Except in cases involving fraud, H.R. 539 would require the Federal Emergency Management Agency (FEMA) to waive the collection of improper payments provided to individuals or households after major disasters declared under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. The bill also would require FEMA to report on its processes for determining the distribution of disaster assistance.
Under current law, FEMA must recoup improper payments, which can stem from errors in processing or from duplicate payments. Recouped amounts are deposited into the Disaster Relief Fund and are available to spend without further appropriation. The agency currently has limited discretion to waive debts.
CBO assumes that the bill will be enacted late in fiscal year 2021. Accordingly, the budgetary effects would begin in 2022. Using information from the agency, CBO estimates that, in nearly all eligible cases under the bill, FEMA would waive collections, which currently total $36 million. Those collections are recorded as reductions in direct spending, so waiving them would increase direct spending. However, those amounts would have been available to spend, so the bill also would reduce outlays. Because collections precede spending, enacting the bill would increase direct spending by $2 million over the 2021-2026 period but would have no net effect on direct spending over the 2021-2031 period.