The Honorable Paul Ryan
Speaker
United States House of Representatives
H-232, U.S. Capitol
Washington, D.C. 20515
The Honorable Nancy Pelosi
Minority Leader
United States House of Representatives
H-204, U.S. Capitol
Washington, D.C. 20515
The Honorable Mitch McConnell
Majority Leader
United States Senate
S-230, U.S. Capitol
Washington, D.C. 20510
The Honorable Chuck Schumer
Minority Leader
United States Senate
S-221, U.S. Capitol
Washington, D.C. 20510
Dear Speaker Ryan, Majority Leader McConnell, Minority Leader Pelosi, and Minority Leader Schumer:
While you continue your negotiations on a long term reauthorization of the National Flood Insurance Program (NFIP), National Taxpayers Union respectfully asks that you include meaningful reforms into any legislative proposal. It is our hope that you will work together, across party lines, to craft a comprehensive legislative package that addresses NFIP’s dismal fiscal state to avoid a future taxpayer-funded bailout of the program. It is our view that enacting only short-term extensions without reforms is a disservice to taxpayers, policyholders, and only serves to further entrench the flaws already deeply embedded in the NFIP.
As you are keenly aware, the NFIP in its current form requires U.S. taxpayers to shoulder a burdensome level of risk. Structural financial problems have resulted in an insolvent program that has borrowed almost $40 billion from taxpayers and runs an annual deficit of nearly $1.5 billion. Heavily-subsidized rates that do not accurately reflect their actual level of flood risk and repetitive loss properties encourage moral hazard. Fewer than two-percent of the millions of policies account for a sizeable portion of its debt. As a result, the NFIP consistently earns a “high risk” label by the Government Accountability Office.
Despite these concerning metrics, Congress has failed to enact significant changes to put the program on sound financial footing. In fact, the program has been renewed 44 times since 1998, 41 times with zero reform. A kicking-the-can-down-the-road approach will only get policymakers so far before the road runs out. And when it does, it will be taxpayers who be will asked to fund a multi-billion dollar bailout of the program.
Rather than continuously seek the easy way out, lawmakers on both sides of the aisle should work together on a series of common sense, bipartisan reforms that would make an immediate difference. Implementing reforms, such as accurate risk-based pricing, increased private market competition, and smarter mitigation policies will help the program move toward fiscal solvency to avoid a future taxpayer-funded bailout.
NFIP is long overdue for reform. We urge you to craft a bill that extends the flood program and also contains much needed changes to help move toward fiscal solvency. We look forward to working with you to achieve a better system for consumers and taxpayers.
Sincerely,
Pete Sepp, President
National Taxpayers Union