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Uncertainty Surrounding Federal Disaster Funding Looms Over State Budgets
- The Pew Charitable Trusts warns that uncertainty around federal disaster funding could reshape state budgeting for disasters in 2026.
- Proposals under consideration would shift to up-front funding models or raise eligibility thresholds for federal aid.
- States have started using rainy day funds or new disaster accounts to cushion potential gaps from reduced federal aid.
- Delays and changes in federal funding are already affecting grants and disaster-response planning in states like New Mexico.
- Legislation and policy shifts could raise the cost burden on states and localities if federal support declines.
- The FEMA Review Council and the FEMA Act propose reforms that could change the way disaster funds are allocated.
- Experts warn that up-front grant funding could improve cash flow but may lack long-term cost flexibility.
- States are preparing for guidance gaps as federal policy debates advance in Washington.
- Some states have created dedicated disaster accounts to guard against future shocks.
- Experts caution that any reform must balance speed of aid with accurate long-term recovery costs.
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