GOP Forces New Look at Disaster Aid : Relief: Republicans in Congress favor a pay-as-you-go approach. Proposals that would fundamentally change the method of disbursing funds in catastrophes will soon be introduced.

Two weeks after the Northridge earthquake struck, Congress approved $8.6 billion in disaster relief to rebuild the region’s shattered communities.

But the massive infusion of cash was accompanied by grousing from fiscal conservatives in the House who wanted to change the way the federal government has traditionally paid for emergency-aid packages: simply by adding them to the deficit.

Now, with Republicans in control of Congress, the doling out of disaster aid may never be the same.

Earlier this year, when the Federal Emergency Management Agency sought $6.7 billion in a supplemental appropriation for California and 40 other states, the House leadership ordered that every penny be funded by offsetting budget cuts.

New House Republican appropriators eagerly complied. They cut more than $17 billion out of last year’s spending plan, with the excess to be used as a “down payment” on their promise to balance the budget by 2002.

“In the past, when Americans were threatened by disaster fallout, the federal government focused on ending human suffering first, paying bills second,” said Rep. Norman Y. Mineta (D-San Jose) in a recent speech to insurance executives. “Now it seems . . . we’ll pay only if we can find the money first.”

This pay-as-you-go approach is forcing lawmakers to take a new look at how the federal government deals with emergency assistance. Proposals that would fundamentally change the way the government addresses disaster relief soon will be introduced on Capitol Hill and may have their best chance in years of being adopted.

Mineta, who was chairman of the House Public Works and Transportation Committee in the last Congress, has taken a lead role in reforming the way disaster aid is funded. His comprehensive Natural Disaster Protection Partnership Act was approved by his committee last September, but got no further.

The bill, along with other provisions, would require insurance companies to contribute each year to a national disaster fund, generated by a rider attached to all residential mortgages issued by federally backed institutions.

When a disaster occurred, insurers would be able to draw money they had paid into the fund. If the fund could not cover disaster costs, the federal government would provide loans, which would be repaid by the insurance companies.

Insurance companies would contribute about $2 billion a year to the fund, according to congressional sources.

The proposal would also make earthquake insurance part of the standard homeowners policy--with additional premiums based on regional risk. This requirement would spread the risk and reduce premiums, insurance executives say.

Next month, Mineta and Rep. Bill Emerson (R-Mo.) plan to introduce a new bill, based on the 1994 measure, that will also seek to cover commercial and rental properties.

It would require anyone who now has or obtains a federally backed mortgage, living in an earthquake- or hurricane-prone region, to purchase coverage for such perils.

The White House is generally supportive of the Emerson-Mineta approach, although it differs on how insurance companies would get federal money once the disaster fund is depleted.

Prospects for final passage are unclear as Republican committee chairmen begin to arrange their legislative agendas after completing work on the GOP’s “contract with America.”

But Rep. Bud Shuster (R-Pa.), chairman of the newly named Transportation and Infrastructure Committee, “is favorably disposed” toward the legislation, said Jeff Nelligan, a committee spokesman. “The bill has pretty good support on the committee,” Nelligan said.

Last month, the House unanimously passed a “sense of Congress” resolution, sponsored by Emerson, that national disaster-relief policies need to be reformed. As part of an overall solution, there is discussion in Congress about placing more responsibility on homeowners who live in areas of high risk, and on governments to do a better job of minimizing damage through tougher laws and mitigation techniques.

The federal government has spent $134 billion for disaster relief over the last two decades, Emerson said, and $33 billion in just the past five years.

“Much of this cost could have been avoided if we would accept disasters as inevitable and prepare for them in advance,” Emerson said. “The solution to this problem requires a total rethinking of federal disaster policy.”