Offsets, Supplemental Appropriations, and the Disaster Relief Fund: FY1990-FY2013
Released: 2016-05-31T00:00:00

Overview

One long-standing policy question facing Congress is how to budget for and deal with the unexpected costs incurred in response and recovery from disasters.

This question was raised in Congress periodically in the 112 th and 113 th Congresses (2011-2013) as part of larger discussions about how government funding decisions impact the economy, the budget deficit, and the national debt. The Budget Control Act (BCA, P.L. 112-25 ), passed in the first session of the 112 th Congress as part of a deal to raise the debt limit, literally changed the terms of the debate. The new law included provisions that outlined separate treatment for disaster relief, distinct from emergency funding. Furthermore, P.L. 112-25 redefined "disaster relief" as being federal government assistance provided pursuant to a major disaster declared under the Stafford Act, rather than assistance provided through the Disaster Relief Fund (DRF). Funding designated as disaster relief in future spending bills could be "paid for" by adjusting upward the discretionary spending caps. This allowable adjustment for disaster relief is limited, however, to an amount based on the 10-year rolling average of what has been spent by the federal government on relief efforts for major disasters.

In May 2011, the House Appropriations Committee proposed offsetting $1 billion of emergency supplemental appropriations for the Federal Emergency Management Agency's (FEMA's) Disaster Relief Fund—the primary source of federal government assistance for people and communities affected by major disasters—which had been depleted at a faster rate than had been projected due to a number of major storms and floods earlier in the year. The House rescinded unspent money from another department's budget to pay for the additional funding, in a proposal that was ultimately not supported in the Senate's version of the bill.

The issue of offsets for supplemental appropriations for the DRF returned to the debate as the House and Senate worked on stopgap funding legislation as FY2011 drew to a close. The Department of Homeland Security's (DHS's) congressional authorizing committees also debated whether disaster assistance funding should be offset as they marked up their bills. No resolution was reached on the issue, as the fiscal year ended and the DRF was replenished through a continuing resolution.

Hurricane Sandy struck the United States on October 29, 2012. Beginning in November 2012 there were calls for supplemental appropriations for Hurricane Sandy relief efforts, as well as calls for offsets to pay for them. On December 7, 2012, the Administration released a request for $60.4 billion in supplemental appropriations in connection with Hurricane Sandy, including $11.5 billion for the DRF. The preamble to the request opposed offsetting the cost of the legislation, and amendments to offset the cost of the legislation in the House and Senate failed.

The result of multiple rounds of congressional deliberations from 1990 through 2013 has been that while disaster assistance from other agencies has at times been funded through shifting resources from one program to another through appropriations legislation, the DRF has generally been given a priority status and been funded promptly in times of need, without offsets.

This report outlines CRS's analysis of supplemental appropriations laws from FY1990 through FY2013, when the first disaster relief supplemental appropriations law was enacted under the terms of the BCA. CRS examined legislation with offsetting rescissions and provisions affecting the DRF, looking for connections between supplemental DRF funding and offsets. The analysis takes a detailed look at three cases where legislation affecting the DRF was fully offset, but ultimately finds that from FY1990 through FY2013, Congress fully offset supplemental funding for the DRF through cuts elsewhere in the budget only once.

The report goes on to survey actions taken by Congress from 2011 through 2013 regarding offsetting funding for the DRF, as the BCA came into effect and Congress interpreted its provisions in funding disaster relief in the wake of Hurricane Sandy. It closes with an examination of issues surrounding offsetting disaster assistance and the use of special budgetary designations to accommodate disaster relief funding.

This report will not be updated.

Definitions

Offsets

In the context of appropriations debate, to "offset" is to use policy changes, additional revenue, spending cuts, or rescissions of previous appropriations to "pay for" all or part of the cost of a piece of legislation. Congress uses the Congressional Budget Office (CBO), which provides budgetary "scoring," to evaluate the costs of legislation and the value of any offsets. Legislation that is "fully offset" has no overall net cost in budget authority or outlays.

Associating an Offset with an Expenditure

When a bill is partially offset, it can be difficult to associate a given offset with the specific appropriation it may be intended to pay for.

Offsetting provisions are not typically linked to other items in appropriations bills, but links may be identified through analysis of report language, other committee documents, or debate. For example, in S.Rept. 112-74 , which accompanied the Senate's version of the FY2012 Homeland Security appropriations bill, the Senate recommended $18.3 million to replace damaged Coast Guard helicopters. The Senate bill also included three rescissions totaling $18.3 million to offset that cost. As the rescissions and funding are both carried in Section 565 of the bill, it is clear that the three rescissions offset the specific additional appropriation. If, however, the aircraft replacement funding was carried in the Coast Guard portion of Title II of the bill, rather than in Title V in the same section as the rescissions, one might not link the rescissions to the additional funding, as there were more than $103 million of other rescissions that simply lowered the budgetary score of the bill and were not directly associated with any other appropriations provisions.

Another such rare example of an overt linkage is in Title VI of the House-reported version of H.R. 2017 , the FY2012 Homeland Security Appropriations bill. The provision reads as follows:

Sec. 601. Effective on the date of the enactment of this Act, of the unobligated balances remaining available to the Department of Energy pursuant to section 129 of the Continuing Appropriations Resolution, 2009 (division A of P.L. 110-329 ), $500,000,000 is rescinded and $1,000,000,000 is hereby transferred to and merged with 'Department of Homeland Security—Federal Emergency Management Agency—Disaster Relief': Provided , That the amount transferred by this section is designated as an emergency pursuant to section 3(c)(1) of H.Res. 5 (112 th Congress).

This section was added as a single amendment in full committee markup of the legislation, and would have provided $1 billion of additional resources to the DRF, paying for it by transferring some resources and rescinding others.

In the absence of these linkages, either in legislative language or explanatory debate, the only way one can authoritatively state that a given provision is offset by rescissions is if the entire appropriations measure is fully offset by such rescissions.

Supplemental Appropriations

Supplemental appropriations are budget authority provided by Congress over and above the budget authority in the annual appropriations bills. Supplemental appropriations can be made through stand-alone supplemental appropriations legislation, or as part of an annual appropriations bill.

Disaster Relief versus Disaster Assistance

The terms "disaster relief" and "disaster assistance" are often used interchangeably to describe support provided to communities in the wake of a disaster. For the purposes of this discussion, "disaster relief" refers to resources provided through the Federal Emergency Management Agency (FEMA) Disaster Relief Fund (DRF). "Disaster assistance" is a broader category which includes other assistance funding for disaster-struck communities. These funds are managed not only through FEMA, but through many other federal agencies and departments. The core analysis of this report deals with supplemental disaster relief, rather than the broader disaster assistance category.

Offsets and Supplemental Disaster Relief

According to CBO analysis, FEMA was the second-largest recipient of supplemental appropriations in the 1990s, behind only the Department of Defense. Most of these appropriations have been for disaster relief.

Over the 24 fiscal years stretching from October 1, 1989, to September 31, 2013, there were 59 bills signed into law that included supplemental appropriations.

As Figure 1 indicates, 31 of these measures included rescissions to offset some of the discretionary budget authority in the legislation—an analysis of these bills identified 18 that carried provisions affecting the DRF. None had provisions explicitly linking their rescissions to additional monies for the DRF. However, six of the bills with rescissions had discretionary spending reductions of such a size that the entire discretionary cost of the bill was offset. Three of those fully offset bills carried provisions affecting the DRF. CRS analyzed these three bills to see whether these were cases where supplemental disaster relief was paid for by offsetting cuts to other parts of the budget.

The background on each of these three instances follows. As these analyses illustrate, supplemental disaster relief has only been fully offset once since 1990.

Emergency Supplemental and Rescissions for Antiterrorism and Oklahoma City Disaster, 1995 (P.L. 104-19)

Shortly after taking control of the U.S. Senate and House of Representatives in the 1994 midterm elections, the new Republican majority began to assemble a large rescissions package to cut previously approved spending for FY1995. The Clinton Administration submitted a package of rescissions and supplemental spending for FY1995 with their FY1996 budget legislation—a package that included $2.2 billion in rescissions and $10.4 billion in additional spending. The requested additional spending included $6.7 billion in funding for the DRF. Speaker Newt Gingrich wrote a letter to the White House, asking for offsets for the additional spending. Testifying before the House Appropriations Committee, Alice Rivlin, Director of the Office of Management and Budget at the time, declined to provide additional offsets, saying: "We believe our supplemental request should be treated as an emergency and not require offsets."

We believe that the law established the authority for the President and the Congress to exempt genuine emergencies from the statutory caps, and the emergencies in question, which include the Northridge earthquake, are exactly the kinds of emergencies for which the authority was created.

The Bush administration used the authority. This Administration has used the authority, with the concurrence of the Congress, for several emergencies over the past few years, including the Midwest floods, hurricanes, and other acts of God.

So we believe that our supplemental request for additional spending on recovery from these emergencies should be treated as an emergency and should not require offsets.

The House Appropriations Committee proposed cutting more than $17 billion in FY1995 spending while providing $5.4 billion for the DRF. The Senate Appropriations Committee developed a smaller $13.5 billion spending package, which funded the Administration's full $6.7 billion request for the DRF.

While the bill was before the conference committee, an additional request from the Administration for $142 million in assistance related to the Oklahoma City bombing came to Congress. The initial conference agreement included $16.4 billion in rescissions, $6.7 billion for the DRF, and an additional $251 million for needs stemming from the bombing. Although both chambers passed the agreement, the President vetoed it largely in response to the makeup of the rescissions package. A new package was approved seven weeks after the original veto, containing $16.3 billion in rescissions, $6.6 billion for the DRF, and $290 million for needs stemming from the bombing (roughly one-half for Oklahoma City, one-half for anti-terrorism measures).

In this case, the congressional majority clearly stated an intent to offset the Administration's supplemental budget requests, regardless of their emergency designation. Some Members criticized the creation of linkages between traditionally politically popular disaster assistance funding and more divisive spending reductions and tax legislation.

Representative Anthony Beilenson, in the minority at the time, made these remarks in debate on the original House package: "Combining these two matters—emergency assistance and rescissions—into one piece of legislation leaves us with the unfair choice of voting either for emergency assistance and against adequate funding for a great many other programs we support, or against emergency assistance and for retaining existing funding for those other programs." Speaking for the majority, the chairman of the Appropriations Committee, Representative Robert Livingston, claimed the bill set a historic precedent, calling it "the first time an emergency supplemental has ever been paid for in history," although the House had already passed an emergency supplemental appropriations bill for the Department of Defense in February 1995 that had been offset.

It is important to note that the new congressional majority had already announced their plan to bring forward a rescission package at the opening meeting of the House Appropriations Committee, where the chairman famously illustrated his intent by displaying a collection of large knives. While the deficit-reduction agenda outlined by Chairman Livingston prior to the supplemental request may have been the original motive for the rescissions package, P.L. 104-19 is a clear case where supplemental appropriations for the DRF were directly and fully offset by cuts to other parts of the budget.

FY1996 Omnibus Consolidated Appropriations and Rescission Act (H.R. 3019, P.L. 104-134)

In February 1996, Congress was faced with resolving six appropriations bills in the wake of a budgetary standoff that had resulted in government shutdowns. That month, the Administration amended their budget request to provide additional resources for FY1996. H.R. 3019 would be the vehicle for the resolution of those six unfinished appropriations bills and the Administration's request for additional funds. The final conference agreement on those unfinished bills included $222 million for the base budget for the DRF, but rescinded $1 billion from the contingent disaster relief funding (a type of emergency funding that is contingent upon a request from the Administration) provided to the DRF just months earlier in P.L. 104-19 . This was the largest single offset to the funding provided in the bill.

It is worth noting that part of the debate on H.R. 3019 addressed offsets for disaster assistance , which is generally considered to be a broader category of disaster funding, going beyond what is provided through the DRF to encompass disaster aid provided through other components of the federal government. The original House version of the bill included offsets for disaster assistance. During Senate consideration of the bill, several amendments were offered and withdrawn that proposed offsets for disaster assistance funding. None of these were brought to a vote. However, the conference report notes that Senate provisions calling for offsets for disaster assistance were dropped from the bill as unnecessary, as both the original House legislation and the conference agreement included adequate offsets for disaster assistance.

While this legislation is an example of disaster assistance being offset, there are two primary reasons to exclude P.L. 104-134 as an example of supplemental appropriations for the DRF being offset. First, while the bill did include new budget authority for the DRF, this was not a supplemental—the new budget authority was the regular appropriation for the DRF for FY1996. Second, although the legislation is offset, the billion-dollar rescission taken from the DRF meant the DRF faced a net loss of $778 million from the legislation. Therefore, by not providing supplemental appropriations to the DRF and actually using DRF funds to pay for supplemental appropriations for other government elements, this legislation is not an example of supplemental funding for the DRF being offset.

Division B of the FY2006 Defense Appropriations Act (P.L. 109-148)

Hurricane Katrina struck the Gulf Coast on August 29, 2005. Ten days later, Congress had passed two laws that provided $60 billion in emergency funding to the DRF. Both measures were enacted one day after the requests were received. Preliminary cost estimates varied widely and lacked a basis in facts, which were still in short supply, as flood waters had yet to recede, preventing damage assessments and cost estimates from being made. After an initial spike in spending to meet emergency needs, as the recovery began to unfold, FEMA's rate of spending slowed. One month after passage, roughly two-thirds of the funds Congress had provided for disaster relief in the wake of the storm had yet to be allocated to hurricane relief work.

Congress began to reallocate the unspent dollars from the DRF to other disaster assistance programs, first to the Community Disaster Loan Program, and then more broadly. The Administration requested a $17.1 billion reallocation from the DRF to shore up non-FEMA disaster assistance programs in October 2005, but in December 2005 Congress approved a larger reallocation package included with the FY2006 Defense Appropriations Act that drew $23.4 billion from previously appropriated DRF monies and distributed them to several other agencies with storm-response needs.

The congressional response to Hurricane Katrina was atypical in terms of the speed of its passage and amount of funding involved. Congress passed the largest non-war supplemental to date in support of the relief efforts before the scope of the needs had been fully assessed. It is not surprising, then, that the initial allocation would be reformulated to meet the emerging challenges of the recovery. The redistribution of DRF resources to disaster assistance in later legislation is, as was the case with P.L. 104-134 , an example of disaster relief being used as an offset, rather than being paid for by an offset.

Debating Offsets for Disaster Relief: 2011-2013

DRF Replenishment and Enactment of the Budget Control Act

In 2011, the House Appropriations Committee adopted an amendment that included an offset for $1 billion of additional DRF funding added to the Homeland Security appropriations bill. This offset was unusual in that it drew funding from the Department of Energy rather than the Department of Homeland Security —traditionally, offsets approved by the appropriations committees in the context of an annual appropriations bill have come from within the originating subcommittee's jurisdiction.

This offset was debated on the House Floor during consideration of the H.R. 2017 , and again during debate on a continuing resolution intended to provide stopgap funding for government operations and to replenish the DRF, which came historically close to depletion at the end of FY2011.

Ultimately, an agreement was reached in September 2011 on a continuing resolution that paid for continued government operations and funded the DRF at an annualized rate of $2.65 billion, but without a supplemental appropriation for FY2011 or an offset.

In the months before Congress addressed the continuing resolution, however, it passed the Budget Control Act (BCA, P.L. 112-25 ). Signed into law on August 2, 2011, this legislation provided a legislative context for the appropriations work for the coming fiscal decade. In addition to setting discretionary spending caps and a means to enforce them, the BCA included provisions to allow the caps to be adjusted upward to make budgetary room for disaster assistance and emergencies. The bill passed the House by a vote of 269-161 and the Senate by a vote of 74-26. The bill came one Democratic vote short in the House of having support of the majority of both caucuses of both the House and Senate. Despite this relatively broad support, discussions concerning the spending caps and budget mechanisms established by the BCA—including the cap adjustment provisions for disasters—continued into the debates on wrapping up the FY2012 appropriations legislation.

Toward the end of December 2011, the House of Representatives took up three pieces of legislation under a single rule for debate: a consolidated appropriations act ( H.R. 2055 , P.L. 112-74 ), a disaster assistance supplemental ( H.R. 3672 , P.L. 112-77 ), and an offset package ( H.Con.Res. 94 ). P.L. 112-74 provided $700 million for the DRF, P.L. 112-77 provided an additional $8.1 billion in disaster assistance (including $6.4 billion for the DRF), and the offset package would have provided a 1.83% across-the-board rescission to pay for the additional disaster assistance. While all three pieces of legislation passed the House, the Senate only passed the consolidated appropriations act and supplemental, rejecting the offset package by a vote of 43-56.

Chairman Harold Rogers of the House Appropriations Committee clearly stated the purpose of H.Con.Res. 94 was to offset the $8.1 billion in additional disaster assistance. Ranking Member Norman Dicks indicated immediately thereafter that the minority opinion was that the resolution was unnecessary, but did not object to its provisions. The Senate did not address the resolution directly in floor debate, although several Senators noted that the disaster supplemental was within the flexibility provided under the BCA.

Ultimately, despite this legislative activity, the first session of the 112 th Congress ended without offsets being applied to supplemental appropriations for the DRF.

Hurricane Sandy: Catastrophic Disasters and Offsets for Disaster Relief

The first time the House and Senate voted on offsetting the costs of a catastrophic disaster after the BCA was in full effect was in the wake of Hurricane Sandy.

On October 29, 2012, shortly after the beginning of FY2013, Hurricane Sandy made landfall in New Jersey. According to wire service reports a month afterward, the storm killed at least 125 people in the United States and had $62 billion in damage attributed to it. In late November and early December 2012, official estimates of the damage began to become public, and calls came from affected delegations for a supplemental appropriations package to provide assistance. Toward the end of November 2012, Senator Saxby Chambliss indicated that he expected disaster assistance to be offset, and House Majority Leader Eric Cantor indicated that disaster assistance should stay within the limits outlined by the BCA. On December 7, 2012, the Administration released a request for $60.4 billion in supplemental appropriations in connection with Hurricane Sandy, including $11.5 billion for the DRF. The preamble to the request noted that the request exceeded the allowable adjustment for disaster relief, and requested that funds not covered by the allowable adjustment be designated as emergency funding. The supplemental request also voiced the Administration's opposition to offsetting the cost of the legislation.

On December 12, 2012, the Senate Appropriations Committee published a draft amendment to H.R. 1 on its website that would have provided $60.41 billion in supplemental appropriations in response to this request. The Senate ultimately amended the amendment, passed it by voice vote and then passed the underlying legislation ( H.R. 1 ) on December 28, 2012, by a vote of 62-32. Senator Leahy, speaking on behalf of Chairman Inouye of the Senate Appropriations Committee as the bill was being brought up, spoke in opposition to offsetting the cost of the bill:

I have heard two arguments against moving to the emergency supplemental as quickly as possible. I have found them surprising. The first is that the cost of this bill should be offset with cuts to other programs. This is the same argument we heard last year when we needed emergency funding to respond to Hurricane Irene. Well, it made no sense a year ago. It makes no sense today. It will make no sense tomorrow. The suggestion that we should cut funding from base budgets of departments and agencies that are carrying out the essential functions of our government in order to pay for an unanticipated natural disaster—that is absurd. Mandating offsets means cutting funding from law enforcement to pay for replacing a vital roadway destroyed by Sandy. It means cutting funding for education through Head Start in order to provide clean drinking water to those who have been left with nothing in the wake of Sandy. The point is obvious: These are emergencies. That is why they are called emergencies. We do not do offsets to pay for emergencies.

.... The President requested and the committee is recommending $60.4 billion to respond to this storm. The total budget authority for nondefense spending is about $500 billion a year. Using the logic that all emergency spending should be offset would cut the discretionary spending needs—if we see seven more disasters, well then I guess we eliminate every single agency, department, and program except the Pentagon.

Senator Schumer spoke later that same day:

First, should we have offsets to the monies that are proposed here?

Now, we have not done that in the long history of disasters, for a good reason. You will never get the disaster money if you have to pit an existing Federal program against disaster money. We have always said that disaster is treated separately, and we would hope that would continue. It would not be fair or right to do this now. I would say to my colleagues, if we begin a pattern of offsetting now—there was some attempt to do it with Irene, but in a bipartisan way we rejected that in this body. If your whole area is hit next and you have to sit there and wait while Congress fights over offsets, what are you going to do? It would be an awful precedent to start that.

As a side note, on December 21, a point of order was raised against the emergency designation for $3.4 billion in Army Corps of Engineers Construction appropriation for disaster mitigation projects. This point of order was sustained, eliminating the emergency designation for that particular appropriation. This meant that the $3.4 billion for the mitigation projects would count against the discretionary spending limits imposed by the Budget Control Act. It is relevant to note that at the time this legislation was being considered, the government was operating under the terms of a continuing resolution, as annual appropriations legislation for FY2013 had not been finalized. As the Budget Control Act had set limits on discretionary spending, counting these appropriations for mitigation against those limits reduced the amount of discretionary budget authority available for future FY2013 appropriations. Some observers considered this as mandating a precedent-setting offset for disaster assistance. Others considered this as including part of the cost of disaster preparedness within the discretionary budget.

On December 28, the Senate debated an amendment to reduce the size of the bill to only pay for the amount of assistance to be obligated in FY2013, and to offset that with reductions in foreign assistance. The sponsor of the amendment, Senator Rand Paul, described the reasoning behind his amendment thusly (the justifications for his particular offset have been redacted):

Mr. President, I rise in support of amendment No. 3410, which would take the spending for Sandy relief and spend only 1 year at a time and would offset that spending with spending cuts. Now, you ask, why would we want to do that? Well, if you have been watching Congress in recent years, you might understand that we are not very good with money up here. Each year we are spending $1 trillion that we do not have. To me, there is absolutely no objective evidence that we are very good with money up here, so you do not want to give Congress 3 years' worth of spending authority on Hurricane Sandy. Why don't we do it 1 year at a time and make sure there is correct oversight and make sure the money is not being wasted, make sure the money is not being abused....

So what I have asked is, let's just spend what you are going to spend next year. CBO says there is going to be $9 billion spent next year. That is what I allocate. I take the $9 billion from places where we are wasting it. I think we are wasting it by sending it overseas.... [W]e can't just say we are going to continue to print the money or borrow the money or simply raise taxes. There is not enough for all of this spending. What you need to do so is say: Some of the spending is wasteful, and we should not do it....

We have bridges and roads crumbling in our country. We have infrastructure that was damaged by Hurricane Sandy. They simply want to print more money and borrow it.

People will stand and say: Oh, we have never offset emergency funding. Well, maybe that is why we have a $16 trillion deficit—because no one wants to cut any spending around here. If you want to help those affected by Hurricane Sandy, do it, but do it by taking the money from someplace where we are wasting it.

The amendment was defeated by a vote of 3-91, and the bill went on to pass 62-32. However, the House did not act on the legislation before the end of the 112 th Congress, and it expired.

The House took up a new supplemental appropriation bill at the beginning of the 113 th Congress. H.R. 152 , which included $17 billion of the Administration's supplemental appropriations request, was introduced on January 4, 2013, and an amendment was filed that same day that included further portions of the Administration's request. The House Appropriations Committee described H.R. 152 as including funding "to meet immediate and critical needs," and the amendment as including $33 billion "funding for longer-term recovery efforts and infrastructure improvements that will help prevent damage caused by future disasters." Several amendments were filed with the House Rules Committee proposing offsets for both parts of the legislative package, some including specific programmatic cuts and others including across-the-board cuts to discretionary spending.

The House took up the legislation on January 15, 2013, under a structured rule which made in order a number of amendments, including one amendment to offset the cost of H.R. 152 with an across-the-board cut to discretionary appropriations for FY2013. The amendment failed by a vote of 162-248. The bill went on to pass the House without offsets by a vote of 241-180.

The Senate took up the bill later that month. An amendment was offered to reduce spending by 0.5% over the next nine years through reducing the discretionary spending limits in the BCA to offset the cost of the legislation. The amendment was defeated by a vote of 35-62. The Senate passed the bill later that day 62-36, and it was signed into law by the President as P.L. 113-2 .

Considerations for Congress

As Congress looks to the future of how it budgets for disasters, it may find itself again considering whether or not to offset disaster relief. It may also find itself in the next few years considering whether to continue or modify the BCA provisions providing budgetary flexibility for disaster relief, or whether to take a different approach.

Should Supplemental Disaster Assistance Be Offset?

With the one exception noted above ( P.L. 104-19 ), in the timeframe reviewed, Congress did not fully offset supplemental funding for the DRF, although it has provided some offsets at times for disaster assistance. However, the appropriations process for FY2012 and consideration of supplemental appropriations in FY2013 saw extensive debate on this topic. While Congress has provided a precedent for those asking how it would approach funding disaster relief under the BCA in response to a catastrophic disaster, funding the federal response to similar future events and ongoing concern about federal spending will likely continue to maintain congressional interest in this issue.

In the timeframe assessed by this report, supplemental appropriations for disaster assistance, including those for the DRF, were requested after the disaster had struck and were on the scale of hundreds of millions to billions of dollars. Although initial emergency needs had usually been met before Congress provided funding, Congress faced political pressure to respond in a timely fashion to ensure needed relief resources are available beyond the immediate term. Adding the additional step to the process of identifying offsets would have extended the time it takes for Congress to respond.

The most common types of offsets are spending cuts. During the debate on supplemental appropriations in the wake of Hurricane Sandy, amendments were offered proposing two types of offsets: specific programmatic cuts and across-the-board cuts. It would likely be difficult in a time of crisis to identify broadly acceptable single sources of cuts in the discretionary budget that could be used to offset billions of dollars of requested spending in response to a catastrophic disaster. Although across-the-board cuts can be relatively simple for Congress to calculate, it is possible that unintended consequences could result, potentially cutting programs important to the recovery of the area affected by the disaster.

Offsets could also be made through raising additional revenues to cover costs from the disaster. However, raising revenues carries political implications for some Members of Congress, and there are significant obstacles in both the House and Senate to a combined revenue and appropriations bill. The House Ways and Means and Senate Finance committees are the committees of jurisdiction for revenue matters, while the House and Senate Appropriations committees have jurisdiction over discretionary spending of that revenue. The regular procedures of the House and Senate provide for separate consideration of revenue and appropriations legislation. Rule XXI in the House mandates that legislative provisions are barred from general appropriations bills. Most revenue-raising provisions would qualify as legislative and therefore would not be in order. The Senate's Rule XVI serves a similar purpose. In accordance with the Constitution, revenue provisions must begin in the House, further complicating any possible Senate effort to initiate the use of such provisions as offsets. While House rules are waived periodically, the appearance of revenue provisions in appropriations bills is rare.

Based on the historical evidence presented, offsetting supplemental funding for the DRF would be a change in the standard practice of Congress. One of the first questions that then arises is whether or not the current situation warrants a change to this traditional pattern of action. The primary focus of the discussion thus far has been the relative severity of the present budgetary situation—Congress may consider how much our current practice of funding disaster needs contributes to the deficit and debt. One complicating factor in assessing this is the inherent unpredictability of disasters. Identifying emerging trends in events that cannot be accurately forecast in terms of timing, frequency, or magnitude, and then determining whether those trends warrant policy change, is extremely difficult.

There is also a question of fairness—making a change to the way disaster assistance is approached by Congress may disadvantage those hit by disasters in the future compared to those hit by disasters in the past, either by adding constraints on the amount of aid provided or by incurring delays in the process due to the processes needed to identify and secure offsets. On the other hand, the government constantly changes policies and practices to save money and to improve efficiency, changing the availability or timing of assistance through a variety of other programs. While some may benefit or suffer as a result, that is in many cases not adequate justification in itself for not attempting to make needed reforms.

As noted above, one potential impact of requiring a search for offsets in the immediate wake of a disaster is that it might delay the availability of federal relief funds. Opponents of offsets note that developing options to pay for disaster assistance may slow the delivery of that aid, especially as recent budget reductions have arguably thinned the availability of quickly agreeable offsets. Also, the urgency of the process may not permit the necessary careful review of programs facing sudden reductions. Proponents might well argue that given the initial failures to deliver aid in the wake of Hurricane Katrina, an accelerated timeline for congressional action does not, on its own, beget an effective, efficient response.

Use of Emergency Designations and Adjustments to Discretionary Spending Limits

What was a traditional pattern of using the supplemental appropriations process to cover the costs of major disasters may have changed with the enactment of the Budget Control Act and its allowable adjustment which can be used to cover the costs of major disasters under the Stafford Act. This allowable adjustment has allowed funding that in the past might have been provided through the supplemental appropriations process to move through the annual appropriations process without competing with the rest of the discretionary budget. Only two supplemental appropriations containing disaster relief have been enacted since the BCA went into effect: P.L. 112-77 , which moved in parallel with a consolidation annual appropriations act for FY2012, replenishing the DRF, and P.L. 113-2 , which passed in the wake of Hurricane Sandy. Each provided multiple billions of dollars in disaster assistance, including billions of dollars for the DRF.

Emergency designations have been used in the past to provide additional funding without violating caps on discretionary budget authority established by congressional budget resolutions. Most supplemental disaster assistance in the past has been designated as emergency funding. One of the primary reasons that supplemental funding for the DRF had not been offset over the period of analysis used in this report is the simple fact that it has not had to be offset, given the availability of the emergency funding mechanism to work around the budget caps.

Disaster relief is defined under the BCA as assistance provided pursuant to the declaration of a major disaster under the Stafford Act. This definition is made as part of creating an "allowable adjustment" to the discretionary budget caps for disaster relief. The BCA also says that "appropriations considered disaster relief under this subparagraph in a fiscal year shall not be eligible" for the unlimited adjustment available for emergencies.

Initially, some observers took a broad reading of these provisions, and envisioned a future where disaster relief funding would be constrained by the size of the allowable adjustment (possibly in a year with multiple costly disasters) and the option of providing emergency funding for major disasters would no longer be on the table. However, the law makes no such explicit delineation—despite the creation of two adjustment mechanisms for emergencies and for disaster relief, there is no explicit statement that the emergency funding adjustment may not be used to pay for disaster assistance or relief. Additionally, it is worth noting that initially, no enforcement mechanisms were provided in the BCA to prevent broad application of disaster relief or emergency designations.

Congress could have chosen to constrain itself from going beyond the allowable adjustment, requiring offsets for further disaster relief from the regular budget, or—in a more proactive step—simply funding a larger proportion of disaster relief in the base budget. The appropriate level of base funding for the DRF was a recurring issue over the time period examined. Instead, in the absence of an explicit prohibition on the practice as noted above, Congress chose to use emergency designations to fund disaster relief in excess of the allowable adjustment under the BCA. As House Appropriations Committee Chairman Rogers noted in debate opposing an across-the-board offset for disaster relief in the wake of Hurricane Sandy:

I believe we can and should attempt to budget for disasters, as we did under the BCA. There are times when a disaster simply goes beyond our ability to offset. Hurricane Sandy is one of those times.

In the current budgetary environment, using allowable adjustments or emergency designations in supplemental appropriations legislation results in additional deficit spending. Strictly conforming to the budget limits means that meeting unexpected demands for resources (such as for disaster relief) will likely result in unplanned reductions in other parts of the budget, reducing services available through other programs.

In addition to the potential fiscal repercussions, the consequences of a political backlash from overuse of these special authorities should not be ignored. Overly broad use of emergency or disaster relief designations to cover spending not appropriate to those categories could lead to more strictly drafted budget control legislation in the future, reducing or eliminating flexibility that may otherwise be needed on short notice in dire circumstances.

The budget constraints of the Budget Control Act will expire at the end of FY2021. Congress may choose to continue to set long-term limits on discretionary spending or take a new approach to the federal budget. As part of those discussions, Congress may consider a new approach to budgeting for major disasters, or extend the current system of discretionary spending caps and adjustments with modifications.

Appendix. Historical Data

To show the relative impact of offsets on supplemental spending and the DRF, Table A-1 provides a breakdown of all appropriations bills that have become law carrying both supplemental spending and rescissions from FY1990 through FY2013. The columns indicate the total amount of supplemental appropriations in the bill, the rescissions in the bill, and the amount of additional funding for the DRF. The table then notes whether there are provisions indicating that the funding for the DRF is offset. The table also notes when DRF funding has been used as an offset for other activities.