FEMA Faces Potential Funding Shortfall  

By: The LSN Partners on July 14, 2023

There is growing pressure on Congress to pass a supplemental spending bill, as the Federal Emergency Management Agency (FEMA) estimates that its disaster relief fund could run out of money by August, coinciding with the recess of both chambers. The latest estimate from FEMA predicts that the fund will be depleted in August 2023 and will have a deficit of $8.5 billion by the end of September 2023. While the fund could receive $20 billion in October through a CR “anomaly,” severe recent weather may require that funding much sooner.


Lawmakers from Florida have introduced emergency spending bills in both the Senate (S 2029) and the House (HR 4295) to replenish the disaster relief funding. However, urgent action may be necessary after extreme flooding in Vermont and upstate New York this month. Senator Peter Welch of Vermont emphasized the need for federal funding to aid in relief efforts as President Joe Biden declared a state of emergency in the state.


The August shortfall in FEMA’s monthly report has been reduced by approximately $2 billion compared to the previous estimate, resulting in a more manageable combined gap of $133 million in the “major declarations” and “base” disaster aid accounts. However, recent calamities and new disaster declarations have likely impacted these figures.


The passage of a supplemental spending bill would enable Congress to spend monies exceeding the spending caps. Republican senators have advocated for additional defense spending beyond the cap, which allows for a 3 percent increase in funding next year. Conversely, House Republicans, including Speaker Kevin McCarthy, have expressed their preference for adhering to the negotiated caps or, in some cases, lowering them if possible.


When asked about the situation in a hearing this week, FEMA Administrators stated they are monitoring it closely in tandem with the White House and doing what they can to keep it under control. As always, the LSN Partners’ team will keep you updated on the latest developments regarding FEMA’s Disaster Relief Fund.