Another 'deductible' may be on the horizon

Comments on FEMA's disaster deductible concept are due March 21.

Another ‘deductible’ may be on the horizon

 FEMA is considering the establishment of a “disaster deductible,” which would require that recipients of FEMA Public Assistance (typically states with counties as sub-recipients) meet a predetermined level of financial or other commitment before receiving federal disaster funds. FEMA made the announcement in an advanced notice of proposed rulemaking (ANPRM) released Jan. 20.

FEMA is not formally proposing the implementation of a deductible, but the agency is soliciting comments on the deductible concept. These comments are due by March 21.

In the notice, FEMA writes that under a disaster deductible framework, states could meet the deductible requirement not just through their post-disaster spending, but also through investments in certain resilience and mitigation projects, like “prior adoption of a building code that reduces risk; adoption of proactive fiscal planning such as establishing a disaster relief fund or a self-insurance fund; or investment in programs of assistance available when there is not a federal declaration.”

The deductible concept is being put forth by FEMA in response to recommendations from the Government Accountability Office (GAO) and the Department of Homeland Security’s Office of Inspector General that the federal disaster declaration threshold – the level of fiscal damage caused by a disaster at which the federal government provides funding to states – be raised to reduce federal spending on disasters. According to FEMA, the deductible proposal would be one way to address the concerns of GAO and the inspector general without raising the disaster threshold.

Ultimately, FEMA believes that a deductible could result in more effective use of taxpayer resources, incentivize proactive fiscal planning for disasters and encourage the set-aside of funds for disaster response and recovery.

NACo is working with its members and partner organizations to assess the potential impact of a “disaster deductible” on counties, and plans to submit comments to FEMA.