The Trump administration canceled $11 billion in disaster payments to states in an unprecedented move that could signal a slowdown in the flow of federal funding after extreme weather events.
The unannounced move was revealed in a Sept. 15 government report showing that the Federal Emergency Management Agency withheld $10.9 billion it had planned to give 45 states in the final two months of the fiscal year that ended Sept. 30. The withheld money, which hasn’t been previously reported, was to reimburse the states for emergency costs related to the pandemic.
FEMA said it “shifted to fiscal year 2026” the planned reimbursements, the report noted in small print, marking the government’s only known acknowledgment that it had delayed the payments. The report does not indicate when the money would be paid, raising concern among emergency management groups about the effect the move could have on state budgets and whether it was a sign of President Donald Trump’s threat to reduce disaster aid to states.
“It’s not something that we ever did in the past,” said Michael Coen, who served as FEMA’s chief of staff during the Biden and Obama administrations. “It’s highly irregular.”
The White House did not respond to requests for comment. The Department of Homeland Security and FEMA also did not comment.
The cancellation is the administration’s latest — and costliest — move to delay the delivery of disaster aid as Trump vows to weaken FEMA and shift more costs to states. The administration has halted multibillion dollar grant programs for disaster protection, imposed new scrutiny on FEMA payments and delayed acting on governors’ requests for aid following disasters.
The move could also complicate the government’s ability to respond to extreme weather by resulting in a large reduction in available disaster aid over the next 12 months. FEMA is effectively starting the fiscal year with an $11 billion IOU that could reduce the balance of the agency’s disaster fund by almost half.
If Congress approves Trump’s budget request of $26.5 billion for FEMA aid, the agency would have only $15.5 billion available for new disaster spending through Sept. 30, 2026, if it reimburses the states what they’re owed in pandemic costs.
FEMA has paid an average of about $50 billion a year in disaster relief from fiscal 2020 through 2024, according to the Congressional Research Service.
“It’s a real reduction in federal capacity,” said Sarah Labowitz, a senior fellow at the Carnegie Endowment for International Peace who tracks FEMA spending. “If they only have $15 billion in the Disaster Relief Fund [this] year, we should expect them to continue the kinds of practices that remove the idea that you as a local jurisdiction aren’t on your own when you face a disaster.”
The canceled payments also create uncertainty for states that were planning to receive their share of the $11 billion. One-third of the $11 billion was slated for New York and California, according to an analysis of FEMA records by POLITICO’s E&E News. Maryland, Georgia, Florida and Pennsylvania are each owed between $500 million and $800 million.
“Eleven billion dollars is a whole lot of money. It’s a tremendous amount of money,” said Emily Brock, who directs the federal liaison center at the Government Finance Officers Association, a trade group for public finance officials that focuses on local, state and federal budgets.
Brock did not know about the delay until being told about it by E&E News and remained uncertain about when in fiscal 2026 FEMA would pay the $11 billion.
“It would be really helpful to know, what is the plan beyond Oct. 1,” Brock said.
$140B in Covid payments
The $11 billion delay was the latest in a series of moves by White House Office of Management and Budget Director Russ Vought and Homeland Security Secretary Kristi Noem that were designed to keep FEMA’s disaster fund solvent through the last fiscal year and avoid asking Congress for additional money.
Since the start of fiscal 2025 a year ago, FEMA projected that it would deplete its disaster fund months before the year ended at the end of September. In February, FEMA disclosed that the fund would have a $14.6 billion deficit by the end of fiscal 2025.
In the past, Trump has addressed projected shortfalls by asking Congress to approve additional disaster funding — as he did three times in his first term, to pay unexpected costs from the pandemic and three catastrophic hurricanes in 2017.
For its part, FEMA has often buffered itself from shortfalls by temporarily restricting disaster aid payments to cover only emergency costs, rather than rebuilding projects and other long-term expenses. The agency has imposed restrictions 10 times since 2003, including in 2017 after Hurricanes Harvey, Irma and Maria.
But starting in June, the administration slowed down FEMA disaster payments and the budget outlook began to improve.
Since then, the administration has postponed at least $1.5 billion in planned aid payments due to “review delays” of disaster-recovery projects in Republican and Democratic states, according to recent FEMA reports reviewed by E&E News.
Payments also slowed because Noem began overseeing the approval of all project expenditures exceeding $100,000. FEMA also became more aggressive in reclaiming disaster aid that states hadn’t collected. And Trump himself started waiting up to two months to take action on governors’ requests for disaster aid.
“Donald Trump is the only president in my lifetime who has withheld disaster relief for devastated communities — it’s totally reprehensible,” Washington Sen. Patty Murray, the top Democrat on the Appropriations Committee, said in a statement to E&E News, referring to the $11 billion.
The canceled $11 billion in pandemic reimbursements originates from Trump’s decision in his first term to use FEMA disaster aid to repay each state for certain emergency costs related to Covid.
FEMA badly underestimated its pandemic costs in early 2020 and continued to do so for several years, creating chronic budget shortfalls as the agency struggled to pay for the pandemic and disasters.
“No one knew initially how much it would cost,” the Government Accountability Office said in a 2024 report about FEMA’s Covid spending.
After estimating in early 2020 that the pandemic reimbursements would cost $17.6 billion, FEMA has now spent $140 billion and expects to continue repaying states for at least another year.
“They will continue to be in this anticipated deficit until all the Covid bills are paid,” said a former FEMA senior official who was granted anonymity to discuss internal deliberations. “The only way to truly get a handle is to provide a supplemental [cash infusion] to close out the Covid bills and let the Disaster Relief Fund focus on what it was intended to do.”
Reporter Andres Picon contributed.
