The Trump administration supports a program developed by the previous administration to shift more of the burden on local governments to pay for disaster relief. The states implement federal flood insurance programs and, as you have suggested, they have been lax in enforcing the purchase of federally mandated flood insurance . The proposal makes sense. Why should a taxpayer in Montana be responsible for paying relief to a homeowner in Florida who refuses to buy flood insurance for his home that is constructed in the floodplain?
If implemented, the proposal would initially cut only $667 million from the FY 2018 federal budget by eliminating certain preparedness grants to state and local governments and requiring 25% cost matching for others. The only other FEMA budget cut proposed for the FY 2018 budget is $190 million for flood map updates. Again, some — but not all — of the cost burden for flood map updates is shifted to state and local government.
Eventually, as states are obliged to increase enforcement of the federally mandated flood insurance program, more funds will be available for them for disaster preparedness grants and disaster relief. If everyone that constructed homes and businesses in areas of flood hazards paid premiums for flood insurance, then there would exist sufficient resources to compensate flood victims for damages without placing an additional burden on taxpayers.