Damage estimates are starting to emerge from Puerto Rico following the devastation caused by Hurricane Maria. The Government of Puerto Rico lacks the funds needed to undertake necessary recovery and reconstruction efforts. Even under regular circumstances, states and territories are rarely equipped to deal with catastrophic disasters without federal assistance. Hurricane Maria devastated Puerto Rico at a particularly difficult time for the island. The Government of Puerto Rico is currently facing a fiscal crisis with more than $74 billion in public debt. Recovering and rebuilding after a disaster of such a large scale is a long term process that involves many stakeholders. The federal government plays a large role in funding these disaster recovery efforts.
Federal Disaster Relief Process
The Stafford Act (PL 93-288) establishes a process for federal assistance in case of major disaster. When the President of the United States approved a major disaster declaration for Puerto Rico, several sources of funding become available to both assist the government of the island and the individuals affected by the disaster. Many of these federal assistance programs, overseen by the Federal Emergency Management Agency (FEMA) but in coordination with various agencies, fall under three broad categories: individual assistance, public assistance, and hazard mitigation assistance.
Public Assistance. This is FEMA’s largest funded program. Administered through grants to the local government, it helps communities pay for debris removal and repairs to public infrastructure, such as public buildings, roads, bridges and utilities.
Individual Assistance. This is direct aid for individuals affected by the disaster. It includes things such as housing for displaced people, grants to provide for needs not covered by insurance, crisis counseling, and disaster unemployment assistance.
Hazard Mitigation. This grant program funds measures to improve resiliency and lessen the effects of a future disaster. Mitigation funding is a fraction of the amount spent on the other two categories.
Funding for FEMA is separated into two categories: base funding and major declarations. Base funding is the smaller of the two and is used to fund ordinary FEMA operations and routine events. The second fund for major declarations is much more substantial; in fiscal 2017, that appropriation was $6.7 billion. This amount is based on how much was spent on disaster relief in the past decade. However, regular appropriations are rarely enough to fund a major disaster. When dealing with major disasters, FEMA’s Disaster Relief Fund (DRF) is regularly given additional funding by Congress through supplemental appropriations.
Recent History of Congressional Disaster Recovery Bills & Appropriations
It is not uncommon for Congressional supplemental appropriations for major disasters to occur in stages. Furthermore, future appropriations may be divided further due to some GOP opposition to catch-all bills following Hurricane Katrina and Superstorm Sandy.
Hurricane Katrina and Sandy followed a similar funding process. Following these disasters, Congress passed stopgap measures to ensure funding for disaster relief efforts. This was later followed by a larger individual disaster relief bill and further supplemental appropriations as needed.
The White House quickly requested aid after Hurricane Katrina struck the Gulf Coast on August 29, 2005. Congress approved and passed a $10.5 billion aid package four days after the storm hit. It was followed days later with a $51.8 billion package. Further appropriations were made to fund disaster recovery in Gulf Coast states (Alabama, Florida, Louisiana, Mississippi, and Texas) in response to the 2005 and 2008 hurricane seasons (Hurricanes Katrina, Rita, Wilma, Gustav, and Ike). These appropriations consisted of eight emergency supplemental appropriations acts, one reconciliation act, and one continuing appropriations resolution.
Supplemental Appropriations Related to Hurricane Katrina
Sept. 2, 2005, P.L. 109-61
Sept. 8, 2005, P.L. 109-62
Dec. 30, 2005, P.L. 109-148
June 15, 2006, P.L. 109-234
May 25, 2007, P.L. 110-28
Nov. 13, 2007, P.L. 110-116
June 30, 2008, P.L. 110-252
July 19, 2010, P.L. 111-212
Supplemental appropriations for Hurricane Sandy were not enacted until a month after the storm hit the Northeast on October 29, 2012. On December 7, the White House requested $60.4 billion in emergency appropriations to assist the states affected by Sandy. This was split into two separate bills. The first relief bill (Pub.L. 113–1), which increased the borrowing authority for NFIP $9.7 billion, was introduced on January 3, 2013 and passed one day later. It was later followed by the Disaster Relief Appropriations Act, 2013 (Public Law 113-2), a wider appropriations bill authorizing $51 billion for disaster relief agencies.
Congressional Appropriations for Hurricane Maria
Currently, there are several major disasters in the U.S. that require federal assistance. The large sum of funding needed to address them all will likely result in several supplemental appropriations by Congress. Two appropriations have already occurred that provide funding for disaster relief efforts in Puerto Rico. However, both bills will likely only provide funding for immediate efforts rather than long-term recovery. Congress must pass a more robust bill in order to effectively fund longer-term efforts.
As of today the proposed disaster supplemental appropriations add up to around $51.7 billion. However, appropriations for disaster relief are not just limited to Puerto Rico but encompass other disaster relief efforts in Texas, California, Florida, and the USVI. The $16 billion proposed for the NFIP would not contribute many funds to the island due to low participation rate in the program. In addition to this, around $5 billion of these funds are loans rather than aid. When you remove the direct loans and the NFIP it leaves around $30 billion for disaster relief funds to be divided between Texas, Florida, Puerto Rico, and the U.S. Virgin Islands.
First Disaster Relief Package: H.R. 601
The Continuing Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act, 2017 (PL 115-56) was signed into law September 8, 2017. The initial purpose if this bill was to fund disaster relief efforts for Hurricane Harvey and Irma. However, while appropriations were made prior to Hurricane Maria, funds from this bill were available to Puerto Rico after a major disaster was declared on the island on September 21, 2017. This $15.3 billion relief bill was meant to address the immediate need for disaster relief funding. However, due to the amount of damage caused by Hurricane Maria in PR and the U.S. Virgin Islands, additional funds were necessary by the following month.
Second Disaster Package- H. Res. 569
The U.S. House of Representatives passed a $36.5 billion disaster relief supplemental package on October 12. This new disaster relief package, now awaiting consideration in the Senate, will be the second installment of aid money that Congress has approved this term. However, these funds are not exclusive to Puerto Rico.
- $18.67 billion is intended to replenish the FEMA disaster relief fund.
- The Department of Homeland Security’s inspector general gets $10 million of that for audits and investigations of the use of relief funds
- Of the amounts provided in this Act for the Disaster Relief Fund, up to $4.9 billion may be transferred to the Disaster Assistance Direct Loan Program Account for the cost of direct loans. This money is to be used for maintaining basic government operations in the absence of funds.
- FEMA may transfer up to 1.5 percent of the amount under this paragraph to the Disaster Assistance Direct Loan Program Account for administrative expenses to carry the direct loan program
- The bill includes a provision enabling the Department of Homeland Security and the Treasury Department to decide to cancel the loan, however, there is no guarantee. The DHS and the Treasury set the terms of repayment; the bill does not contain a proposed interest rate.
- $150 million may be transferred to the Disaster Assistance Direct Loan Program to lend a territory or possession of the United States that portion of assistance for which the territory or possession is responsible under the cost-sharing provisions.
- Up to $1 million may be transferred to the Disaster Assistance Direct Loan Program Account for administrative expenses to carry out the Advance of Non-Federal Share program
- Up to $1.27 billion in grants for disaster nutrition assistance for Puerto Rico. The only appropriation that is specific to Puerto Rico. The Supplemental Nutrition Assistance Program will provide a grant to Puerto Rico for disaster nutrition assistance.
The final $16 billion in the bill goes to the National Flood Insurance Program. The House bill cancels $16 billion of NFIP’s current debt. However, Puerto Rico has less than a 1% participation rate in the NFIP. Just 5,675 federal flood insurance policies exist on an island with nearly 1.57 million housing units. These funds are unlikely to have any significant impact on the island.