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<br />THE FLOOD OF 1993
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<br />Table 1.7 NFIP Flood Insurance Losses for the Period From April I Through September 30, 1993 by State for
<br />the 1993 Midwest Floods.
<br />
<br />Slate Policies Loss Count Total Average Losses Payments
<br /> 1/31/94 Payments ($) Payment ($) (%) (%)
<br />Illinois 36,844 3,624 61,389.123 16,939,60 22 21
<br />Iowa 8,689 1,690 23,378,415 13,833,38 10 8
<br />Kansas 11,065 1,071 10,702,780 9,993.26 7 4
<br />Minnesota 3,472 372 1,712,960 4,604.73 2 >1
<br />Missouri 20.981 8,271 192,296,740 23,249.52 5 65
<br />Nebraska 6,652 503 4,833,133 9,608.61 3 2
<br />North Dakota 3,008 198 285.572 1,442,28 1 >1
<br />South Dakota 1,313 115 745,309 6,480,95 2 >1
<br />Wisconsin 7,096 323 1,999,654 6,190,88 2 >1
<br />Total 99,120 16,167 297,343,686,00 18,392,01
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<br />Source: Federal Emergency Management Agency, Federal Insurance Administration, Computer prinl-out, March 16, 1994.
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<br />wheat is the principal crop. The largest claims were in
<br />the prairie pothole region (as were the bulk of the crop
<br />disaster payments) rather than in the floodplains. The
<br />probability of participation in the crop insurance
<br />program is lower for floodplain farmers than for those
<br />in the upland because flood damage is, in general, more
<br />localized than droughl which is the primary hazard iu
<br />the Midwest.
<br />
<br />Loans. Federal agencies have approved $623 million
<br />in loans to individuals. businesses. and communities
<br />impacted by the Midwest flood. These loans, which
<br />must be repaid, are a federal expenditure only to the
<br />degree that interest rareS are subsidized, borrowers
<br />default on loans, and administrative costs are iucurred
<br />(See Table 1.9). The primary source of Ihe loans is the
<br />Small Business Administration (SBA) Disaster Loan
<br />Program which provided $597 million in loans to flood-
<br />affected homeowners and renters, businesses of all
<br />sizes, and non-profit organizations. Interest subsidies,
<br />defaults, and administrative costs amount to
<br />approximately 30 perceuI of the loans," Fanners
<br />Home Administration (FmHA) is the source of
<br />agricultural loans because SBA is prohibited from
<br />
<br />28
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<br />making loans to farmers.
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<br />Federal income tax deductions. Uninsured and
<br />otherwise umeimbursed losses resulting from casualties
<br />such as a flood are deductible for Federal Income Tax
<br />purposes to the extent that they exceed IO percent of
<br />Federal Adjusted Gross Income plus $100. This
<br />deduction results in decreased tax revenue to the federal
<br />govenunent. The Internal Revenue Service provides
<br />tax counseling to disaster victims to assist them in
<br />applying for refuods by amending their previous years
<br />tax return when a major disasrer is declared. The loss
<br />of tax revenue has not been quantified for the Midwest
<br />flood. Due to the amount of insurance and disaster
<br />assistance payments. the income levels of many of the
<br />flood victims, and Ibe requirement that the loss exceed
<br />10 percent of adjusted gross income, the loss may not
<br />be substaotial. The casualty loss deduction, however,
<br />does acl as an additioual mechanism for transferring the
<br />costs of flood damage from the private sector to the
<br />federal goverrunem.
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