[StBernard] Bush administration will not yield on waivers

[Westley Annis]

I confess...I don't understand half of this stuff...
 
By Bill Walsh
Washington bureau

WASHINGTON - Despite mounting political pressure, the Bush administration is
sticking to its refusal to waive a requirement that Louisiana pay 10 percent
of the costs of hurricane recovery projects. 

Contrary to popular perception, the administration says, it fronted
Louisiana the money - estimated to be $775 million - for the payments as
part of the $10.4 billion earmarked last year for rebuilding flood-damaged
houses. 

"The money was allocated. You've got the money," said Donald Powell, the
federal Gulf Coast recovery coordinator. "Let's be sure we focus on the fact
that Louisiana was granted that money by federal taxpayers for the 10
percent match." 

But state officials say what appeared at the outset to be a gesture of
generosity has turned into a bureaucratic tangle. Getting the money requires
compliance with such a dizzying array of federal regulations, they say, that
not a single penny has yet changed hands. In many cases, the officials say,
complying with the regulations would cost as much as what they would
receive. 

The stalemate has left hurricane-ravage communities wondering if they will
have to shoulder rebuilding costs on their own and has fueled allegations,
particularly among Democrats, that the Republican White House is
short-changing Louisiana. It has even become an issue in the nascent
presidential race. 

"When 9/11 happened, the federal government ... waived the requirement that
Manhattan would have to pay 10 percent of the cost of rebuilding. When
Hurricane Andrew happened in Florida, the 10 percent requirement was
waived," Sen. Barack Obama, D-Ill., said at a rally in Selma, Ala., on
Sunday. "New Orleans, the largest national catastrophe in our history, the
government says where's your 10 percent? There is an empathy gap." 

With the administration refusing to budge, the state has appealed for relief
to the Democratic-controlled Congress, which appears ready to oblige. A key
House committee has passed a bill waiving the cost share for Louisiana,
Mississippi, Texas and Florida. A similar measure is being pushed in the
Senate. 

Soon after Hurricanes Katrina and Rita hit in 2005, Louisiana Gov. Kathleen
Blanco asked the federal government to pay the entire tab for recovery.
States generally have to pay 25 percent, but federal guidelines say the
share can be lowered to 10 when damage exceeds $110 per capita. 

Even that has been waived in major disasters, such as 9/11 terrorist attacks
when the cost was estimated to be $390 per person. Louisiana officials
estimate that the two hurricanes will cost $6,700 per capita, so they
figured a waiver would be a slam dunk. 

Instead, the Bush administration agreed in early 2006 to allocate federal
funds through the Community Development Block Grant program to pay the
state's share. What few, including Bush's recovery coordinator, realized at
the time was the red tape associated with getting the money. 

"We were focused on how much was needed," Powell said. "I can't say we
focused on this particular issue." 
As it turns out, it's not a matter of Louisiana writing a check. What's
required is that local communities are required to apply for reimbursement
on each of some 20,000 separate projects. And to do that, they have to
comply with two sets of federal rules, one from the Federal Emergency
Management Agency and the other from the Department of Housing and Urban
Development. 

Both agencies require environmental studies, each with different
requirements, and a review to determine that the costs are "reasonable." HUD
also requires proof that the project will benefit adequate numbers of low-
and moderate-income people and that contractors follow federal fair wage
laws. 

For projects costing less than $300,000, which state officials estimated to
be about two-thirds of the total, the cost of compliance runs between
$25,000 to $30,000 - about equal to the 10 percent. None have successfully
navigated the whole process. 

"The 10 percent that we have budgeted is mired in red tape and unavailable
to spend without colossal waste of taxpayers' money and time," said Andy
Kopplin, executive director of the Louisiana Recovery Authority. "It is
slowing down the recovery." 

The state has set aside the $775 million from the federal government in
anticipation of using it to pay the 10 percent match. But Kopplin said that
if the requirement were waived, the money could be sent immediately to
communities to accelerate their rebuilding plans. 

The LRA proposed a bureaucratic end run. It suggested following the dual set
of rules for the costliest projects, such as top-to-bottom school
rebuilding, and having the federal government pick up 100 percent of the tab
for the rest. But in December, FEMA said that plan would violate the law. 

Powell, who acknowledges the "red tape issue," has urged Louisiana instead
to employ an accounting maneuver. He said Louisiana could tap some of the
expected $2 billion in state budget surplus for its 10 percent match. Then,
to avoid two sets of federal regulations, the state could apply for federal
block grants in the same amount for other projects, such as setting up an
insurance pool as Mississippi wants to do. 

"That is a fairly simple work-around," said Taylor Beery, director of policy
for Bush's Office of Gulf Coast Recovery. "This is a way to cut through the
red tape." 

Louisiana officials said they weren't convinced it would mean any less
rigmarole and say the surplus may be needed for other purposes. 

Doris Votier, superintendent of St. Bernard's Parish schools, is worried
that without a resolution soon, her community will be stuck with the bill. 

For her quick action in borrowing money and rebuilding schools right away,
Votier has been hailed as a go-getter who placed the needs of her students
first. But now she is afraid that her initiative will have a steep cost
because she didn't follow all of FEMA and HUD rules. 

As a result, she said, the community may not be eligible for reimbursement
for as much as $20 million and with a fractured tax base, unable to pay on
its own. 

"But we couldn't allow (the regulations) to slow us down because the
survival of the parish depended on it. We had to move forward," Votier said.
"You would think that 18 months out all these particulars would be worked
out."

Bill Walsh can be reached at bill.walsh at newhouse.com or (202) 383-7817.