Washington–Legislation that would exclude money the government grants to homeowners for flood repairs from being considered as income that disqualifies them from federal assistance programs has won passage in the House of Representatives.
The bill, which has insurance industry support, now moves to the Senate. It was introduced by Rep. Richard Baker, R-La., in February. Known as HR 804, it is a response to an Internal Revenue Services decision issued last year.
Under that IRS finding, all flood mitigation grants must be reported as income for tax purposes. According to the House Financial Services Committee, where Rep. Baker chairs a key subcommittee, anecdotal evidence has shown that homeowners have refused grant offers for mitigation out of fear of the tax implications.
The panel found there were concerns as well that eligibility for other programs, such as federal education, nutrition and health care benefits, could also be affected.
"This bill reaffirms the purpose of flood mitigation grants, which is to lend a hand to people badly in need of assistance, and to do away with the unfair punishment of counting the grants against them and rendering them ineligible for other programs," said Rep. Baker.
Mr. Baker's legislation, which was passed by a voice vote on the House floor, had the backing of insurance groups.
"It is in the interest of the federal government to encourage mitigation of homes to prevent flood damage, but without this legislation many homeowners would be forced to forgo such mitigation in order to continue to qualify for other programs important to them and their families," said Melissa Shelk, vice president of federal affairs for the American Insurance Association.
Rep. Baker's bill is designed to build on the reforms enacted as part of the Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004, which required the owners of repeatedly flooded properties to make mitigation efforts or potentially face having their flood insurance premiums raised to actuarially determined levels.
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