These include the Budget Control Act of 2011 ( P.L. 112-25 , hereinafter the BCA), which established a range of budget-controlling mechanisms. Caps were placed on discretionary spending from FY2012 through FY2021. If these caps are exceeded, an automatic cancellation of budget resources—known as sequestration—would take place across most discretionary budget accounts to reduce spending down to the cap. Finally, the report explores a number of other issues pertinent to disaster relief funding in the BCA-regulated environment, including
time frames for congressional action after a large-scale disaster strikes; the implications of the rising number of Stafford Act declarations; funding disaster relief efforts in severe disaster years; offsetting the cost of disaster relief; calculating the allowable adjustment for disaster relief; the degree to which different types of disaster relief are included in the methodology for calculating the 10-year average on disaster relief spending; and the possible implications of excluding Stafford Act assistance for emergencies and fires from the allowable adjustment calculation. The limit established by the BCA on adjustments to the caps for disaster relief is based on the average funding provided for disaster relief over the last ten years, excluding the highest and lowest annual amounts, calculated by the Office of Management and Budget (OMB). If Congress spends less than that average on disaster relief in a given fiscal year, the caps can be further adjusted upward by the unspent amount in the following year. Funding requested under the disaster relief cap adjustment is for major disasters declared pursuant to the Stafford Act and designated by the Congress as being for disaster relief pursuant to section 251(b)(2)(D) of the BBEDCA, as amended by the BCA. 113-2 , the Disaster Relief Appropriations Act, 2013 (that provided $50.5 billion in supplemental funding for Hurricane Sandy), used the remaining $5.4 billion of the allowable adjustment to provide additional resources for the DRF. The sizeable initial disaster relief expenditures for Hurricane Katrina and the other 2005 storms will begin to lose relevance in calculating the allowable adjustment for disaster assistance for FY2016, and will no longer impact calculations for the allowable adjustment in FY2017. Once FY2005 and FY2006 rotate out, there will be a corresponding drop in the allowable disaster assistance adjustments. Moreover, as the Administration and Congress work to spend under the adjustment, the allowable adjustment could continue to decrease, increasing the likelihood that it would be inadequate to accommodate future catastrophic disaster needs. Renegotiation of the underlying budget control laws, or 4. In the wake of Hurricane Sandy, the Administration submitted a request to Congress for more than $60 billion in relief, well in excess of the available allowable adjustment. Efforts were made to reduce the size of the FY2013 disaster supplemental, as well as to remove emergency funding designations for mitigation programs, to ensure that such funding would count against the BCA's discretionary spending limits. Supporters argued that additional funds could be provided later in the process. Disaster Relief Spending Under the BCA

In the "minibus" legislation, P.L. The structure of the appropriation for the DRF has change d to reflect the availability of resources that do not count against the allocation for annual appropriations, allowing for prefunding of disaster needs.
On August 2, 2011, the President signed into law the Budget Control Act of 2011 (BCA, P.L. 112-25), which included a number of budget-controlling mechanisms. As part of the legislation, caps were placed on discretionary spending for the next ten years, beginning with FY2012. If these caps are exceeded, the BCA provides for an automatic rescission—known as sequestration—to take place across most discretionary budget accounts to reduce the effective level of spending to the level of the cap. Additionally, special accommodations were made in the BCA to address the unpredictable nature of disaster assistance while attempting to impose discipline on the amount spent by the federal government on disasters. The BCA created an allowable adjustment specifically to cover disaster relief (defined as the costs of major disasters under the Stafford Act), separate from emergency appropriations.
The limit established by the BCA on adjustments to the caps for disaster relief is based on the average funding provided for disaster relief over the previous ten years, excluding the highest and lowest annual amounts, calculated by the Office of Management and Budget. If Congress spends less than that average on disaster relief in a given fiscal year, the caps can be further adjusted upward by the unspent amount in the following year. The existence of this "allowable adjustment" for disaster relief has influenced the way that the Disaster Relief Fund (DRF) is structured, allowing a larger overall funding stream to be provided in annual appropriations without it counting against the bill's allocation of discretionary spending.
On October 29, 2013, Hurricane Sandy came ashore, causing loss of life and billions of dollars in damage. The Administration proposed a relief package that exceeded the allowable adjustment for disaster relief under the BCA. The Administration requested, and Congress for the most part agreed, to designate the supplemental funding provided in the wake of Hurricane Sandy as emergency spending outside of the limited disaster relief adjustment made available under the BCA. The history of the legislative response to this disaster demonstrated that while the BCA included an accommodation to provide dedicated additional funding for many disasters, catastrophic events such as Sandy remain a challenge to those developing long-term budgeting strategies.
This challenge could be compounded by the fact that by design, the methodology used by the Office of Management and Budget (OMB) to calculate the allowable adjustment could not capture the full range of disaster relief spending, and that the structure of the formula for calculating the average provides smaller allowable adjustments in future years. The sizeable initial disaster relief expenditures for Hurricane Katrina and the other 2005 storms will begin to lose relevance in calculating the allowable adjustment for disaster assistance for FY2016, and will no longer impact calculations for the allowable adjustment in FY2017. Once FY2005 and FY2006 rotate out, there will be a corresponding drop in the allowable disaster assistance adjustment.
In the face of these challenges, Congress could choose to continue to use emergency funding to meet unbudgeted disaster relief needs, or change the allowable adjustment mechanism. Congress may also consider changing the formula used for calculating the allowable adjustment. Another potential option would be to take other steps to mitigate the impact of federal disaster relief spending on the budget, including altering the underlying laws, if Congress believes further legislative controls for federal disaster relief expenditures are a priority.
This report will be updated as needed.