The Barbed Wire - December 22, 2017

December 21, 2017
Senator Lara Introduces Legislation to Promote Fire Prevention and Access to Homeowners Insurance
Federal Disaster Relief
Federal Tax Reform
Continuing Resolution

Senator Lara Introduces Legislation to Promote Fire Prevention and Access to Homeowners Insurance

On Wednesday, Senator Ricardo Lara (D-Bell Gardens) joined local leaders, including Placer County Supervisor Jennifer Montgomery, to introduce the Wildfire Safety and Recovery Act, legislation aimed at helping California adapt to the “new normal” of extreme wildfire risk, keeping people and homes safe, and ensuring an ongoing strong market for insurers.  
California residents impacted by wildfires have seen a dramatic increase in non-renewals and cancellations, and RCRC, through its participation on the Tree Mortality Task Force, has worked to address this problem through the Insurance Subgroup.  
“More Californians are at risk from catastrophic wildfire, and many are taking steps to protect themselves and their property,” said Placer County Supervisor Jennifer Montgomery.  “Instead of dropping customers and putting insurance out of reach statewide, the Wildfire Safety and Recovery Act will allow insurers to continue to profitably invest in California and support responsible property owners and local communities who are stepping up to be fire safe.”
Among other actions, the Wildfire Safety and Recovery Act will:
  • Prevent insurance companies from dropping or non-renewing customers following a wildfire disaster; 
  • Require insurance companies to offer mitigation discounts and continued coverage to homeowners who make investments in wildfire safety; and,
  • Require approval by the Department of Insurance before insurance companies reduce the volume of policies in high-risk areas, in order to minimize market disruptions for homeowners and communities.
Senator Lara’s press release can be accessed here.

Federal Disaster Relief

This week, House Republicans proposed $81 billion in disaster relief through H.R. 4667 for areas hit by hurricanes and wildfires, the largest standalone aid bill in recent years.   Initially believed to be attached to a Continuing Resolution (CR), the stopgap funding measure was kept separate from H.R. 4667, the disaster supplemental bill, after a failure among Republicans to reach a consensus on a package deal.

Last week House leadership was concerned state delegations from Texas and Florida would withhold their support for a CR that did not include disaster relief but this appeared to be a bluff as the threat of a government shutdown loomed large.  H.R. 4667’s prospects for passage, originally seen less likely as standalone legislation, brightened after reports that House Minority Leader Nancy Pelosi (D-CA) will allow Democrats from states recovering from hurricanes and wildfire to support the bill.  Even if the bill passes the House with Democratic support, the Senate will not take up the disaster supplemental until Congress returns for the new year.  In his Thursday remarks, Senate Minority Leader Chuck Schumer (D-NY) called the bill “an unacceptable disaster supplemental” that fails to meet the needs of California, Puerto Rico, and the U.S. Virgin Islands.

Prior to sending H.R. 4667 to the House Floor, the House Rules Committee approved an amendment proposed by Rep. Mimi Walters (R-CA) which provides tax relief for families and individuals who were victims of California wildfires.  The amendment expands the requirements for writing off property damage and softens the penalty for accessing retirement funds to cover emergency expenses.

In addition to tax relief for wildfire victims the disaster aid package will provide over $81 billion in relief as its currently written.  The new aid package will split funding across multiple agencies, providing $26.7 billion to FEMA, $26.1 billion to the Community Development Block Grant program, and $12 billion to the Army Corps of Engineers for rebuilding.  With this latest package, Congress will have provided $130 billion emergency funding for hurricane and wildfire relief.

Federal Tax Reform

This week, Congress passed the Republican tax plan, clearing a path for the largest overhaul of the U.S. tax code since the Reagan administration.  The bill is ready for the president’s signature, which is expected to happen on January 3, 2018.  The measure passed the House with 224 Republican votes over unified Democratic opposition, and 12 Republican no votes.  The bill’s provisions will take effect immediately and taxpayers should understand how changes to the tax code will impact their returns.  The 12 dissenting Republicans were primarily from California, New Jersey, and New York, high tax states where the tax plan is deeply unpopular because of reductions to the state and local income tax (SALT), property tax, and mortgage interest deductions.  

California will lose more from the $10,000 cap to the SALT deduction than any other state.  In 2015, Californians claimed $112.6 billion from the SALT deduction, over 20 percent of the total amount claimed by U.S. taxpayers under SALT.  Itemizers will be impacted by caps to SALT, property taxes, and mortgage interest deductions, but Republicans anticipate a higher percentage of households will opt for the standard deduction, which will double in value under the new tax code.  The deduction caps implemented by the tax code overhaul are set to expire on December 31, 2025 along with the cuts to the individual rate.  Congress will decide whether to let these provisions expire or pass new legislation to permanently add this language to the tax code

Continuing Resolution

The Senate passed a further continuing resolution (CR) that will fund the government through January 19, 2018, and avoid a shutdown today.  The measure overcame opposition from Democrats and conservatives with a 66-32 vote.  GOP leadership won over 8 moderate Democrats while Republican senators Rand Paul (R-KY) and Mike Lee (R-UT) voted against the stopgap funding measure, and Sen. John McCain (R-AZ) was unable to cast a vote.  
Many prominent Democrats refused to support the must-pass spending bill, threatening a government shutdown, without long-term funding for the Children’s Health Insurance Program (CHIP) or language granting long-term legal status for DREAMers.  The bill includes funding for CHIP through March 2018, but Democrats want a five-year extension of the program in the CR, along with the DREAM Act, which provides protections for DREAMers.  The CR will allow Congress to break for the holidays before resuming funding negotiations for Democratic priorities and defense programs. 
Now that Congress has passed the CR, President Trump will sign the stopgap funding bill into law at the earliest opportunity.  In addition, President Trump is now expected to sign the Republican tax plan tomorrow before he departs for Christmas in Mar-A-Lago.  President Trump was initially withholding his signature until January 3, 2018 to give Republicans time to address language in the Pay As You Go Act, which would trigger an automatic $25 billion cut to Medicare to offset the tax bill’s $1.5 trillion hit to the deficit.