The federal government could be nearing a collapse of its ability to help with major disasters as the second catastrophic hurricane in less than two weeks bears down on Florida.
Hurricane Milton, a Category 5 storm whose winds reached 180 mph late Monday but weakened to a Category 4 early Tuesday, is whirling toward a possible landfall in Tampa Bay just as the main federal disaster programs are facing financial instability amid a series of recent calamities, including Hurricane Helene’s flooding of communities throughout the Southeast.
Those include the Federal Emergency Management Agency’s disaster fund, which pays for repair and rebuilding efforts; the Small Business Administration’s loans to stricken businesses and homeowners; and FEMA’s flood insurance program. All could be within weeks of running dry of cash, based on recent remarks by President Joe Biden, Homeland Security Secretary Alejandro Mayorkas and insurance analysts — even as FEMA sought to assure the public Monday that it has enough money to meet its “life-saving” responsibilities for Helene and Milton.
The concerns about federal resources are growing as lawmakers of both parties clamor for Congress to return to Washington before the November election to approve additional disaster funding. Fiscal conservatives in the House have balked at that, and Speaker Mike Johnson said this weekend that he had no plans to bring his members back.
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Washington’s ability to pay for recovering from the back-to-back disasters is “a big concern,” said Elizabeth Zimmerman, who ran FEMA’s disaster response office in the Obama administration. She added, “It could be very devastating to the financial aspects of what the federal government has.”
The two hurricanes raise concerns about whether “FEMA and the federal government has money to respond to any disaster that comes up that they need to provide life-sustaining support in,” added Zimmerman, a senior executive adviser at IEM disaster consultants.
Mayorkas has said FEMA’s disaster fund could run out of money next month, leaving it unable to pay for rebuilding public buildings, roads and facilities such as water-treatment plants, all of which are essential to restoring normalcy. The agency’s flood insurance program, which has nearly 2 million policies in the areas hit by Helene or threatened by Milton, may also run out of money to pay claims and be forced to borrow from federal taxpayers, according to credit-ratings agency AM Best.
And the Small Business Administration “will run out of funding in a few weeks” to provide homeowners and businesses low-interest disaster loans for repair and rebuilding, Biden warned Friday in a letter to Congress.
Even a small disaster program run by the Federal Highway Administration is facing a budget shortfall that could limit its ability to rebuild federal roads damaged by Helene or Milton.
The SBA’s disaster-loan program provided $45 billion in disaster loans — mostly to homeowners — from 2001 through 2022. If the SBA were unable to provide the loans after Helene and Milton, that would be a huge setback on recovery and would further drain the FEMA disaster fund by prompting households to collect from FEMA’s emergency aid.
Biden compounded the strain on FEMA when he agreed in recent days to pay the entire cost of debris removal and emergency measures after Helene instead of the customary 75 percent of costs. Normally, states would have paid the other 25 percent.
FEMA also faces immediate concerns about saving lives in hurricane-hit areas. The agency’s Daily Operations Briefing published Monday morning shows that its Urban Search and Rescue operations are “not mission capable” and have only four teams available.
More than 200 counties encompassing 31 million people in six states have been declared federal disasters or emergencies due to Helene or Milton. Helene has killed at least 230 people after it deluged much of Florida’s Gulf Coast, crashed ashore in the state’s Big Bend area and left a trail of flooding and wreckage across states including Georgia, North Carolina and Tennessee.
Milton poses an even more potentially dire scenario, as its path threatens to make a direct strike on Tampa Bay, one of the nation’s most vulnerable communities for storm surge. The region of more than 3 million people hasn’t suffered a major hurricane strike since 1921, and regional planners have warned that such a disaster could inflict hundreds of billions of dollars in losses.
“This is not a good situation,” National Weather Service Director Ken Graham said of Hurricane Milton’s potential devastation when it makes landfall Wednesday.
The recent warnings by Biden, Mayorkas and experts about disaster funding contrast with the optimism of financial projections made before Milton took aim at Florida’s Gulf Coast.
At a press briefing Monday, a senior FEMA official sought to assure the public about the agency’s immediate capabilities without directly answering questions about the agency’s ability to pay for long-term recovery.
“We are supporting the life-saving requirements that we have,” FEMA acting Associate Administrator for Response and Recovery Keith Turi said, referring to Helene and Milton. “If there’s a point in which we need to take additional measures, … then we’ll take those measures when the time is appropriate.”
Turi added that FEMA was moving three search-and-rescue teams from California to the Southeast and is getting help from the Coast Guard.
The condition of the federal disaster programs is putting pressure on Congress to end its election-season recess early and approve additional disaster aid.
On Sunday, Johnson reiterated his refusal to convene the House ahead of its Nov. 12 scheduled return. “We will help people in these disaster-prone areas,” Johnson told Fox News. “It’ll all happen in due time.”
A triple fiscal crunch
The three main federal disaster programs have faced budgetary problems previously. But it’s never happened all at once.
The current strains are the result of long-standing weaknesses in the programs colliding with the increasing damage from disasters due to climate change and development.
“The frequency and intensity of disasters continue to increase every year, and the number of federal disaster declarations continues to rise in parallel,” said Carrie Speranza, president of the International Association of Emergency Managers.
Carlos Martín, director of the Remodeling Futures program at the Harvard Joint Center for Housing Studies, said the FEMA is now facing problems paying not just long-term disaster rebuilding expenses but also short-term emergency costs.
“When you’re questioning that, and that becomes a question of whether the federal government will play the role that it has over the last 50 years, that’s a huge concern,” Martín said.
FEMA’s multibillion-dollar Disaster Relief Fund faced problems in early August when it ran low, and the agency imposed restrictions that led it to temporarily cut off $9 billion for rebuilding projects.
Although FEMA lifted the restrictions Oct. 1 when Congress allocated $20 billion for the current fiscal year, the agency could burn through that money quickly and be forced to reimpose the restrictions if lawmakers do not provide extra money in the coming months.
Mayorkas warned last week that FEMA “does not have the funds to make it through the [hurricane] season,” which ends Nov. 30.
White House press secretary Karine Jean-Pierre echoed a similar theme Monday, saying: “The FEMA disaster relief fund faces a shortfall at the end of the year.”
“The recovery from this is going to be very costly,” said Zimmerman, the former FEMA official. “These response efforts are very costly with all this search-and-rescue.”
FEMA’s National Flood Insurance Program, or NFIP, could run out of money because of weaknesses when Congress created the program in 1968 and did not require insurance premiums to reflect a property’s potential for flood damage. The inadequate premiums forced FEMA to borrow $20.5 billion from the U.S. Treasury after Hurricanes Harvey, Irma and Maria in 2017.
FEMA has paid billions of dollars in interest on the debt, which it says it cannot repay. That has left FEMA able to borrow only an additional $10 billion to pay insurance claims.
“I don’t think the NFIP needs to dig into its borrowing authority for Helene,” said Sridhar Manyem, senior director of industry research at AM Best credit ratings agency. “But Milton is another story. That could be a game-changer.”
Hurricane Milton “could exhaust the NFIP and require the government to have to provide more funding for payments to be made to NFIP policyholders,” AM Best Associate Director David Blades said.
FEMA said it has the ability to pay $14.8 billion in NFIP claims “without seeking additional assistance from Congress.”
The only disaster to exceed that level is Hurricane Katrina, which resulted in claims payments exceeding $16 billion while killing more than 1,300 people in New Orleans and elsewhere. Like Katrina, Milton surged to Category 5 fury over the warm waters of the Gulf of Mexico, and it is expected to remain dangerous even as its winds slacken somewhat before striking land.
Jeremy Porter, head of climate implications research at the climate risk modeling firm First Street, offered a more optimistic take: Helene and Milton “are not likely to exhaust NFIP’s borrowing authority,” he said, in part because few residents have national flood insurance policies in the hard-hit areas of Georgia and North Carolina.
Anne C. Mulkern and Mike Lee contributed to this report.
