“Lacking this ability to repay within a reasonable period, we view deficit-financed spending from any additional FEMA borrowing above its current $18.5 billion level to be essentially identical to those of a conventional federal spending program. Therefore, spending flowing from additional federal borrowing authority should be fully paid for by spending reductions elsewhere in the federal budget.”

The Federal Emergency Management Agency, which administers the NFIP, has estimated that claims relating to Hurricanes Katrina and Rita will ultimately cost the program approximately $23.5 billion, which is more than had been paid out by the program from its inception in 1968 through 2004.

Congress has already extended the NFIP's borrowing authority to $18.5 billion, and Reps. Pence and Hensearling noted that the House is expected to vote tomorrow to further increase it to $21.2 billion to cover claims through April.

“While this spending should be offset, we appreciate your work with House conservatives to ensure this a short-term extension that will allow substantial time for a vigorous and comprehensive reform of the flood insurance program over the coming months,” the two said in the letter.

“If this imperative reform effort falters, we will oppose any future increases to FEMA's borrowing authority that are not fully offset,” they wrote.

The reforms sought by Reps. Pence and Hensearling would make the NFIP actuarially sound and allow for the building of reserves for higher than expected claims. Specifically, the two called for an end to premium subsidies for properties used as vacation homes and addressing the problem of repetitive loss properties.