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Senate votes to delay flood insurance hikes

Measure faces an uncertain future in House

WASHINGTON — Setting aside objections from the White House and fiscal watchdogs, a bipartisan Senate majority voted Thursday to delay rate increases in federal flood insurance for coastal property owners from Maine to California.

The 67 to 32 vote reflected mounting political opposition to big insurance hikes that Congress passed in 2012 to prop up the nation’s nearly bankrupt flood insurance program. The bill, which faces an uncertain outcome in the House, would delay the increases for up to four years for hundreds of thousands of property owners across the country, including tens of thousands in Massachusetts.

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The measure also postpones the adoption of a new set of official flood maps for coastal regions, which would have dramatically expanded areas designated as prone to floods and required thousands more to obtain costly insurance. In Boston alone, the number of properties encompassed in the new maps would rise from 8,000 to 18,000.

Thursday’s vote cut across party lines, uniting lawmakers from coastal states. Senator Edward J. Markey and Senator Elizabeth Warren, the Massachusetts Democrats, for instance, voted aye, along with Republicans Marco Rubio of Florida and Lindsey Graham of South Carolina.

Representative William R. Keating, a Massachusetts Democrat who represents Cape Cod and other coastal areas, said the strength of bipartisan support in the Senate should increase its chances for passage in the House.

“It’s an issue geographically that affects both Republican and Democrats,” Keating said. “In terms of fairness, in terms of economic interests, this affects people on both sides of the aisle.”

The White House this week said President Obama opposed the legislation, arguing that it would “further erode” the financial position of the program, which is administered by the Federal Emergency Management Agency and is $24 billion in debt. But the administration did not threaten a veto, leaving open the possibility that Obama could sign the bill into law if it clears the House.

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Opposing senators said phasing out subsidies in flood-prone areas is necessary to ensure the sustainability of the federal program. The rate hikes were passed under a 2012 law that received heavy support and was backed by the entire Massachusetts delegation, including the eight members in office today. The measure was part of a much larger transportation and student loan package, which brought billions of dollars to Massachusetts.

Senator Mary Landrieu, the Louisiana Democrat and a key proponent of the four-year delay, said supporters will seek to win over the Obama administration in coming days.

“I’m hoping that the people of the White House did not understand how powerful this issue is,” Landrieu said in an interview. “If they give us some time to explain it, potentially we could work with them to find some common ground.”

Speaking after the vote, Senator Charles Schumer, the New York Democrat, said there are “serious prospects” the bill will pass in the House. House Speaker John Boehner has signaled the chamber may consider more modest adjustments to the 2012 law.

The 2012 changes to the program were intended to make property owners in the riskiest areas pay rates closer to market level, effectively reducing the subsidy they received from taxpayers and property owners in less risky flood areas. Massachusetts lawmakers say they backed efforts to boost the sustainability of the flood insurance program in 2012 but that debate over the legislation failed to predict how steeply premiums would increase. They also want FEMA to complete an affordability study before any rate hikes take effect.

“The idea behind [the 2012 provision] was to first do a study on affordability and what the proper increases would be,” said Representative John F. Tierney, who represents Massachusetts’ North Shore.

The uncertainty over Congress’s plans has also been disruptive to the local real estate market, with prospective homeowners struggling to determine what insurance level they would pay. As approved, the Senate legislation would allow property owners to transfer their subsidized policies to people who buy their homes.

Other provisions, such as increased premiums for high-risk flood properties and on 1.7 million second homes, would remain in effect.

The federal flood program was established in 1968, after many private sector insurers viewed flood insurance as too risky. Property owners who benefit are able to pay just 40 to 45 percent of their full insurance cost, with taxpayers picking up the rest of the tab.

Opponents of the subsidies – mainly budget watchdog groups – contend that the risk of flood damage will only increase as global climate change continues to raise sea levels. They say that flood insurance rates must be brought in line with true risk levels.

“The program is basically bankrupt and only operating by the grace of the American taxpayers,” Senator Richard Shelby, an Alabama Republican, said in debate Wednesday. “Essentially it was flawed from the beginning when it was created in 1968.”

Before the bill passed, a number of amendments were offered, including a proposal by Senator Pat Toomey, the Pennsylvania Republican, to gradually phase in rate increases. His amendment failed 34-65.

R.J. Lehmann, a senior fellow at the R Street Institute, a free-market think tank, said the Toomey amendment aligns more with the position of the White House, rather than the Senate bill.

Still, he said that a strong bipartisan push in the House could win Obama administration support.

“If there really is a movement in the House to push a longer bill, it doesn’t look like the White House will veto it,” Lehmann said.

Kimberly Railey can be reached at kimberly.railey@globe.com.

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