CBO staff contacts for this estimate are Kathleen
FitzGerald (for federal costs), Leo Lex (for the impact on
state, local, and tribal governments), and Paige Piper/Bach
(for the private-sector impact). This estimate was approved
by Peter H. Fontaine, Deputy Assistant Director for Budget
Analysis.
____
House of Representatives,
Committee on Ways and Means,
Washington, DC, July 12, 2005.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services, Rayburn House
Office Building, Washington, DC.
Dear Chairman Oxley: I am writing concerning H.R. 804, a
bill ``[t]o exclude from consideration as income certain
payments under the national flood insurance program,'' which
is scheduled for floor consideration on Tuesday, July 12,
2005.
The bill is within the jurisdiction of the Committee on
Ways and Means because it would exclude certain flood
insurance mitigation payments from consideration for purposes
of determining eligibility for and amount of benefits under
certain means-tested programs. As a result the bill could
affect eligibility for and benefit levels under certain
programs under the Committee's jurisdiction. However, in
order to expedite this legislation for floor consideration,
the Committee will forgo action on this bill. This is being
done with the understanding that it does not in any way
prejudice the Committee with respect to the appointment of
conferees or its jurisdictional prerogatives on this or
similar legislation.
I would appreciate your response to this letter, confirming
this understanding with respect to H.R. 804, and would ask
that a copy of our exchange of letters on this matter be
included in the Congressional Record during floor
consideration.
Best regards,
Bill Thomas,
Chairman.
____
House of Representatives,
Committee on Financial Services,
Washington, DC, July 12, 2005.
Hon. William M. Thomas,
Chairman, Committee on Ways and Means, Longworth House Office
Building, Washington, DC.
Dear Chairman Thomas: Thank you for your letter regarding
H.R. 804, a bill ``to exclude from consideration as income
certain payments under the flood insurance program.''
I recognize that specifying the treatment of these payments
for purposes of determining eligibility for any income
assistance or resource-tested programs could affect
eligibility for and benefit levels under certain programs,
including those under the jurisdiction of the Committee on
Ways and Means. I appreciate your cooperation in developing
an amended version of the bill, thereby permitting its
consideration under suspension of the rules. This cooperation
does not prejudice your Committee in any way with respect to
the appointment of conferees or its jurisdictional
prerogatives on this or similar legislation.
I intend to place this exchange of letters in the
Congressional Record. Thank you again for your assistance.
Yours truly,
Michael G. Oxley,
Chairman.
Mr. NEY. Mr. Speaker, I appreciate Chairman Baker's effort on
crafting this piece of legislation and Chairman Mike Oxley's diligence
in seeing this bill to the floor.
H.R. 804, introduced on February 15, 2005, will prevent federal
agencies that administer means-tested or income-tested benefits from
considering NFIP mitigation grants as income. H.R. 804 is necessary due
to an IRS ruling in July 2004 that such grants must be reported as
income for tax purposes. This IRS ruling has caused significant
uncertainty in the administration of the Bunning-Bereuter-Blumenauer
Flood Insurance Reform Act of 2004. Anecdotal information has revealed
that a significant number of homeowners have refused mitigation offers
not only due to the fear of a potential tax liability, but also the
potential for other unknown liabilities imposed by other federal
government agencies. These penalties could include the loss of certain
federal education, nutrition and health care benefits. H.R. 804
eliminates the potential for additional penalties by preventing federal
government agencies (other than the IRS) from considering NFIP flood
mitigation grants as income.
The precedent for this exception is found in the Stafford Act, which
explicitly states that any disaster or pre-disaster mitigation payments
made to homeowners under that Act are not to be considered as income by
any federal agency administering a means- or income-tested benefit. By
incorporating this language in the National Flood Insurance Act, H.R.
804 will resolve any additional uncertainty by likewise preventing
federal agencies from considering flood mitigation grants as income.
Floods have been, and continue to be, one of the most destructive and
costly natural hazards to our nation. In the aftermath of Hurricane
Dennis this past weekend, I fear many communities in the South and
Midwest will witness this unrelenting power firsthand as the tropical
depression continues to unload heavy, flooding rains inland.
During this past year, there have been three major floods in my
district in eastern Ohio. All three of these incidents qualified for
federal relief granted by the President. Recent flooding in January of
this year resulted in historic levels in several local dams, and, in
Tuscarawas County, three communities were forced to evacuate, which
displaced 7,000 people. I was able to witness this devastation
firsthand when I toured damaged properties in both Tuscarawas and
Guernsey counties. Also, I am planning to hold a field hearing in
Tuscarawas County next month to continue the Subcommittee's oversight
of the National Flood Insurance Program.
The National Flood Insurance Program is a valuable tool in addressing
the losses incurred throughout this country due to floods. It assures
that businesses and families have access to affordable flood insurance
that would not be available on the open market.
Prior to the passage of the National Flood Insurance Act in 1968,
insurance companies generally did not offer coverage for flood
disasters because of the high risks involved. Today, almost 20,000
communities participate in the national flood insurance program. More
that 90 insurance companies sell and service flood policies. There are
approximately 4.4 million policies covering a total of $620 billion.
Last year's Flood Insurance Reform Act achieved significant reforms
to this important federal program and I look forward to hearing from
all of our witnesses today as we discuss FEMA's implementation of its
flood mapping policy, as well as determine whether new reforms and
initiatives are in order to complement the work we accomplished last
year.
I urge my colleagues to approve this legislation.
Mr. OXLEY. Mr. Speaker, I rise today in support of H.R. 804, a bill
that would exclude from consideration as income certain payments under
the national flood insurance program.
This bill was introduced by my friend and colleague from Louisiana,
Mr. Richard Baker, and was reported from the Financial Services
Committee, by voice vote, on March 16, 2005. I am pleased to see it on
the floor of the House this morning and am confident that it will
receive favorable consideration.
H.R. 804 is a common-sense bill that will prevent Federal agencies
administering means- or income-tested benefits from considering
National Flood Insurance Program (NFIP) mitigation grants as income.
Successful distribution of these mitigation grants is vitally important
to the financial soundness of the NFIP, since they help prevent costly
repetitive flood losses by allowing homeowners to elevate their
properties or take other measures to prevent future flooding.
In July 2004, an IRS ruling maintained that these mitigation grants
must be reported to the IRS as income for tax purposes. As a result,
some homeowners have refused mitigation offers out of a concern that
mitigation funds could increase their reported income to levels that
would result in a loss of Federal education, nutrition and health care
benefits. Other homeowners fear potential tax liabilities.
We in the Congress have put in a great deal of work over the past
several years on the repetitive flood loss issue, culminating in the
[[Page H5649]]
Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004. This
Act expanded the use of mitigation grants and requires homeowners to
participate in flood mitigation programs. Unfortunately, we are now
faced with a situation where affected homeowners face the loss of
benefits such as subsidized school lunches, Federal education grants
and Medicaid. That is just not right.
H.R. 804 removes this concern and will allow flood mitigation grants
to work as intended. I urge my colleagues to help protect homeowners
throughout our Nation by supporting final passage of H.R. 804.
Mr. BAKER. Mr. Speaker, I have no further requests for time, and I
yield back the balance of my time.
The SPEAKER pro tempore (Mr. Foley). The question is on the motion
offered by the gentleman from Louisiana (Mr. Baker) that the House
suspend the rules and pass the bill, H.R. 804, as amended.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
____________________