By Craig Gallagher
As I have previously mentioned, FEMA is in big trouble financially and with the recent flooding in Louisiana, that trouble just got a whole lot worse. After Katrina and Sandy, FEMA the administer of the National Flood Insurance Program (NFIP), has found itself billions of dollars short of what it has required to assist those impacted by natural disasters.
As recently shared, the flood insurance program was originally intended to be self-sustaining — funded through policyholder premiums, not taxpayer dollars — and for much of its history, it was.
But the catastrophic hurricanes Katrina in 2005 and Sandy in 2012 caused so much damage that the program could not pay for it all. After Hurricane Katrina, Congress increased FEMA’s borrowing authority from $2 billion to more than $20 billion. They increased it again, to $30 billion, after Hurricane Sandy. The program’s debt to the U.S. Treasury is now $24 billion.
The challenge is that those that are not living in flood prone areas, are not pleased to see their tax dollars being used to reconstruct homes for those who have chosen to live in flood zones. Simply put, folks living in Nebraska do not like their tax dollars being used to subsidize flood insurance for those living in areas such as coastal Florida or the Jersey Shore.
Conceptually the government agrees with them. The NFIP – National Flood Insurance Program, is designed to be funded by the yearly premiums collected not tax dollars. The problem is with a debt of 24 Billion, and annual premiums collected of less than 3.5 Billion, the current path FEMA is on is a straight up recipe for disaster.
Stay tuned to review how FEMA can remain solvent and how it may affect you if you are required to carry flood insurance.
Craig Gallagher, President of GFH CONSTRUCTION, is a recognized industry leader in true turn key house lifting with over 25 years of FEMA construction experience. Contact GFH Construction today at WWW.GFHCONSTRUCTION.COM or call 732 703 7580.