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$5 billion in federal hurricane aid to La. remains unspent
By Melinda Deslatte
The Associated Press/Shreveport Times (Louisiana)
November 19, 2008
BATON ROUGE — More than one-third of the $13.4 billion in federal block grant aid given to Louisiana after hurricanes Katrina and Rita remains unspent, according to information provided today to the state's hurricane recovery panel.
Though the money has been earmarked to specific recovery programs, about $5 billion hasn't been used three years after the storms, Paul Rainwater, the governor's hurricane recovery chief, told the Louisiana Recovery Authority board.
"We're going to try to spend down as much money as we can," Rainwater said of the existing programs.
But he said he expects about $300 million to $500 million won't be spent in the ways the dollars were set aside. The Louisiana Recovery Authority will look at other ways to allocate the recovery money, Rainwater said.
Congress sent Louisiana the pool of flexible aid dollars, called Community Development Block Grant money, after Katrina and Rita devastated New Orleans and the state's coast in August and September 2005.
Most of the money was set aside for homeowner aid. But some was targeted for business loans and grants, rental property repair, work force training, college education and research programs, and state and local building repairs.
Gov. Kathleen Blanco's administration designed the programs, many of which are continuing under Gov. Bobby Jindal's administration.
Some of the programs have been bogged down in bureaucracy, have requirements of upfront spending to be reimbursed or haven't attracted a lot of interest.
Much of the unspent aid is slated for housing recovery programs, including $2 billion for the Road Home grant program for homeowners.
Several thousand people are awaiting final decisions on grants, and the Louisiana Recovery Authority is asking for permission from state and federal officials to expand the program to include people who sold their homes at a loss after the program's launch in 2006.
However, the Road Home isn't expected to spend all the money allocated to it because fewer people received aid than were initially projected.
Among the slowest-spending programs are ones that involve rental housing. Two rental aid programs allocated $1.4 billion of the recovery aid have spent only $172 million.
The complex tax credit and reimbursement programs were supposed to help rebuild rental housing. But some landlords have complained the programs were unworkable and they had trouble making the necessary arrangements with banks to participate.
Several recovery programs — particularly the rental housing piece — are moving too slowly and should be revamped or scrapped, said Rep. Karen Carter Peterson, D-New Orleans, a member of the Louisiana Recovery Authority board.
Rainwater told the Louisiana Recovery Authority board his staff is working on a proposal to overhaul the rental housing recovery programs. Any program that appears to be underperforming will be reviewed and could be redesigned, he said.
Not all of the slow spending falls on the state. A $700 million program created for communities and parishes to help with their local recovery projects — everything from rebuilding firehouses and police stations to dealing with blighted property — hasn't spent a dime yet, according to the Louisiana Recovery Authority information.
Local governments have to do the repair or recovery projects then seek reimbursement from the state, and no one has requested reimbursement, Louisiana Recovery Authority spokeswoman Christina Stephens said.
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