The Reward for Surviving Sandy May Be Higher Taxes

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But politically, Sandy couldn't have come at a worse time, with Republicans and Democrats locked in a bitter standoff over spending and taxes as a series of painful automatic tax increases and spending cuts known as the "fiscal cliff" looms if lawmakers can't agree on a deficit reduction plan. Lawmakers from states hit hard by Sandy are eager for the White House to make its emergency request to Congress for more Sandy money.

A new disaster aid funding plan was put in place by last year's budget agreement that permits President Barack Obama to seek another $5.4 billion in disaster aid — on top of $7.1 billion approved as part of a six-month government funding bill — without breaking budget limits. Lawmakers are eager to at least obtain the $5.4 billion during Congress' lame duck session. It's more likely any additional funds would come next year.

There's also a possibility that more Sandy funding could get wrapped into a broader budget deal as part of the fiscal cliff talks.

On Wednesday, FEMA approved $8.3 million in debris removal funding for four New Jersey municipalities, and New Jersey's state government got $31.1 million for feeding and housing rescue and utility workers after the storm.

[Photos: Heroic Superstorm Rescues]

On New York's Long Island, Long Beach City Manager Jack Schnirman said the community already took steps this year to reduce a $10.25 million deficit from its $87 million annual budget. The city workforce was cut by 10 percent, including five firefighters from a 35-member force. The city also imposed a three-year tax surcharge on all homeowners to close the deficit.

That puts the city in no position to ask taxpayers to cover the costs of Sandy, which he estimated at $200 million. Moody's Investor Service says after FEMA reimbursements, the city could be left with a bill of as much as $25 million. Schnirman said he is still seeking ways for other federal or state money to cover that cost.

"We can't go back to our taxpayers," he said. "That's not a viable option."

Municipal governments are already doing the calculations — and not liking the answers. On the eastern half of Long Island, Suffolk County officials say Sandy has cost an estimated $70 million for debris removal and beach and road repairs, as well as police overtime. A county official estimated that after FEMA reimbursements, the county could be on the hook for $50 million but didn't anticipate having to raise taxes.

Westerly was the Rhode Island town hardest hit by the storm. Town Manager Steven Hartford said it has already paid $400,000 for storm-related repairs and sand removal; the total cost is likely to reach $3.5 million before FEMA reimbursements.

"If we spend between $3 million and $4 million, even if we hit a grand slam and get 75 percent of that reimbursed, we're still out a million dollars," Hartford said.

Likewise, in Point Pleasant Beach, N.J., Mayor Vincent Barrella is bracing for a higher tax rate in a town that has already approved $2.4 million for emergency cleanup. It approved more than $1 million in spending this week for boardwalk repairs, sand removal, replacing police cars destroyed in the storm, a front-end loader and other Sandy-related costs.

"This is stuff you have to do," Barrella said. "You have to haul away the debris, you have to pick up the downed trees; you can't just leave the sand in the middle of the street."

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    Contributing to this report were Associated Press writers Frank Eltman in Long Beach, N.Y., Andrew Miga in Washington, D.C., and David Klepper in Westerly, R.I.

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    Wayne Parry can be reached at http://twitter.com/WayneParryAC

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