FEMA Spent Nearly Half Its Disaster Budget in Just 8 Days with Hurricane Helene

FEMA Spent Nearly Half Its Disaster Budget in Just 8 Days

By Thomas Frank, Anne C. Mulkern & E&E News

CLIMATEWIRE | Eight days into the fiscal year, the federal government has spent nearly half the disaster relief that Congress has allocated for the next 12 months.

The rapid spending — which is likely to accelerate as aid flows to states pulverized by Hurricanes Helene and Milton — soon will force the Federal Emergency Management Agency to restrict spending unless Congress approves additional funding.

“I’m going to have to evaluate how quickly we’re burning the remaining dollars in the Disaster Relief Fund,” FEMA Administrator Deanne Criswell said Wednesday during a news briefing, hours before Milton began tearing into Florida’s Gulf Coast and spawning floods, tornadoes and power outages across the state.

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Under the spending restrictions, FEMA would cut off funding for disaster-related rebuilding projects nationwide and reserve its money for life-saving operations during disasters. The cutoff often halts major repairs to roads, sewer plants and water-treatment facilities.

“We keep a reserve in the Disaster Relief Fund to make sure I can always cover these life-saving activities,” Criswell said.

Before Helene and Milton, Criswell had expected to impose restrictions in December or January.

“I’m going to have to assess that every day to see if I can wait that long,” Criswell said.

Criswell disclosed that as of Tuesday, FEMA had spent $9 billion of the $20 billion that Congress put in FEMA’s disaster fund Oct. 1 for the fiscal year that runs through Sept. 30, 2025. It was the first time FEMA has publicly stated how much money it has since Hurricane Helene hit the Southeast two weeks ago.

President Joe Biden has sought additional FEMA funding since last October but Congress has ignored the request.

On Wednesday, a group of House Democrats urged Speaker Mike Johnson (R-La.) to “immediately reconvene” the chamber “so that it can pass robust disaster relief spending.”

The Democrats, led by Rep. Marcy Kaptur of Ohio, said money is needed for both FEMA and a Small Business Administration program that gives low-interest loans to homeowners, renters and businesses whose property was damaged by a disaster.

But Johnson has said that he does not plan to reconvene the House before the election to address disaster funding.

SBA disaster loans have become a vital part of the federal government’s effort to help people rebuild after hurricanes, floods, wildfires and other disasters.

SBA Administrator Isabel Casillas Guzman said that money to operate the program will run out “before the end of October.” If the agency’s funding lapses, it will continue accepting applications but will not process them until program funding is replenished.

The absence of SBA loans will accelerate the drain of FEMA disaster funds by forcing people who could have gotten loans to sign up for FEMA emergency aid of up to $42,000.

The SBA provides loans to homeowners up to $500,000 at a 2.8 percent interest rate to repair or replace homes and property damaged by a disaster. The agency provided $45 billion in loans from 2001 to 2022, according to an E&E News analysis of records.

FEMA has frequently struggled to pay disaster costs and has imposed spending restrictions on 10 occasions since 2003, most recently in early August.

“It makes a considerable difference in overall community financial health and resilience,” said Chad Berginnis, executive director of the Association of State Floodplain Managers. “These longer-term repairs are all but shutting down.”

FEMA typically pays 75 percent of rebuilding costs and leaves the remaining 25 percent to states.

The spending restrictions often are imposed in August as disaster funds run low near the end of a fiscal year and costs rise during the peak of hurricane season.

If FEMA starts restricting spending in December or sooner, as Criswell projected, it would be the earliest time of year that FEMA ever has taken that action. The move could halt rebuilding projects for months.

FEMA most recently imposed the restrictions, called “immediate needs funding,” in early August — temporarily halting $9 billion it had planned to give states for rebuilding projects.

Part of the reason FEMA has spent so much money this fiscal year is that it lifted the spending restriction on Oct. 1, when Congress replenished the disaster fund.

Criswell stopped short of saying Wednesday that FEMA might have to stop performing life-saving operations such as search-and-rescue missions. In September 2023, as FEMA faced a budget shortfall, she told Congress that FEMA’s remaining disaster funding “would be insufficient to cover all of our ongoing life-saving operations.”

FEMA is able to “support all of the needs of everyone that was impacted by Helene and Milton,” Criswell said.

Reporter Andres Picon contributed.

Reprinted from E&E News with permission from POLITICO, LLC. Copyright 2024. E&E News provides essential news for energy and environment professionals.