Dispute over low-income energy assistance delays flood insurance bill

A Senate dispute over low-income energy assistance might jeopardize legislation to increase the federal flood insurance program's borrowing limit, potentially preventing thousands of homeowners from being reimbursed for claims related to Hurricane Katrina.

Sen. Olympia Snowe, R-Maine, has placed a hold on a bill to increase the borrowing limit from $18.5 billion to $20.8 billion for the Federal Emergency Management Agency to operate the flood program, according to a Senate aide and lobbyists. The House passed the measure by voice vote Wednesday.

Snowe does not oppose the federal flood bill, but has taken the action to spur movement on Senate legislation that would allocate an additional $1 billion in funding for the Low Income Home Energy Assistance Program in fiscal 2006. Appropriators had provided $2.2 billion for the program.

Senate Majority Leader Bill Frist, R-Tenn., in December promised Snowe and Sens. Norm Coleman, R-Minn., and Susan Collins, R-Maine, that he would bring up the LIHEAP measure early this year.

But Frist has been stymied in bringing the bill to the floor because Sen. Tom Coburn, R-Okla., has placed a hold on the bill. Coburn's concerns about the LIHEAP bill are also shared by other fiscal conservatives, according to aides. Democrats support the measure.

Coburn is calling for the additional $1 billion for LIHEAP to come from offsetting budget cuts, his spokesman said. "The president's budget has a clear definition of what an emergency is, and I don't think that qualifies for that," the spokesman said.

The recently passed budget reconciliation bill calls for $1 billion -- $250 million in guaranteed funds and $750 million in emergency funds -- to be spent on LIHEAP in fiscal 2006 and fiscal 2007. The Senate bill would modify that language to allow the entire $1 billion to be spent in fiscal 2006.

The emergency money, though, would be allocated at the discretion of the White House.

Insurance and financial services lobbyists said they are concerned that if Congress does not clear the flood insurance program by the end of the week, the federal flood program will reach its cap and stop issuing reimbursement checks to policyholders affected by Katrina.

The federal program is funded by premiums and administered by insurance companies, but a spate of natural disasters has forced the FEMA to borrow Treasury funds that exceed its budget. Late last year, lawmakers raised the borrowing limit from $3.5 billion to $18.5 billion to pay claims from hurricanes Katrina and Rita.

One lobbyist said he was perplexed why the House amended the flood insurance bill Wednesday, forcing it to go back to the Senate to be cleared. The Senate passed the bill Feb. 10 with language that would provide $21.2 billion in borrowing authority, almost $500 million more than called for in the revised House version.

"This is like the U.N. without the little earpieces to translate stuff," the lobbyist complained.

Conservatives have been concerned about the flood program, which serves 4.7 million homeowners, because they contend the borrowed funds will not be repaid. Reps. Mike Pence, R-Ind., and Jeb Hensarling, R-Texas, outlined their reservations in a letter Tuesday to House Speaker Dennis Hastert, R-Ill., and Majority Leader John Boehner, R-Ohio. They said they would oppose any future increases in borrowing authority for the flood program unless it was offset by cuts elsewhere.