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S. HRG. 113–649 

TAX RELIEF AFTER A DISASTER: 

HOW INDIVIDUALS, SMALL BUSINESSES, 

AND COMMUNITIES RECOVER 

HEARING 

BEFORE THE

SUBCOMMITTEE ON TAXATION AND IRS OVERSIGHT 

OF THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

NOVEMBER 18, 2014 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

RON WYDEN, Oregon, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

SHERROD BROWN, Ohio 

MICHAEL F. BENNET, Colorado 

ROBERT P. CASEY, Jr., Pennsylvania 

MARK R. WARNER, Virginia 

ORRIN G. HATCH, Utah 

CHUCK GRASSLEY, Iowa 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

ROB PORTMAN, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

JOSHUA SHEINKMAN, Staff Director 

CHRIS CAMPBELL, Republican Staff Director 

SUBCOMMITTEE ON TAXATION AND IRS OVERSIGHT

ROBERT P. CASEY, Jr., Pennsylvania, Chairman 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

MICHAEL F. BENNET, Colorado 

MARK R. WARNER, Virginia 

MICHAEL B. ENZI, Wyoming 

ORRIN G. HATCH, Utah 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

JOHN CORNYN, Texas 

JOHN THUNE, South Dakota 

PATRICK J. TOOMEY, Pennsylvania 

(II) 

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Casey, Hon. Robert P., Jr., a U.S. Senator from Pennsylvania, chairman, 

Subcommittee on Taxation and IRS Oversight, Committee on Finance ......... 1 

Enzi, Hon. Michael B., a U.S. Senator from Wyoming ......................................... 2 

Schumer, Hon. Charles E., a U.S. Senator from New York ................................. 4 

Bennet, Hon. Michael F., a U.S. Senator from Colorado ...................................... 6 

Roberts, Hon. Pat, a U.S. Senator from Kansas ................................................... 7 

Menendez, Hon. Robert, a U.S. Senator from New Jersey ................................... 8 

WITNESSES 

Berke, Hon. Andy, Mayor, Chattanooga, TN ......................................................... 10 

Loughery, Hon. Robert G., Chairman, Bucks County Board of Commissioners, 

Doylestown, PA .................................................................................................... 11 

Ignizio, Hon. Vincent M., Council Member (District 51), New York city council, New York, NY ................................................................................................ 13 

Cronin, Sean T., executive director, St. Vrain and Left Hand Water Conservancy District, Longmont, CO ............................................................................. 15 

Ellis, Steve, vice president, Taxpayers for Common Sense, Washington, DC .... 16 

Lewis, Troy K., chair, Tax Executive Committee, American Institute of Certified Public Accountants, Draper, UT ............................................................... 18 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Bennet, Hon. Michael F.: 

Opening statement ........................................................................................... 6 

Berke, Hon. Andy: 

Testimony .......................................................................................................... 10 

Prepared statement .......................................................................................... 31 

Casey, Hon. Robert P., Jr.: 

Opening statement ........................................................................................... 1 

Prepared statement .......................................................................................... 35 

Cronin, Sean T.: 

Testimony .......................................................................................................... 15 

Prepared statement .......................................................................................... 36 

Ellis, Steve: 

Testimony .......................................................................................................... 16 

Prepared statement .......................................................................................... 40 

Enzi, Hon. Michael B.: 

Opening statement ........................................................................................... 2 

Prepared statement .......................................................................................... 44 

Ignizio, Hon. Vincent M.: 

Testimony .......................................................................................................... 13 

Prepared statement .......................................................................................... 46 

Lewis, Troy K.: 

Testimony .......................................................................................................... 18 

Prepared statement .......................................................................................... 50 

Loughery, Hon. Robert G.: 

Testimony .......................................................................................................... 11 

Prepared statement .......................................................................................... 61 

Menendez, Hon. Robert: 

Opening statement ........................................................................................... 8 

Roberts, Hon. Pat: 

Opening statement ........................................................................................... 7 

Page

IV 

Schumer, Hon. Charles E.: 

Opening statement ........................................................................................... 4 

COMMUNICATIONS

Enterprise Community Partners ............................................................................ 65 

Housing Action NH .................................................................................................. 68 

(1) 

TAX RELIEF AFTER A DISASTER: 

HOW INDIVIDUALS, SMALL BUSINESSES, 

AND COMMUNITIES RECOVER 

TUESDAY, NOVEMBER 18, 2014 

U.S. SENATE, 

SUBCOMMITTEE ON TAXATION AND IRS OVERSIGHT, 

COMMITTEE ON FINANCE, 

Washington, DC. 

The hearing was convened, pursuant to notice, at 2:30 p.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Robert P. 

Casey, Jr. (chairman of the subcommittee) presiding. 

Present: Senators Schumer, Menendez, Bennet, Enzi, Roberts, 

and Thune. 

Also present: Democratic Staff: Jennifer McCloskey, Staff Director for the Taxation and IRS Oversight Subcommittee. Republican 

Staff: Bart Massey, Minority Staff Director for the Taxation and 

IRS Oversight Subcommittee. 

OPENING STATEMENT OF HON. ROBERT P. CASEY, JR., A U.S. 

SENATOR FROM PENNSYLVANIA, CHAIRMAN, SUBCOMMITTEE ON TAXATION AND IRS OVERSIGHT, COMMITTEE ON FINANCE 

Senator CASEY. Well, good afternoon. The hearing will come to 

order. This afternoon we convene the Senate Finance Subcommittee on Taxation and IRS Oversight to discuss an important topic: 

how the tax code can help areas recover and rebuild after major 

disasters. 

I want to thank Chairman Wyden and Ranking Member Hatch 

for the opportunity to hold this hearing, and our subcommittee 

ranking member, Senator Enzi, who is sitting next to me up here. 

We are grateful he is with us. We have Senator Roberts and Senator Menendez. We will be joined by other Senators shortly. I also 

want to acknowledge Senator Schumer—who should be here 

later—for his leadership on this issue by way of legislation. 

We know that natural disasters such as floods, hurricanes, and 

tornadoes can have a devastating impact on communities. We will 

hear a lot about that today from our witnesses. 

I know that in Pennsylvania we have seen firsthand the tremendous impact, the horrific impact is probably a better way to say it, 

that flooding has had on our Commonwealth. In 2011, Hurricane 

Irene followed by Tropical Storm Lee caused the worst flooding in 

Pennsylvania in 40 years, since Hurricane Agnes in 1972. In 2012, 

2 

of course, Hurricane Sandy caused even further and severe flooding 

across the State. 

In the aftermath of these storms, I visited communities across 

our State and witnessed firsthand the impact of the devastation: 

flooded homes and businesses and severely damaged infrastructure. Overwhelmed local governments were the norm after those 

storms. To add on a personal note, I remember talking to a friend 

of mine, a lawyer in northeastern Pennsylvania, who was one of 

those confident tough guys, never in a bad mood, never down, a 

very strong person. I had never seen him in a vulnerable position. 

Because of what happened in the flooding, when his house was devastated and his family was adversely impacted, I walked up to say 

‘‘hello’’ to him and to try to encourage him, and he just collapsed 

in emotion. That is the kind of impact it had. 

Everywhere you would go—I know other Senators saw this—you 

would not even have to hear from the person; you could see it in 

their eyes, what happened to them. So, in addition to the physical 

devastation, the impact this had on people’s lives in a very personal and substantial way will remain with us for a long, long 

time. I had never, ever seen that in my life up to that point, how 

horrific a natural disaster can be for an individual. 

The Federal Government, fortunately, has a number of tools to 

help these communities in need. Today we are here to discuss one 

such tool: tax relief. While there are several permanent provisions 

in the code to assist in these situations, the reality is that we take 

a one-off approach in response to natural disasters. 

For example, taxpayers were provided free housing in the aftermath of Hurricane Katrina and the Midwest tornadoes of 2007. 

They received additional tax exemptions for each victim they 

housed, but no similar relief was offered to those who housed victims of Hurricanes Sandy and Irene. Similarly, families affected by 

the Gulf Coast hurricanes in 2005 and Midwest storms in 2007 

were eligible for additional tax credits for educational expenses, but 

victims of other major disasters, such as flooding in Pennsylvania 

in 2011 and 2012, did not receive comparable assistance. 

This lack of consistency in our response is troubling. The Federal 

Government should have a fair and equitable approach. Today’s 

hearing will offer us a much-needed opportunity to examine these 

policies. I look forward to taking a closer look at various types of 

relief, the benefits and drawbacks of temporary and permanent relief provisions, and ways we can improve the Internal Revenue 

Code on these issues. 

Natural disasters can happen to any community. It is important 

that the Federal Government stand ready to help all communities 

rebuild from natural disasters. 

[The prepared statement of Senator Casey appears in the appendix.] 

Senator CASEY. At this time, I will yield to our ranking member, 

Senator Enzi. 

OPENING STATEMENT OF HON. MICHAEL B. ENZI, 

A U.S. SENATOR FROM WYOMING 

Senator ENZI. Thank you, Mr. Chairman, and thank you for holding this important hearing on how we can best help and support 

3 

the efforts of small businesses, communities, and affected citizens 

to recover from disasters, primarily focusing on tax relief after the 

disaster. 

For my part as a former Mayor and member of the State legislature and as an accountant, I well recall the challenges my hometown and surrounding communities had to face to recover from a 

variety of disasters. We needed to call on all of the resources we 

had available to bring our cities and towns back from those tragic 

experiences. 

I mention that because I have always believed that responses to 

disasters should be guided and directed by those closest to the folks 

back home: their elected officials on the local and State level. They 

are the ones who know best how to respond to a disaster in a way 

that is both supportive of those affected and mindful of our limited 

financial resources. 

Yes, I mentioned costs. It is a concept we need to keep in mind 

during our discussions. A sound response requires that we balance, 

on the one hand, our limited government resources with the needs 

of the communities on the other. We strive to preserve this equilibrium to make sure that the government, over time, can respond 

equitably to those who have suffered losses now, or will in the future, in a sustainable pattern. 

We have all seen the faces of those who are in the midst of working to cope with a disaster. Heartbreaking as it is, we must not 

lose sight of the fact that, when we provide Federal tax relief for 

one affected region, all of the Nation’s taxpayers ultimately help to 

pay for it. As a grandfather, it continues to concern me that my 

grandchildren might not have it as good as we have. 

When the time comes for them to take their place as leaders of 

our country, my fear is that they will find themselves faced with 

a major disaster of their own. What will they find when they have 

to look at our rainy day fund? If we are not careful, there will be 

nothing in it but stacks of IOUs. Clearly we cannot allow that to 

happen. 

That is why we need to use the financial aid we have in a very 

careful and judicious manner. We can no longer afford to spend 

more money than we have without a clear plan of action and an 

even clearer strategy to pay for our relief efforts. With that in 

mind, we should be certain that whatever tax changes for specific 

communities we consider should be based on three principles. First, 

the corresponding tax benefits should go to those who need them. 

Two, they should likely exist for a limited period of time. Three, 

they should come with standards of accountability so we can both 

track our expenses and monitor how they are being used, to evaluate their effectiveness. 

We need to ensure that whatever help we provide does not evolve 

into a long-term subsidy that will be around long after the community has recovered from the emergency. We just do not have the 

funds necessary to make long-term or permanent commitments in 

response to emergency, short-term needs. 

Back in 2008, Senator Max Baucus and I worked out a bipartisan agreement to have the Federal Government on course to be 

better prepared for weather-related disasters that hit our Nation’s 

agriculture communities. Our agreement was designed to ensure 

4 

the money would be in the hands of those affected by these disasters in a timely manner, which is why we placed this new program 

under the administration of the Agricultural Disaster Relief Trust 

Fund. 

Congress reauthorized the program earlier this year. The reauthorization process is important because it gives us an opportunity 

to reevaluate the program’s operation to ensure it is working as intended. Let us be sure, whether we are granting relief through the 

tax code, making an appropriation, or working on an assistance 

program, that the money we provide goes right into the hands of 

those who need it the most: the businesses and individuals who 

really need our help. 

We must also work in concert with the affected States to ensure 

they are getting what they need—no more, no less. There must also 

be a plan in place to pay for it that will make these programs as 

budget-neutral as possible. 

Thank you, Mr. Chairman, once again, for holding this hearing. 

I am looking forward to the testimony we will receive today that 

will help guide our efforts and provide us with a framework for our 

future work on this issue. 

Senator CASEY. Senator Enzi, thank you very much. 

[The prepared statement of Senator Enzi appears in the appendix.] 

Senator CASEY. We are going to be doing introductions, and I will 

jump ahead a bit and turn to Senator Schumer for an introduction. 

OPENING STATEMENT OF HON. CHARLES E. SCHUMER, 

A U.S. SENATOR FROM NEW YORK 

Senator SCHUMER. Well, thank you, and I appreciate the committee members. I want to thank you, Senator Casey and Senator 

Enzi, for organizing the hearing. I want to express my appreciation 

to Chairman Wyden for his interest in pursuing a package of permanent tax policy to help taxpayers facing the challenges associated with natural disasters like hurricane Sandy. I am hopeful that 

Senator Hatch will keep this issue on his agenda in the new year. 

It is my pleasure to introduce one of our witnesses, a good friend 

of mine, a fellow elected official from New York City, Councilman 

Vincent Ignizio. I call him Vincenzo, but we won’t do that here. 

Councilman Ignizio was first elected to the New York city council 

in 2007. He now serves as the council’s minority leader. Prior to 

serving on the city council, he was a member of the New York 

State Assembly, serving the South Shore of the great borough of 

Staten Island. 

He has passed a record number of bills for a South Shore council 

member. He helped expand bus and train service in the area, 

cleaned up brownfields, and secured funding for autism treatment 

and research. 

But most importantly for our discussion here today, Mr. Chairman and my colleagues, he has played a vital role in helping New 

York rebuild after the devastation of Sandy. In the aftermath of 

the storm, many New York City property owners who rebuilt or repaired their homes faced an increase in property tax bills because 

the repairs boosted their home’s value. The Councilman successVerDate Mar 15 2010 15:57 Jun 19, 2015 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 R:\DOCS\94658.000 TIMD
5 

fully led efforts to ensure that those forced to repair their homes 

after Sandy were not hit with a property tax hike. 

This tax abatement was absolutely critical to many families still 

trying to get back on their feet—who could otherwise be priced out 

of their own homes by doing simply what we hoped they all would 

do: rebuild. The policy change is going to make a difference. 

But of course, there is much more to be done. Councilman, as we 

both know, 2 years after Sandy’s devastation, many communities 

in New York, the resilient, are still living with the aftermath of the 

storm. Homeowners and businesses continue to rebuild and recover. 

The Councilman and I are partnering to rebuild a seawall that 

helped to protect the Atlantic Village that was destroyed in the 

storm. Working together, we secured $60 million in HUD funding 

to build an offshore breakwater and living shoreline along the 

South Shore of Staten Island, and we will make sure that the 

project is built as soon as possible to provide storm mitigation for 

thousands of Staten Island residents. 

Although the Federal and State Governments continue to provide 

this vital relief, many businesses and homeowners have taken on 

substantial debts of their own to rebuild, plan for the future, and 

protect against future storms. While homes on Staten Island are no 

longer literally underwater, many families remain financially underwater. 

So it is imperative that we provide tax relief for these families, 

similar to what has been provided for those impacted by past 

storms like Katrina and the 2008 floods in Iowa. I look forward to 

working with my colleagues in this committee to secure it. 

Vincenzo, Councilman, I appreciate that you are taking the time 

to be with us. The Councilman is a Republican. I am a Democrat. 

We have worked very closely together over the years, and I hope 

that can be a metaphor for the new Congress on this bill and on 

many other things that we want to do to help our constituents. 

Thank you, Mr. Chairman. I thank my colleagues for letting me 

introduce Councilman Ignizio. 

Senator CASEY. Thank you, Senator Schumer. I will do a few introductions. I will turn to Senator Bennet to do an introduction as 

well. 

The first witness, Mayor Andy Berke of Chattanooga TN, was 

first elected Mayor of Chattanooga in March 2013—I hope I have 

that right—after serving in the State Senate of Tennessee for almost 6 years. He was born and raised in Chattanooga. Mayor 

Berke has shed light on the impact of natural disasters on local 

municipalities, and we are grateful that you are here. I do not 

know if you get the prize for traveling the furthest, but we are 

grateful for that. 

Next, I would like to introduce a Pennsylvanian, Chairman of the 

County Commissioners of Bucks County, Robert Loughery. Bucks 

County is one of our major counties in Pennsylvania, one of the 

largest population centers in our State in southeastern Pennsylvania and suburban Philadelphia. The Chairman was first elected 

to the board of Bucks County Commissioners in 2011, and was 

unanimously named Chairman in 2012, 2013, and 2014. That is 

not easy to do. He also brings to the panel substantial privateVerDate Mar 15 2010 15:57 Jun 19, 2015 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 R:\DOCS\94658.000 TIMD
6 

sector as well as public-sector experience in economic development. 

So, Mr. Chairman—I told you I would call you that today—we are 

grateful you are here. Thanks for appearing. 

Next we will turn to Senator Bennet for an introduction. 

OPENING STATEMENT OF HON. MICHAEL F. BENNET, 

A U.S. SENATOR FROM COLORADO 

Senator BENNET. Thank you, Mr. Chairman. I have a chance to 

introduce a great Coloradan. I want to thank you for holding this 

hearing. 

We all know that natural disasters can be completely devastating 

to communities. We faced that in Colorado last fall when our State 

saw catastrophic flooding following record rainfall. 

In September 2013, communities across Colorado received more 

rain in 1 week than normally falls in an entire year. The rainfall 

caused widespread flooding across a large area from Colorado 

Springs all the way up to Fort Collins. Ten lives were tragically 

lost, and 11,000 people were evacuated from their homes. 

In the end, more than 1,500 homes and 200 commercial buildings 

were destroyed. Infrastructure all across the region, including roadways, irrigation ditches, and water reservoirs, was also severely 

damaged. In total, the devastating floods caused upwards of $3 billion in damage for Colorado. 

Sean Cronin, whom we are lucky to have with us today, is the 

executive director of Colorado’s St. Vrain and Left Hand Water 

Conservancy District. He saw this damage firsthand, because the 

St. Vrain River and Left Hand Creek drain in the front range of 

the Rocky Mountains near Longmont in Boulder. 

During these floods, these rivers abandoned their channels, destroying their landscapes and any infrastructure that stood in the 

way. Sean witnessed this devastation, and he has been on the front 

lines helping communities ever since. 

For his flood recovery efforts, he recently received the Colorado 

Foundation for Water Education’s Emerging Leader award. So, Mr. 

Chairman, I am very proud to welcome Mr. Cronin here to the committee and to thank you again for holding today’s hearing. 

Senator CASEY. Senator Bennet, thank you very much. Two more 

introductions, then we will turn to Senator Roberts, and then we 

will have our testimony. 

Next we have Steve Ellis, who is vice president of Taxpayers for 

Common Sense, by the acronym TCS. Mr. Ellis serves as a leading 

media and legislative spokesman for TCS. In addition to overseeing 

several of the organization’s programs, he is an expert in several 

fields including earmarks, flood insurance, and Federal disaster assistance programs. Prior to joining TCS in 1999, he served as an 

officer in the U.S. Coast Guard and received both the Coast Guard 

Commendation Medal and the Coast Guard Achievement Medal. 

So, we are grateful you are here, Mr. Ellis. Thanks very much. 

Finally, we have Troy Lewis. Troy is chairman of the Tax Executive Committee at the American Institute of Certified Public Accountants, known as AICPA. Like our ranking member, Senator 

Hatch, Mr. Lewis is a resident of Utah, owning a small accounting 

firm in Draper, UT and serving as vice president at Heritage Bank, 

a community bank in St. George, UT. Mr. Lewis has testified beVerDate Mar 15 2010 15:57 Jun 19, 2015 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 R:\DOCS\94658.000 TIMD
7 

fore the Finance Committee previously and brings over 20 years’ 

experience in performing tax-related work for small businesses and 

individuals. Thank you for being here. 

Senator Roberts? 

OPENING STATEMENT OF HON. PAT ROBERTS, 

A U.S. SENATOR FROM KANSAS 

Senator ROBERTS. Well, thank you, Mr. Chairman, for your leadership in holding this very timely committee meeting, and thanks 

to Senator Enzi and all concerned. And thank you to the witnesses 

for taking time out of your valuable schedule to be here. 

I just wanted to take a moment to reflect on the critical importance of tax relief and assistance available to cities and towns that 

have been hit by natural disasters. At 9:45 p.m., May 4, 2007, an 

EF5 tornado, the highest level on the standard meteorological 

scale—it was a different kind of tornado; it was a wedge tornado, 

not a funnel tornado—plowed through the city of Greensburg, KS. 

It killed 12 people and destroyed and damaged more than 95 percent of the city’s structures, most vehicles, and the electricity infrastructure. 

Most residents were displaced from their homes and businesses. 

All city and county services including the schools, city hall, hospital, and courthouse were absolutely destroyed. Greensburg was 

literally wiped off the map. 

In the immediate aftermath, I called President Bush. He was at 

Camp David. I told him he needed to get FEMA out to Greensburg 

right away. He informed me that that request had to come from 

the Governor. I told him the Governor was at a jazz concert in Louisiana. He said, ‘‘Raise your right hand’’—by phone, which I did— 

and he said, ‘‘Please take the following oath as Governor of Kansas 

for only 5 minutes,’’ which I did. And he said, ‘‘You have FEMA 

coming.’’ 

The response of the State, local, and Federal Governments was 

simply tremendous. We were quickly able to safeguard residents 

and secure property and begin the hard task of rebuilding. Soon 

after, I began working with my colleagues on the Finance Committee to secure tax relief that would enable Greensburg to rise 

from the dust and also to rebuild. The tax relief initiative we developed emulated the Gulf Opportunity Zone benefits provided to the 

Gulf Coast area after Hurricane Katrina—in many cases, quite literally, substituting the language in the GO Zone legislation. 

Among the measures in this package were changes to the casualty loss rules, incentives to hire and retain employees, depreciation changes to help offset rebuilding costs, and enhanced bonding 

authority to allow the local government to quickly restore its 

schools and its infrastructure. We were able to get tax relief enacted by the end of the year. 

Now remember when this happened—at the end of the year. 

That provides a time of uncertainty that I think we have to address 

in this legislation. 

These provisions were important to putting the town back on its 

feet, rebuilding homes and businesses, and helping residents cope 

with the extreme hardship of the total destruction of the town. I 

am proud to say we are building a new Greensburg using the tax 

8 

relief we were able to provide. The town is modernizing and is considered a model for disaster response and also redevelopment. 

Seven years later, Greensburg is the world’s leading community 

in energy-efficient buildings, including the new city hall and the 

new 48,500 square-foot Kiowa County Memorial Hospital. Renewable energy powers the entire community, and the streetlights are 

all LED. The population is growing, and the town is back in business. 

Greensburg is proof that tax relief can help a town rebuild. We 

were fortunate in Kansas to be able to move quickly with a comprehensive aid package, including tax relief. This was a full team 

effort, including my Kansas colleagues here in Washington and the 

support of my Senate colleagues, most especially on this committee. 

Let me say, as I reflect on Greensburg’s rebuilding, it is clear to 

me that we could have provided more immediate help, help that 

would have provided strong comfort and certainty that the Federal 

Government would be there to help Greensburg rebuild. This is 

why it is very important that we think about enacting a menu of 

permanent disaster relief that can be activated at a moment’s notice when an area is hit with a disaster meeting the appropriate 

criteria. 

Having immediate access to relevant tax relief is absolutely vital 

to future disaster response. So, as we discuss tax reform, I encourage the chairman, and I encourage all Senators present, to keep in 

mind the experience of Greensburg and other disaster-stricken 

towns. 

There was an emergency relief area at Barclay College in a very 

small community called Haviland, KS, about 15 miles away. As I 

walked into that relief center, I noticed an elderly gentleman sitting on the edge of his bunk staring into space. He was quite elderly. He was wearing an overcoat. He was wearing the shoes of his 

neighbor—he didn’t know what happened to his neighbor—and no 

socks and his pajamas. 

I put my arm around him and identified myself as Senator Pat 

Roberts, and I said, ‘‘We are going to be of help to you, sir.’’ He 

said, ‘‘No, I have lost my life.’’ But he did not lose his life, and we 

were able to provide help. He did eventually go to assisted living 

in Dodge City, KS, just down the road a piece. But I will never forget him staring off into space, much like the story in the illustration by the chairman. 

It just seems to me that we could have provided a lot more predictability and hope for people to stay the course as opposed to 

moving to other areas—and there were a lot of family experiences 

that way. I hope that we can move on some legislation. 

Thank you, Mr. Chairman. 

Senator CASEY. Senator Roberts, thank you very much. 

Senator Menendez? 

OPENING STATEMENT OF HON. ROBERT MENENDEZ, 

A U.S. SENATOR FROM NEW JERSEY 

Senator MENENDEZ. Thank you, Mr. Chairman. In deference to 

the witnesses, I am going to synthesize, but I do want to speak 

briefly. I have a meeting with the Majority Leader, and I hope to 

9 

be back so I can ask questions and glean the testimony that I have 

read from the conversation that will take place. 

But very briefly, in our case, Superstorm Sandy was New Jersey’s worst natural disaster in its history, and it was the secondmost expensive disaster in our Nation’s history. Today, 2 years 

after the storm, thousands of families are still not back in their 

homes—thousands. 

We talk about the beaches and the boardwalks and all of that— 

which are great and important to our State, important to its economic vitality—but the very essence of community is people in 

their homes. And thousands are not there. And they faced the wind 

and the storm and the surge, but what they are facing now is far 

greater in some respects than the natural disaster that took place. 

They are facing a government that is not sufficiently responsive. 

They are facing a situation where a Federal judge in New York 

found that insurers were purposely changing engineering reports to 

claim no responsibility to pay the insured or to lowball them. In 

fact, since we, the Federal Government under FEMA, are the ones 

who let these underwriters write the insurance policies, we should 

be looking into that. 

And then finally, we have the tax code, which is why I appreciate 

you and the ranking member having this hearing. I just read today 

of a New Jersey resident from Centerville, NJ. She owes the IRS 

$22,000 in taxes on income she never saw. She owes this amount 

because she was flooded three times in 3 years—the last one being 

Sandy. So she accepted a government buyout which was $70,000 

less than she owed on the mortgage. 

While the bank wrote off the debt, she still owes income taxes 

on the $70,000, leaving her with a tax bill she cannot afford because she is on a teacher’s salary. This is someone who did the 

right thing, paid her insurances all along, someone who took the 

action to reduce future flood damage through repetitive loss and 

then got hit with a $22,000 tax bill. So we have to look at that as 

a final provision and as one of the provisions that I think, whether 

permanently or otherwise, needs to be dealt with. 

The final thing I will say is that I voted to give tax relief to similar victims of Hurricane Katrina. I voted for the Midwest flood victims from 2007 and 2009 because I understand what we mean 

when we say this is the ‘‘United States of America.’’ And that is 

what it means to me. 

Now we have a reticence, it seems, to create the same type of relief that we extended to those fellow Americans for the challenges 

we are having on the east coast, and that is simply not acceptable. 

So I hope we can get to the point where we can deal with the emergency that exists with these people who, through no fault of their 

own, find themselves with tax bills that they never realized any 

benefit of, and then seek some permanency so that we do not have 

to do this ad hoc and can respond to people’s lives and get people 

back in their homes. 

I appreciate the opportunity to speak. 

Senator CASEY. Thank you, Senator Menendez, and thanks for 

bringing the witness that each of our Senators brings here from 

their home States and their own experience. That is why this is 

such an important and bipartisan issue. 

10 

I do want to thank our witnesses for being here today. Your written statements will be entered into the record. We appreciate the 

fact that you may not be able to get to your entire testimony in 

your 5 minutes, but we will make sure that each of your full statements is made a part of the record. 

So, Mayor Berke, we will start with you. 

STATEMENT OF HON. ANDY BERKE, 

MAYOR, CHATTANOOGA, TN 

Mayor BERKE. Thank you, Mr. Chairman. Chairman Casey, 

Ranking Member Enzi, members of this committee, I appreciate 

the opportunity to talk with you today about how cities like Chattanooga are affected by natural disasters and how, with greater tax 

relief, they can recover. 

Just after lunchtime on Friday, March 2, 2012, a tornado crashed 

through the Island Cove Marina off of Harrison Bay in Chattanooga. The restaurant at the marina immediately ushered its patrons into the cooler to wait out the storm in a safe place. When 

they emerged, the entire area had been transformed. 

The marina manager, Terry Kelley, first worked to clean up the 

fuel spilling into Chickamauga Lake, and then he paused to survey 

the damage. Snapped trees, sunken boats, and half-submerged 

masts dotted the horizon. Downed power lines draped over the 

debris-strewn parking lot. 

The storm had a tremendous impact on both the boat owners, 

many of whom were retired and a few who called those boats their 

home, and on the marina owners themselves. Seventy percent of 

the 400 slips at the popular Marina were damaged, and it would 

take years to rebuild. 

From just that single tornado, nine docks were destroyed, which 

added to the $5 million of damage to the property alone. Factor in 

the nearly 250 boats damaged or destroyed, and the price tag hits 

$15 million. 

Island Cove was one of many victims that day. In March 2012, 

Tennessee was declared a Federal disaster area after flooding and 

severe storms, including almost 20 tornadoes, ravaged our area and 

impacted the lives of nearly 1,000 citizens. 

The widespread destruction could be witnessed in over 344 distinct locations throughout our State. In our area alone, we saw 

over $16.8 million of property damage and a relief effort that required 997 volunteers who gave a total of 6,617 hours. Dozens of 

families lost their homes, thousands of residents lost power, 82 

buildings were completely destroyed, and businesses faced both 

physical damage and lost earnings. In just a few short hours, people’s lives were changed. 

This level of destruction meant that those who lost the most— 

and that is often our most vulnerable—would face a long and difficult road to recovery. There is one thing that we know very clearly: when a community suffers this kind of damage, the speed at 

which aid is administered directly correlates to the speedwith 

which a community can heal. I have no doubt that by speeding up 

the time in which tax relief is available to families and businesses, 

we will see our communities recover quicker. 

11 

While Island Cove had good insurance, the insurance only covered a fraction of the costs. On top of that, they immediately lost 

revenue and carried that loss for 2 years while struggling to recover. If the National Disaster Tax Relief Act of 2014 would have 

been in place in March 2012, that general manager, Mr. Kelley, believes the 50-percent depreciation bonus provision and the extension of the Net Operating Loss Carryback provision would have 

provided crucial cash flow during those critical recovery years, bolstering their bottom line as they struggled to keep their business 

afloat. 

Through the National Disaster Tax Relief Act of 2014, we can 

help safeguard both our small businesses as well as the most vulnerable among us. This is particularly true for affordable and 

workforce housing. For instance, 8 percent of the homeowners affected in Tennessee during the 2012 storms were low-income. And 

we know, after a disaster, the need for affordable housing is greater than ever. With our rent prices rising, giving us the seventh 

highest rate in the country, Chattanooga simply cannot afford to 

lose any moderately priced units when a disaster strikes. 

Today we have over 1,600 citizens on our wait list for public 

housing, with the problem set to grow even worse. Chattanooga has 

lost 931 public housing units in the last 8 years, with another 900 

units coming off line in the near future. We are one of five cities 

nationwide in a program to expand landlords’ participation in the 

Housing Choice Voucher Program. More than 1,000 Chattanoogans 

are still struggling to find a place to live that will accept their 

HUD housing voucher. 

This is just one snapshot of one moment in one city, but these 

types of disasters happen without warning and without mercy. 

Whether it is the destruction of a home or property, damage to a 

business, or the loss of a life, this body has the opportunity to 

make a real and lasting difference in the recovery effort of a city, 

a State, and a community in their time of greatest need. 

Senator CASEY. Mayor, thank you very much. 

[The prepared statement of Mayor Berke appears in the appendix.] 

Senator CASEY. Commissioner Loughery? 

STATEMENT OF HON. ROBERT G. LOUGHERY, CHAIRMAN, 

BUCKS COUNTY BOARD OF COMMISSIONERS, DOYLESTOWN, 

PA 

Commissioner LOUGHERY. Good afternoon. Thank you. 

Chairman Casey, Ranking Member Enzi, and other members, I 

appreciate the opportunity to discuss the critical subject of how 

communities can best recover after a major natural disaster, and 

I commend your committee for taking up this important topic 

today. 

As you may recall, Hurricane Irene first made landfall on August 

22, 2011, as a Category 1 hurricane in Puerto Rico, where severe 

flooding resulted in significant property damage and loss of lives. 

Five days later, it made a second landfall over the Outer Banks of 

North Carolina with sustained winds remaining at Category 1 

level. Then on August 28th, it reached Philadelphia and the surVerDate Mar 15 2010 15:57 Jun 19, 2015 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 R:\DOCS\94658.000 TIMD
12 

rounding suburbs, where it did substantial damage, raising the 

Schuylkill River to levels not seen in nearly 140 years. 

The region was further battered when, just days later, Tropical 

Storm Lee also struck Pennsylvania with torrential rainstorms and 

severe wind damage. By the time these two storms had blown 

themselves out, Hurricane Irene and Tropical Storm Lee had inflicted much harm along the entire east coast of the United States. 

Of course, we in Bucks are no strangers to weather-related disasters. Since 2007, Bucks County has experienced eight federally declared weather-related disasters, including Hurricane Sandy, Hurricane Irene, and Tropical Storm Lee. 

In each of these events, the Neshaminy Creek, the Delaware 

River, and the Delaware Canal all saw substantial flooding with 

millions of dollars in losses to residents and businesses, with hundreds of thousands of lives disrupted, and the livelihoods of many 

thousands threatened. 

Hurricane Irene, in August of that year, racked up big numbers 

for power outages, with more than 131,000 PECO customers losing 

power in our county, and more than half a million in Philadelphia 

and the surrounding suburbs. Less than a month later, Tropical 

Storm Lee caused more than $2 million in damages to parks, roads, 

bridges, and equipment owned by Bucks County and 17 of our municipalities. Damage to private property was significantly greater. 

Even now, those costs are being borne by the residents and the 

businesses in our county, and further tax relief could prove instrumental in restoring their quality of life and the lives and the viability of their business enterprises. It is my understanding that this 

relief may also include the availability of additional Low-Income 

Housing Tax Credits, which I would also like to encourage you to 

consider. 

The Low-Income Housing Tax Credit program has been and continues to be one of the single most powerful producers of highquality, affordable rental homes. Over the past 2 decades, these tax 

credits have enabled private developers to produce more than 1,100 

new high-quality residences for low-income working households in 

Bucks County alone. Spread over 17 different projects throughout 

our county, our $5-million tax credit allocation has leveraged over 

$15 million in new private investment. 

Without these incentives, the housing market simply does not 

provide an adequate supply of homes within the reach of people of 

modest means. In fact, in Pennsylvania today, as noted by the 

Housing Alliance of Pennsylvania, there is a shortage of 220,000 

apartments affordable to the working poor, those people living on 

$22,000 a year or below. 

In Bucks County, we experience these same challenges as well. 

Seniors, low-wage workers, and people with disabilities face an incredible challenge in finding safe, decent, and affordable housing. 

The lack of good, adequate housing further exacerbates other issues 

and problems that put increasing strains on the services our county 

provides to its residents and additional demands on our taxpayers. 

The challenge is further compounded in our county by the state 

of a significant number of existing public housing units that are 

near the end of their useful life that need comprehensive rehabilitation. Places such as Venice Ashby, located in Bristol Township, 

13 

Bucks County, would benefit from an increased allocation of LowIncome Housing Tax Credits. That would allow our housing authority to replace old and rapidly deteriorating housing stock constructed in the 1970s with new affordable housing, transforming an 

entire neighborhood and surrounding community. 

This is exactly the type of initiative we seek to pursue in Bucks 

County as we tackle affordable housing issues. So, again, thank 

you for the opportunity to share our experiences and our vision 

with you this afternoon, and for your close attention and that of 

your staff to the challenge of addressing this important public policy challenge, as the need for the various relief measures envisioned is very real. 

Recovering from Hurricane Irene and Tropical Storm Lee has 

proved daunting, and they will not be the last. We speak of economic costs today, but storms such as these, the rising waters and 

the fierce winds, not only uproot trees, they uproot lives. They 

wash away not only goods, but hard-fought dreams. You have it 

within your power to lend a hand in rebuilding those lives and 

communities and restoring those dreams. I hope that you take it. 

Thank you. 

Senator CASEY. Thank you, Commissioner. 

[The prepared statement of Commissioner Loughery appears in 

the appendix.] 

Senator CASEY. Councilman? 

STATEMENT OF VINCENT M. IGNIZIO, COUNCIL MEMBER 

(DISTRICT 51), NEW YORK CITY COUNCIL, NEW YORK, NY 

Councilman IGNIZIO. Good afternoon, Chairman Casey, Ranking 

Member Enzi, and members of the subcommittee. My name is Vincent Ignizio. I am the minority leader of the New York city council. 

Thank you for allowing me the opportunity to testify on behalf 

of my constituents in Staten Island and all of New York City’s residents on how Hurricane Sandy affected our communities and how 

we can continue to help them through tax relief and other programs. I want to also give a special thanks to Senator Chuck Schumer, who has been a great partner with my office and all of Staten 

Island’s elected officials, especially as we worked together to help 

our city recover from the worst natural disaster in its history. 

Many of you have been familiar with our borough since Hurricane Sandy wrought destruction on the northeast coast on October 

29th and 30th of 2012. On Staten Island, Sandy’s surge took a particularly devastating toll. Twenty-four people lost their lives, thousands of homes and businesses were severely damaged or destroyed, and, in some cases, entire neighborhoods were taken off 

the map. 

More than 2 years later, residents of my borough and all of New 

York City are still struggling to recover. Even those who have been 

fortunate enough to get back on their feet are filled with angst 

about what a future disaster might bring, or are grappling with the 

prospect that misguided government policies may finish the job 

Sandy started and put them out of their homes. 

Take, for example, Paul DiCristina, who has lived with relatives 

in Brooklyn since the storm destroyed his home and his family’s 

restaurant, the Coral Bay Cafe ́ in Tottenville. Paul desperately 

14 

wants to rebuild, but he has received no assistance from recovery 

programs created to help businesses and homeowners, though it is 

clear he is exactly the type of person that these programs set out 

to help. 

In Atlantic Village, a homeowners association consisting of 152 

homes and more than 350 residents in the Annadale section of 

Staten Island is in dire need of assistance as well. To protect themselves from the water of the Raritan Bay, the association took out 

an SBA loan to fund the construction of a steel-reinforced concrete 

seawall. But the storm surge from Hurricane Sandy ripped the seawall apart as if it were a piece of paper. Many of the homes closest 

to the water were damaged, though it would have been far worse 

had the seawall not been there. 

After cleaning up the debris, the association had no money left 

to rebuild their seawall and cannot afford to take out another loan, 

leaving hundreds of residents in harm’s way. Ironically, they are in 

worse shape than they were prior to Sandy. 

I have been working with Senator Schumer’s office to identify a 

source of funding for Atlantic Village, but I think we both agree it 

should not be so difficult. Federal disaster recovery programs are 

welcome and necessary, but in my 17 years as a public servant, I 

have learned that anything you can do in government to help people help themselves is usually far more effective, more sustainable, 

and absolutely faster. We should provide Federal tax incentives to 

help homeowners associations like Atlantic Village and individual 

homeowners build protections or build to a more resilient standard. 

That type of tax relief would have certainly helped Richard 

White, a city bus driver from Crescent Beach. Rich has been more 

fortunate than many others affected by Sandy. Through his sheer 

determination and resourcefulness, he has been able to rebuild his 

bungalow home. 

He took pension loans, ran up credit card debt, scrimped and 

saved, and applied for every charitable program he could to get together the $70,000 to repair his home back to its pre-Sandy condition. He is still waiting for the city housing recovery program to 

elevate his home to protect him from future flooding. 

Meanwhile, when Rich was finally able to move back to his family home last year, he was struck with another blow when his property tax was increased by over 30 percent. He, like thousands of 

other New York City homeowners, discovered one of the unintended consequences of rebuilding their flooded homes: soaring 

property taxes. 

It is because of Rich and many other constituents who called my 

office, shocked by their property tax bills, that I work with my colleagues in government to fix the problem. But even when we solve 

our post-disaster property tax problems, there is a much greater 

obstacle to a permanent, sustainable recovery in New York that 

cannot be overcome without Federal intervention: the soaring costs 

of flood insurance. 

While I know it is not the purview of this committee, I feel 

strongly that we cannot talk about economic recovery without addressing this crucial problem, which, if not fixed, will price our constituents out of their homes. I believe tax relief should be considered as part of the solution. 

15 

The IRS can help as well by providing tax credits for homeowners who elevate their homes or perform other measures to 

make their homes more resilient, perhaps with something similar 

to the ENERGY STAR rebate program. It can also provide tax incentives for homeowners who are not required to purchase flood insurance or who are purchasing flood insurance for the first time. 

Passage of the National Disaster Tax Relief Act of 2014 would 

be another big step forward in the right direction, as it would provide substantial assistance to my constituents, especially the provisions that would give them the ability to expense qualified disaster 

costs, claim an exclusion from the gross income disaster mitigation 

payments received from State and local governments, and take a 

full Earned Income Tax Credit if their home was damaged by 

Sandy. In fact, I believe the provisions of the National Disaster Tax 

Relief Act should be long-term, or periodically renewable, so that 

the Federal Government can instantly turn on a tax relief package 

for areas declared national disasters. 

Such a package would not only help stimulate a faster recovery, 

but would also provide some certainty for effected individuals and 

businesses during a time of uncertainty and difficulty. I know elected officials on all levels are working hard to make sure Americans 

who have suffered so much from disasters have a government that 

is helping them recover quickly and efficiently, while helping us become more resilient for any future storms that come our way. 

Thank you, again, for listening. 

Senator CASEY. Thank you, Councilman Ignizio. I appreciate 

your testimony. 

[The prepared statement of Councilman Ignizio appears in the 

appendix.] 

Senator CASEY. Mr. Cronin? 

STATEMENT OF SEAN T. CRONIN, EXECUTIVE DIRECTOR, ST. 

VRAIN AND LEFT HAND WATER CONSERVANCY DISTRICT, 

LONGMONT, CO 

Mr. CRONIN. Thank you, Mr. Chairman, Ranking Member Enzi, 

Senator Bennet, and other committee members. I appreciate this 

opportunity to share with you a perspective that relates to just a 

small piece of this bill. 

My name is Sean Cronin. I am the executive director of St. Vrain 

and Left Hand Water Conservancy District. We are located 40 

miles north of Denver, CO. We organized in 1971 and cover about 

320,000 acres, 70,000 acres of which are for irrigated agricultural 

production. 

Irrigation is provided through a collection of water users who incorporated as mutual ditch companies. These ditch companies are 

federally recognized as exempt 501(c)(12) organizations so long as 

85 percent of the revenue is obtained through the water users 

known as shareholders. The 85-percent rule presents challenges to 

maintaining these complex and vast irrigation systems. 

This challenge was worsened following the September 2013 flood, 

when we experienced a one in 1,000 year rain event. It took 10 

lives and caused hundreds of millions of dollars in damages. Within 

my district alone, 44 of the 94 ditch companies suffered damages 

in the flood at approximately $19 million. 

16 

The good news is, farmers do not let grass grow under their feet, 

and they got out there and did the work that needed to be done. 

The repairs were completed, about 95 percent of which are expected to be back on line by the end of this year. The bad news 

is that the costs—at least initially—are borne completely by the 

shareholders, who are farmers and the backbone of our local economy who grow the food that we eat. 

We are expecting some assistance from FEMA and from HUD. In 

those cases, companies are concerned that the FEMA and the HUD 

reimbursement funds will violate the 85-percent rule and possibly 

create a tax liability. Moreover, many companies could creatively finance their repairs without Federal assistance, though in doing so 

could possibly create another tax liability. 

The bill as drafted provides funding options and incentivizes 

these ditch companies to reinvest into irrigation infrastructure, the 

same infrastructure that is critical to the agricultural industry, 

local economy, and our quality of life. 

In closing, in the opinion of the district and its agricultural constituents, this bill will have a positive impact on the September 

2013 flood recovery, will strengthen our communities, and will 

make further investments in critical infrastructure to maintain agricultural economies. This is one of our country’s most recent natural disasters, and this is really an opportunity to put into action 

a bill that addresses the needs now and will prevent some of the 

hindsight stories that we heard today. Thank you for the opportunity. 

Senator CASEY. Thanks, Mr. Cronin. You get extra credit for not 

using your whole allotted time. [Laughter.] 

[The prepared statement of Mr. Cronin appears in the appendix.] 

Senator CASEY. Mr. Ellis? 

STATEMENT OF STEVE ELLIS, VICE PRESIDENT, 

TAXPAYERS FOR COMMON SENSE, WASHINGTON, DC 

Mr. ELLIS. Thank you. Good afternoon, Chairman Casey, Ranking Member Enzi, and members of the subcommittee. I am Steve 

Ellis, vice president of Taxpayers for Common Sense, a national 

nonpartisan budget watchdog. 

I am very pleased you invited me here today. TCS has been involved in national disaster policy since our inception nearly 20 

years ago. I have been engaged in this issue since I was a young 

Coast Guard officer working on the policy response to the Great 

Midwest Flood of 1993. 

I know the hearing today and the committee’s jurisdiction is on 

tax policy, but I want to stress that the Nation has to reform its 

policies to take a holistic approach to disaster response and recovery that promotes resilience and pre-sponds to inevitable future 

disasters. That encompasses Federal appropriations, tax expenditures, rules and regulations, loans and loan guarantees, as well as 

local and State engagement. More generally on tax policy, Taxpayers for Common Sense strongly supports efforts to enact comprehensive tax reform eliminating many tax expenditures. 

Simply put, too much Federal assistance, whether spending or 

revenue loss, goes out without a real plan in place and adequate 

demands to make communities and individuals more resilient. 

17 

Every dime that is spent by the U.S. Treasury in disaster response 

should help ensure that another dime does not have to be spent on 

the same thing in the future for another recovery. 

Unlike appropriated spending, however, tax credits, special depreciation schedules, and tax-exempt bonds are blunt instruments. 

They can reward much reinvestment that would happen regardless, 

and may create subsidies that are out of proportion to the losses 

incurred when other State, Federal, and charitable programs are 

taken into account. 

As with other areas of the tax code, these disaster-related tax expenditures are hidden spending and deserve far more scrutiny than 

they have received. For instance, there is very little data available 

that objectively documents who did what with the various tax preferences that were granted post-Katrina or for other disasters. 

We do not know if various provisions change behavior, increase 

resiliency, or help people rebuild. But we do know that much of the 

redevelopment did not occur in the areas hardest hit, and went 

to areas less affected that presumably did not need the taxadvantaged bonds to redevelop. 

In some cases, it may not make sense to redevelop certain vulnerable areas that were hit hard, but that should be a conscious 

part of the decision-making process that also incorporates how the 

redevelopment is being done, what structures are being constructed, and the level of protection and/or mitigation involved. 

There has been a push to extend or create provisions to increase 

tax advantages in disaster-affected regions. This has been referenced earlier. This includes proposals involving the New Markets 

Tax Credit, charitable contributions, and use of tax-exempt retirement plan funds, among others. 

Each of these provisions was part of an earlier disaster recovery 

tax package. All suffer from a lack of effective targeting to the 

greatest needs, and each fails to promote greater resilience to future disasters. The New Markets Tax Credit is supposed to spur 

development in low-income communities with tax credits, and there 

are proposals to increase the allocations to target some of these 

same communities, specifically in disaster areas. The program has 

its detractors. In some cases, the New Markets Tax Credit not only 

went to development that would have otherwise occurred, it was 

up-scaled. 

Just this summer, the GAO indicated that the program needed 

increased controls and transparency. Beyond these criticisms, the 

program is not structured to promote targeted, more resilient development, which is what communities recovering from disaster 

need. 

In the case of charitable contributions, individuals making contributions to charities for disaster relief efforts would be allowed to 

deduct more off their income than is currently allowed. The Federal 

Government is effectively saying that those impacted by larger disasters are, in effect, more important than those affected by smaller 

ones, or those whose plight, such as chronic disease, does not stem 

from a disaster. Finally, the government would be subsidizing contributions to these organizations without really knowing the activities the organizations would undertake or why. 

18 

Another idea is penalty-free withdrawals from retirement accounts. But this provision has not been targeted or limited to 

disaster-related activities. The taxpayer could spend the money on 

anything, including items with nothing to do with disaster, rebuilding, or increasing resilience. Furthermore, this has the potential of 

turning a retirement plan into disaster insurance, which would be 

a questionable policy from a retirement security perspective. 

Disaster-related tax provisions have a place in response, but 

they, like the rest of the government’s disaster recovery, need to be 

targeted to promote resilience and reduce risk. Current law is ad 

hoc at best. Free post-disaster funding reduces the incentives to invest in pre-disaster efforts to mitigate damage and promote resilience. 

I applaud you for conducting the oversight and for reviewing the 

tax expenditures. Whether you enact disaster-related tax provisions 

or not, I urge you to request the GAO report on how these types 

of provisions have been implemented in the past and whether they 

have promoted more resilient recovery. 

Any Federal spending—whether through the Treasury or the tax 

code—should be evaluated to see whether it has the intended impact. Disaster recovery spending should be evaluated on whether 

communities emerge more resilient and less vulnerable to future 

disasters. 

Again, thank you for inviting me to testify here today, and I am 

happy to answer any questions you might have. 

Senator CASEY. Thank you, Mr. Ellis. 

[The prepared statement of Mr. Ellis appears in the appendix.] 

Senator CASEY. Mr. Lewis, I was handed a note here. When I 

read a quick summary of your biography, I saw you did live in 

Pennsylvania, including Scranton, PA, my hometown. 

Mr. LEWIS. I did indeed. I lived in Scranton, or Clarks Summit, 

actually. 

Senator CASEY. That is close enough. Lackawanna County. 

Mr. LEWIS. Right at the turnpike; right. 

Senator CASEY. So you will have half an hour to provide your testimony. [Laughter.] 

Mr. LEWIS. Okay. Thank you. So noted. Yes. I also lived on the 

Susquehanna River in Harrisburg and Camp Hill. Does that give 

me an extra 15 minutes? 

Senator CASEY. At least that. 

Mr. LEWIS. Okay. Thank you. 

STATEMENT OF TROY K. LEWIS, CHAIR, TAX EXECUTIVE COMMITTEE, AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, DRAPER, UT 

Mr. LEWIS. Chairman Casey, Ranking Member Enzi, and members of the subcommittee, thank you for the opportunity to testify 

regarding tax relief after a disaster. 

My name is Troy Lewis. I am a vice president of Heritage Bank 

in St. George, UT. I am also a sole tax practitioner, an adjunct professor at BYU, and chair of the Tax Executive Committee of the 

American Institute of CPAs. I am testifying today on behalf of the 

AICPA. 

19 

Families and communities impacted by disasters are often displaced from their homes, their livelihoods, and their businesses. We 

believe permanent relief will provide disaster victims with the utmost amount of certainty and fairness. It will also allow them to 

promptly receive the assistance that they need. 

Therefore, I urge you today to consider enacting tax legislation 

that permanently provides meaningful and timely relief. Our current system offers inconsistent tax relief. Congress generally considers each disaster as an isolated event and restricts any special 

tax relief to that one event. 

Unfortunately, such an unpredictable process results in similar 

taxpayers receiving vastly different tax treatment for the same 

type of loss. In the interest of fairness, it is important that all victims, whether they reside in Harrisburg, PA, Bucks County, PA, 

Draper, UT, Greensburg, KS, or some other State, and whether 

they have endured a hurricane, a mudslide, or some other type of 

disaster, receive similar tax treatment. 

We recognize that certain tax benefits may not be available to 

every taxpayer due to his or her personal situation. However, the 

rules should be consistent among the various disasters. We need 

legislation that makes disaster-related tax provisions effective immediately when a triggering event occurs. 

Most of the time, individuals and businesses do not know what 

tax relief, if any, they will receive until Congress enacts legislation, 

sometimes months or even years after the event. However, families 

and businesses want and need to rebuild as soon as possible. But 

without any guarantee that tax relief is on its way, victims are 

often forced to make difficult and financially burdensome decisions. 

Providing tax relief in a timely manner will reduce the uncertainty 

surrounding what tax relief victims will receive and when they will 

receive it. 

The AICPA has submitted ten recommendations for the record. 

I would like to share a few of them with you. First, tax relief 

should automatically be available when a victim resides or has a 

business located in a FEMA-declared disaster area. This automatic 

trigger will ensure that victims are provided tax relief for which 

they are eligible in a timely manner. 

Second, disaster victims should be allowed an itemized deduction 

for the full amount of any related casualty loss. The current rules, 

which have a couple of different limitations, are unnecessarily complicated, lack transparency, and do not always provide sufficient relief. 

Third, a victim should have the option of carrying back a net operating loss attributable to a disaster for 5 years as opposed to 2 

years under the current rules. An increased carryback period would 

allow businesses to receive refunds sooner, helping them more 

swiftly recover. 

Fourth, it is important that individuals and businesses have up 

to 5 years to replace property that is destroyed by disaster, while 

deferring the resulting gain. For example, many impacted communities have historic buildings that require an extensive permit application and approval process prior to rebuilding. 

In these circumstances, a 2-year replacement period can be particularly limiting for victims of a disaster. A 5-year replacement peVerDate Mar 15 2010 15:57 Jun 19, 2015 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 R:\DOCS\94658.000 TIMD
20 

riod would most likely provide victims sufficient time to rebuild 

their property. 

Next, I urge Congress to allow individuals to immediately access 

their own retirement funds while they are awaiting insurance reimbursements or other government assistance. Generally, individuals who make early withdrawals are subject to an extra 10- 

percent excise tax. However, we strongly believe that penalties 

should not be imposed on disaster victims who withdraw up to 

$100,000 from a qualified plan, such as a 401(k) or an IRA, assuming that they repay that amount within 5 years. 

Finally, I want to mention a provision that allows individuals to 

exclude cancellation of debt from their taxable income, provided the 

cancellation occurs within 1 year of the disaster. As we heard from 

Senator Menendez from New Jersey, this is a real issue. 

The current rules are harsh and many times a shock for victims 

who suffer significant losses. If individuals are unable to repay 

their loans, they are most certainly unable to afford the tax on that 

phantom income. 

In summary, the implementation of timely and permanent tax 

relief provisions will allow victims to have certainty, fairness, consistency, and the ability to promptly receive the assistance that 

they so desperately need after a disaster. 

Again, Mr. Chairman, thank you for the opportunity to testify. 

I will be happy to answer any questions. 

Senator CASEY. Mr. Lewis, thanks very much. 

[The prepared statement of Mr. Lewis appears in the appendix.] 

Senator CASEY. We will start with my home-State Commissioner. 

Commissioner Loughery, we know—I mentioned earlier—how significant a county Bucks County is in our State, probably the fourth 

or fifth largest by way of population. I was looking at the number, 

a 2013 estimate, 627,000 people—a big county. 

You have had eight federally declared weather disasters since 

2008, right? 

Commissioner LOUGHERY. Yes. 

Senator CASEY. And I know you talked about this in your testimony, but just in terms of a listing or itemization, if you could 

walk through a couple of examples of policies that you think 

worked well, and where you think we are short on policies that 

would provide the kind of—as you have all alluded to in one way 

or another—relief that has a measure of certainty to it as well as 

relief that is timely so that the families and the communities can 

recover. Can you just kind of itemize what is working, or what has 

worked, and what does not? 

Commissioner LOUGHERY. Sure. As people were saying earlier 

here, one of the hardest things for small businesses is managing 

risks, and they want things to be as predictable as possible. Of 

course, a natural disaster sort of throws everything to the wayside. 

Trying to work through and work with those small businesses 

and to help them get back up has been one of the bigger challenges 

that we have had, because there are not a lot of tools for the county 

to use to work with those small businesses. We are able to respond 

to the municipalities. We had 17 municipalities impacted by the 

last tropical storm, and we are able to work with PEMA and 

FEMA, and there is a process for going through that. 

21 

I think there seems to be a breakdown from the county side, 

working with the State, to small businesses, thus they do not have 

that predictability as perhaps the municipalities or the county 

would in sort of repairing roads and bridges, even though it takes 

time. 

To answer your question, we need to give more predictability to 

small businesses. And if you think about the places I listed in 

Bucks County along the Delaware River, along the Neshaminy, you 

are talking about first- and second-generation suburbs: Levittown, 

historic places like Bristol, Washington’s crossing along the canal, 

places like that, where the tourism economy is very important. And 

so I often get phone calls from those small businesses to say, ‘‘What 

do you have to help us out?’’ 

As I said earlier, we usually have more to help the municipalities, the public entities, than we do specifically for small businesses. I think this tax relief for the families as well as the small 

businesses will give them more predictability and an ability to at 

least plan—should something like this happen—how they could 

best work their way out of it. 

Senator CASEY. You had mentioned the Low-Income Housing Tax 

Credit as one of the tools that helps substantially. Can you walk 

through how that has helped the county? 

Commissioner LOUGHERY. Well actually, the approach that I 

wanted to present today for the county is really the rehabilitation 

of public housing in Bucks County. Not a lot of people think that 

we have public housing in Bucks County, and the fact of the matter 

is that we do. It is old and it is coming to the end of its useful life, 

located in many of the places that I just mentioned in terms of 

first- and second-generation suburbs in the county, particularly in 

the lower part of the county. 

We are interested in looking at how to rebuild, rehabilitate, revitalize, and really transform these neighborhoods and communities 

in Bucks County, be it lower Bucks County or upper Bucks. We believe that that makes for safer neighborhoods, more efficient neighborhoods—if you will—for today’s families. On top of that, the resiliency—we heard that word used here today—from the weather disasters and storms is important, because most of these places, what 

they suffer first—and what they suffer most—are power outages. I 

know you toured through Bucks County in many of those power 

outages, and they are impacting many of those areas. 

So we see the Low-Income Housing Tax Credit allocation as an 

opportunity for us to begin to rebuild or transform these neighborhoods, because getting them to recover after disasters is even more 

difficult given the age of the housing stock. Being able to make investments, leverage private-sector investments, creates a better 

neighborhood and one that could rebound quicker—if you will— 

from a lot of these weather-related disasters. 

Senator CASEY. I just remember going through, among other 

places in the State, Yardley and getting firsthand testimony. It was 

for me—and I know for a lot of us in the Senate—a learning experience that we do not want to repeat, because you heard directly 

from people. It was not like you went into a town and went into 

a room and had a meeting. You were walking into a neighborhood, 

22 

and people were coming out of their homes talking directly to you 

about what happened to them. So it was a searing reminder. 

My time is up for this round, but I wanted to turn to our ranking 

member, Senator Enzi. 

Senator ENZI. Thank you, Mr. Chairman. I want to thank the 

panel. In my 18 years, that is probably the most punctual panel 

that I have heard, with one being substantially under the time. 

[Laughter.] 

I want to thank you for your testimony, for providing a great 

deal of this in advance. There were a number of things in your testimony that will be very helpful, as we fashion or amend legislation. I know that we try to keep the record open so that people can 

submit questions in writing. That is usually very helpful, and everybody is not here and never is able to be at a hearing, so I hope 

you will help us with some of those answers. 

One of the reasons I mentioned that is that I am the accountant 

and a lot of my questions are very technical and specific, and I do 

not expect you to have the information with you at the moment. 

But I would appreciate it if you would get that for me. 

I will start with Mr. Ellis. I appreciate your experience in observing and evaluating the forms of Federal tax relief that are provided 

for disasters. Have you seen tax changes that have gone beyond the 

boundaries of providing relief only to victims, and, if so, could you 

please identify some? 

Mr. ELLIS. Sure. Thank you. One of the areas that was touched 

on—Senator Roberts mentioned the GO Zone Bonds. And one of the 

things that the GAO, the Government Accountability Office—they 

were evaluating that—found was that the counties in Louisiana, 

the parishes, obviously had differing impacts from Katrina, Rita, 

and Wilma, which were the ones that were targeted with the GO 

Zone, and also all of the States there. Instead of creating a 

prioritization system of how the bonds would be allocated, it was 

on a first-come, first-served basis. 

So whoever got to the door the fastest was who got the money. 

And generally it would be a parish that was actually less affected 

by Katrina that was able to kind of recover quicker. So you definitely had the impact of those bonds going to people who were, at 

least, less affected. 

I would also point out that, just by its definition, the increase in 

the deduction for charitable contributions to disaster-related organizations is going to benefit people who are not in the disaster. In 

the case after Katrina, it went from 50 percent of income that was 

eligible to be deducted to 100 percent. I think in the current legislation it is up to 80 percent, so that is another area where I would 

say that that is not going to the disaster victims. 

Then I would only add one more thing, and that is part of my 

concern that I raised in my testimony. It is hard to track these, 

and they are not being very well monitored. No one is trying to actually evaluate where they are going or how it is being done. And 

that is something that I think will be very vital going forward and 

be important to incorporate into any future package. 

Senator ENZI. Thank you. That is very helpful. You also suggest 

taking a holistic approach to the disaster response. Can you idenVerDate Mar 15 2010 15:57 Jun 19, 2015 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 R:\DOCS\94658.000 TIMD
23 

tify any State or Federal approaches that move kind of toward that 

strategy? 

Mr. ELLIS. Well, I mentioned that I was involved after the 1993 

flood, the Great Midwest Flood of 1993, and in that instance you 

actually had a 1995 flood that followed in roughly the same area, 

and you had communities like Arnold, MO and Valmeyer, IL that 

actually relocated lock, stock, and barrel to higher ground. 

So you had an effort there that was funded by the Federal Government that actually moved them so that, when the floodwaters 

returned in 1995, they were not affected. Also, New York City is 

doing buyouts, and there is a strategy in that area. Also looking 

to New York City, the MTA, the Metropolitan Transit Authority, 

has done an extremely large catastrophe bond to try to mitigate 

their risks going forward. 

So these are creative ways that I think we can look at, and one 

of the things that I mentioned in my written testimony is this idea 

of insuring public infrastructure so its cost is not being borne by 

the Federal taxpayer. So those are just a couple of things that I 

think might illustrate that. 

Senator ENZI. Thank you. That is extremely helpful. 

Mr. Lewis, I appreciate you bringing the accountant’s viewpoint 

to this. I am particularly interested in—because of my experience 

and as a small business owner—what types of challenges you observed following disasters with respect to filing of tax returns and 

tax penalties? Do you believe that there are any changes that need 

to be made in this area of tax compliance? And incidentally, I want 

to thank you for your list of very specific things that you put in 

your testimony too. 

Mr. LEWIS. Thank you. It is a fair question. So there are two aspects that you raised. One is in administration and one is more of 

a legal, legislative fix. 

Let’s deal with the administrative for just a moment. Under most 

of the existing law, the IRS has some administrative leeway to 

grant victims of disasters some administrative relief as you describe it, things such as allowing late filings, waiving of notices and 

penalties. That gets done, but again, as we discussed and I repeated in my written and my oral testimony, it is done on a oneoff basis. There really is not a consistent answer. 

That is one of the things that I think is most frustrating for us 

of the CPA community. When a disaster happens, although the 

AICPA will be constantly on the phone with the IRS, they seem to 

not be as uniform in their approach, because there is not a defined 

pattern such as, if FEMA declares a disaster, this is the kind of 

relief that should be granted. It will not provide any level of comfort. It provides a lot of confusion for our practitioners and for the 

taxpayers. 

So on the administrative side, I think the thing is, if we can get 

permanent, timely, consistent, and certain administrative relief, 

that would be very helpful. That would go a long way to solving 

some of our challenges with filing. 

From a legislative perspective, again, the real challenge is the 

victim’s challenge, which is that we do not know—because a lot of 

this legislation has been dealt with on a one-off basis and it is not 

permanent—we cannot tell a client, we cannot advise them beyond 

24 

what we have today. So telling somebody in Staten Island, for instance, hey, help is on the way, you will be able to take additional 

bonus depreciation or some of these items I put in my testimony— 

that is not available. That is a frustration. 

I think victims want consistency, and they want predictability. 

About 10 years ago, our organization put together 10 good tax policy ideas, and number one was equity and fairness. I think to answer your question, equity and fairness need to be a part of this 

process. If you have equity and fairness, you will have consistency, 

and you will have the ability for victims and for the tax professionals who serve those victims to be able to advise them appropriately. 

Right now, we are left guessing. As was mentioned earlier by 

several of the Senators, what do you tell a client who is a victim 

of Hurricane Sandy? Is help on the way? I think that is a difficult 

question, and therein lies the complexity for us. 

Senator ENZI. Thank you. If I could just make a couple more 

comments—— 

Senator CASEY. Sure. 

Senator ENZI. I am going to have to run to a meeting here, but 

I want to thank Mr. Cronin. You bring up one of the most important problems in the west, and that is water. I got to observe some 

of those Colorado floods. In fact, I could not go straight from Denver up to Wyoming. I flew in on a plane to Denver and had to go 

by way of Nebraska to get home. So I appreciate your comments 

on that, and I will have some more specific questions for you on 

that. 

Mr. Loughery, I would be interested in some of the long-term 

strategic budget planning that you might have in mind. And I will 

have questions for the others too. 

I appreciate all of your willingness to testify and, more specifically, to answer some written questions. Thank you. 

Senator CASEY. Thank you, Senator Enzi. 

I wanted to ask Mayor Berke a question or two about small businesses. I know that they become, I guess, at once both victims of 

a disaster and then often the drivers out of the ditch, so to speak. 

The recovery is often driven by what happens to small businesses. 

In particular, in your testimony you quoted at the beginning Mr. 

Terry Kelley, the marina manager. And then later on, on the second to the last page of your testimony, you said, ‘‘If the National 

Disaster Tax Relief Act of 2014 would have been in place in March 

of 2012, Mr. Kelley believes the 50-percent bonus depreciation provision and the extension of the Net Operating Loss Carryback provision would have provided crucial cash flow’’—probably the three 

most important words there. 

Can you talk a little bit about your experience with the importance of focusing on getting small businesses back on their feet? 

Mayor BERKE. Well, as I said, Island Cove Marina is a great example of those kinds of small businesses. This is a place that was 

destroyed as a result of these tornadoes, and for us, the quicker 

that that gets built back, not only do you provide that small business with a place to earn money and to provide its goods to our 

constituents, but you also have those construction jobs and all of 

the rebuilding tools that provide money for your economy. 

25 

So when we talked to Mr. Kelley—he is a great example of somebody who had to work hard even to get started on building back 

this business in Chattanooga. I think—to go to some of the points 

that were made here earlier—if he had known what the tax ramifications were for his business, that would have allowed him to put 

that money back into our economy sooner, get people back to work, 

and then eventually get his business back up and running as 

quickly as possible. 

Senator CASEY. Is there anything else in terms of what you hope 

we would do that would have a particularly beneficial impact on 

small businesses? Anything else that was not discussed or raised 

already? 

Mayor BERKE. The only other thing that I was going to say that 

I think helps small business in a way that we do not often talk 

about is that housing actually affects our small businesses, both 

from the side of building it, but also the need to have those units 

available for people to live in. 

As I said, Chattanooga had the seventh-highest rise in rent in 

the country over the last 5 years. That is good in the sense that 

it means that we have a lot of demand and we have people with 

rising income. It is bad in the sense that many of our entrepreneurs, young people and small business owners, need to live in 

workforce housing. So when we lose those valuable units, we lose 

a critical tool that we need to grow business around our city and 

particularly to keep our city vibrant and energetic. 

Councilman IGNIZIO. Mr. Chairman? 

Senator CASEY. Yes, Councilman. 

Councilman IGNIZIO. If I may dovetail on that from Staten Island’s or from New York City’s perspective? 

Senator CASEY. I actually had a question for you, but go ahead. 

Councilman IGNIZIO. Okay. If you do not mind. Thank you, Mr. 

Chairman. 

I think part of what is missing is that the small business coming 

back, opening up in the community, sends a message—I can tell 

you from my perspective—that the larger community is coming 

back and that we will rebuild. 

What happened to my community is that, when some businesses 

opened, people felt a certain ‘‘it is going to be okay’’ scenario. If we 

offer these businesses some tax incentives to do so, then they acknowledge and they have an understanding of where their revenues are going to be so they invest and reinvest in the community. 

Then the community as a whole does the same and follows in suit. 

I think it sends a ripple effect through the entire city. 

So I think that is something that is important, not only for the 

economics of the community, but also to send the message to the 

community that it is coming back. 

Senator CASEY. That message, I think, is critically important. 

What I was going to ask you about was something you said in your 

testimony that was pretty direct and blunt, but you were making 

an important point. On the second page, you said, ‘‘Even those who 

have been fortunate enough to get back up on their feet are filled 

with angst about what a future disaster may bring or grappling 

with the prospect that misguided government policies may finish 

the job Sandy started.’’ Pretty tough words. 

26 

Walk me through that so that we have a sense of—around here, 

when we are working together and you have bipartisan breakthroughs and good policy, that is a good day. On other days, we 

have to worry that we are not somehow violating what is, in medical terminology, the Hippocratic Oath: ‘‘do no harm.’’ I think that 

is part of what you are getting at here. But walk us through what 

you hope we would not do in the response to future disasters. 

Councilman IGNIZIO. Sure. A couple of points. The timeliness of 

the fact that government really is there—with the length of time 

it took to originally allocate the funding for Sandy victims, people 

were waiting in limbo day after day, saying, ‘‘Where is my government trying to help me?’’ 

The second part was that, sometimes a policy sounds really good 

in the halls of the U.S. Senate or in the U.S. Capitol, but when it 

gets to the people, it does not help at all. Flood insurance is a problem that I think is going to face all Americans in the coming 

months and years ahead because, if the goal is to ensure that people come back to their home, well, if you are charging $1,000 a 

month—which in some cases, some of my constituents have been 

quoted—that home is unaffordable. So government ends up finishing the job that Sandy began. 

I am grateful to Senator Menendez and Congressman Graham 

who worked in a bipartisan fashion in both Houses to get flood protections done. I just think that many times programs have a hard 

time getting down to the level of my constituents. 

When you start with the alphabet soup of all the agencies—you 

know, we are dealing with a bus driver here in my friend Richard 

White. And he would say, if he was here, ‘‘I am not sophisticated 

in all of the intricacies of government. I just want help. I just want 

to get back into my house; find me an easy way of doing it.’’ 

Then his accountant tells him, well, in this State, this was the 

program. In this State you can deduct this, and we do not know 

what is going to happen for New York State or for Sandy, and that 

is up to what is going on here in Washington. People are cynical, 

and people are saying, ‘‘How can we have a government that selects different benefits based on different storms in different parts 

of the country?’’ 

And that is what I think many of the people, or most of the people, talked about: a consistent approach—that a tornado or a natural disaster that occurred in California or occurred in Colorado or 

occurred in New York ought be treated as all the same, and the 

help should be there for all of us. 

Senator CASEY. That is why it is encouraging that we have a bipartisan panel here, and you have worked in a bipartisan fashion 

with folks on this committee, including Senator Schumer, as well 

as Senator Menendez and others. 

I also know that Richard White, the gentlemen you referenced, 

a city bus driver from Crescent Beach—what I was struck by was 

the number you have in your testimony. He took out a pension 

loan, ran up credit card debt, and scrimped and saved for every 

charitable program so he could scrape together more than $70,000 

to repair his home. Now that is a heck of an effort that he made 

to do that. It sounds like he was on his own for a lot of that. He 

was kind of—— 

27 

Councilman IGNIZIO. Yes, sir, he was. And he is still waiting for 

some help. Ultimately, his house is going to have to be elevated, 

which is going to put him out of his home for longer now, several 

months, while they lift his home. That assistance will come from 

the city program, but it is still going to put him out of his house 

for months while he is still paying his mortgage and he has no 

place to go. 

So that part has not been solved: how do you pay for a mortgage 

and pay for rent on an apartment on a civil servant’s salary? I do 

not know that that has been sufficiently addressed either by New 

York City or by New York State. 

Senator CASEY. Mr. Cronin, I know that you made reference, in 

your testimony, to the irrigation ditch companies trying to rebuild 

their infrastructure, the infrastructure for water delivery. And I 

know that is obviously crucial to agriculture. That theme or that 

reality is certainly present in other States as well, in terms of the 

adverse impact on agriculture. 

Can you give us some examples or ways that these companies 

would have been better able to meet those challenges if they had 

had more certainty in the code, something that all of us have referred to today? 

Mr. CRONIN. Yes. Thank you, Mr. Chairman. 

Despite popular opinion, food does not originate in the grocery 

store. It does originate in the fields in the breadbasket of this country, so at least in the western part, irrigation infrastructure is a 

significant piece of that. Mother Nature does not give us enough 

water to grow the food necessary to provide for the growing demand. So we harvest and use rivers and snowmelt to provide that 

water to grow crops. 

The natural disaster had a significant impact in terms of the velocities, and it completely blew out the diversion infrastructure that 

allows us to take water from the rivers and put it on crops in 

fields. So we were left with no choice. One of our ditch companies, 

the Highland Ditch Company, which had a meeting quickly following the disaster, was faced with taking out a $2-million loan 

from the State of Colorado. 

Usually those meetings that involve any amount of money, 

whether it is $1 or $2 million, are very lengthy, with a lot of farmers hemming and hawing on whether or not they are going to assess themselves for those costs. Expecting a long drawn-out meeting, everybody strapped in for the debate, one old farmer stood up 

and said, ‘‘We have no choice, do we?’’ And they all stood up and 

said, ‘‘You know, we don’t have any choice. This is our livelihood. 

This is what produces the food. Let’s do it.’’ 

So they went ahead and assessed themselves for the cost of a $2- 

million loan. Fortunately, that loan can be paid off in 30 years, and 

the State of Colorado stepped up and said, we will waive at least 

the interest portion of that for the first 3 years. So they do have 

some possibility to produce some revenue and not trigger this 85 

percent, and that would be a loan. 

The concern is whether it is financial assistance through the 

Federal programs or sale of assets that these companies own. The 

concern is that that would trigger a taxable event, and, much like 

the farmer at the Highland Ditch Company who said, ‘‘We have no 

28 

choice,’’ they have no choice. They have to build this infrastructure. 

It is completely necessary for their livelihood and the growing of 

those crops. 

So in the end, if there is a sizeable tax bill, in the opinion of 

many in those companies, it just means the Federal Government 

did not fulfill its obligation to provide—in this case—75 percent of 

the cost share reimbursement. It will be 75 percent less the tax liability. 

Senator CASEY. That is real life. We are grateful to you for telling us about that. 

I have unlimited time. At the risk of keeping everybody here for 

the day—and I will not have an open mic time—before we wrap up, 

I wanted to give folks time for a closing comment. Or often what 

we like to do at hearings is try to distill it down to the most important points, if there is any particular message you wanted to bring. 

Maybe we will just start left to right in the order we introduced 

folks. 

Mayor, we will start with you and anyone who wants to say anything going left to right. 

Mayor BERKE. Thank you, Mr. Chairman, again, and thank you 

for having this hearing. 

This is a moment where people are often at their most disorganized and at their toughest. So anything that this body can do to 

provide predictability for them so that they can get back on their 

feet faster helps those constituents, but it also helps our communities. And, in particular, finding ways to incent quicker, more sustainable development would truly help our cities. 

Senator CASEY. Commissioner? 

Commissioner LOUGHERY. Mr. Chairman, again, thank you for 

the opportunity to be here. Thank you for all of your support in 

Bucks County, and I know Senator Toomey has been very supportive as well. 

I will just echo what the Mayor said. It is the predictability, and 

I think, for the most part, the American people are resilient. We 

bounce back. For some of us, it takes a little bit longer than others, 

given our circumstances, but when there is a path that has predictability to it, when we can sort of see where we need to go, especially with small businesses trying to get back up, that helps the 

community, the families, and the neighborhoods that are impacted 

by these weather-related disasters. 

So I would just echo the comments of predictability in terms of 

giving a path for those small businesses and the families to be able 

to recover. 

Senator CASEY. I appreciate you being here. Thank you. 

Commissioner LOUGHERY. Thank you. 

Senator CASEY. Councilman? 

Councilman IGNIZIO. Yes, thank you, Mr. Chairman. I want to 

thank you for having this hearing and drawing a spotlight on this. 

There are people across the country who are still suffering from 

disasters that occurred years ago. I thank you for highlighting it, 

and I hope that this is a first step in what ultimately will be a 

great fix. 

Without sounding coy, I want to thank the American people for 

giving the funds to my community to rebuild. Ultimately, it is 

29 

Americans helping Americans, and I am grateful to that, and I 

hope we can build a better mousetrap in the bills that you all are 

taking up here. 

Thank you very much. 

Senator CASEY. Thanks very much. 

Mr. Cronin? 

Mr. CRONIN. Thank you, Mr. Chairman. The reason I took as little time as I did is, we did some quick math on the total investment by the American people on tax incentives such as this, and 

we are probably anywhere from one-tenth of 1 percent to 1 percent 

of the total tax benefit there. So it just did not seem fair to take 

up the full 5 minutes. 

That being said, there is a larger issue at hand, and this 85- 

percent rule is very significant to our constituents really west-wide. 

And whether you are talking about investment in the infrastructure that served us greatly for over 100 years, water provided for 

local cities, water provided for the growing of food, or water for endangered species, we need that reinvestment going into the future. 

We really hope that this committee will, in the future, consider 

bills such as this to make something more permanent and address 

this 85-percent rule, because it is really critical to the settlement 

of the west and the continued quality of life there. Thank you. 

Senator CASEY. Thank you. 

Mr. Ellis? 

Mr. ELLIS. Thank you, Mr. Chairman. I agree with the Councilman that Americans are big-hearted people, but we cannot afford 

to be soft-headed. Part of that is, we have to plan for these events. 

We know they are inevitable. We know that they are going to happen, especially in places where they have already occurred before. 

So some of it is really not just about the predictability in the tax 

code so that individuals and companies know what to expect, but 

also the predictability for the taxpayers, that these communities 

have done their part to plan for these inevitable disasters, so that 

we can invest wisely and make them more resilient before the next 

disaster occurs. And that is why I use the term of the funding disaster response being ‘‘pre-sponding’’ to the next disaster. 

And then, just two other little points very quickly that have been 

raised. I want to point out—and I have done a lot of work on the 

flood insurance program over the years. The program is $24 billion 

in debt to taxpayers, and it takes about $3.5 billion dollars in premiums. So something has to be figured out on that. I agree that 

you do not want to have unsustainable premiums and push people 

out of their houses, but we have to come up with real solutions in 

that area. 

Then also, on the timing of funding, much of the funding postSandy was through the Disaster Relief Fund, which has about $6 

billion in it. I would note—and this gets to the point about really 

figuring this out and planning forward—as of August 31st, only 25 

percent of the $50 billion that was appropriated in the Sandy relief 

package had actually been outlaid. 

So we were almost 2 years out at that point and still had not 

spent a lot of that money. Some of that is, we might be thinking 

about it more wisely, but it also means that Congress could look 

30 

at these events more prudently and, instead of doing one big chunk 

of money, do them as appropriate and track the funding. 

I will stop there. Thank you. 

Senator CASEY. Thanks very much. 

Mr. Lewis? 

Mr. LEWIS. Chairman Casey, thanks again for the opportunity to 

be here. 

This morning, in final preparation for this testimony, I spoke to 

one of our tax practitioners in Louisiana who was on the ground 

working with clients who had suffered from Katrina. You could feel 

in the conversation his deep emotion. I mean, I think for most 

Americans, particularly those who are not impacted by these disasters, it becomes a discussion. It becomes something that they see 

on the news. 

But when we talk to people—actually like many of these panelists—and you hear how devastated some of these communities really are and the difference that programs could make, you get a 

sense of how important what you are doing today really is. It 

changes lives, and it changes them for the better. 

I think the key here to doing that is to make these changes automatic and make them permanent. This one-off approach that we 

have had for the past decade helps on a discriminative basis, and 

that is the thing that I find most troubling. I think, to Mr. Ellis’s 

comments, when we find those programs that work well and those 

tax incentives, we should codify them in a way that is predictable, 

that is consistent, and is fair, and I think in that sense that you 

will get the disaster relief that this hearing has been called to propose. 

Senator CASEY. Thanks very much. Well said by all of you. 

Thank you, and I appreciate your testimony. If you have more that 

you want to submit for the record, of course, you can do that. 

I want to ask my colleagues on the record here to submit statements, if they have them, or questions for the record to the committee. But we are grateful for your testimony. You bring to us a 

real and immediate sense of what happens in communities, and 

that is why a hearing like this is so important. So we are grateful. 

Thanks very much. 

We are adjourned. 

[Whereupon, at 4 p.m., the hearing was adjourned.] 

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