A Tortured Path to Recovery
What happened to all that money that was supposed to rebuild the Gulf Coast?
In September 2005, two weeks after Hurricane Katrina struck, President Bush famously stood in Jackson Square in New Orleans and pledged that "we will do what it takes" to help rebuild. Ever since, he has taken to talking about the $110 billion in aid for the Gulf Coast, an unprecedented commitment for disaster recovery. But for many Gulf Coast politicians in Congress and their counterparts back home, that number is one big fiction.
It has been 21 months since Katrina, and tens of thousands of Gulf Coast residents are inching toward repairing their homes and getting back to business. But the money that has actually reached hurricane victims so far doesn't add up to $110 billion, at least not solely for Katrina and certainly not just for rebuilding projects. A surprising amount-Katrina funding details confound even government auditors-is unspent or caught up in a bureaucratic never-never land between the feds and state and local officials. Democrats in Washington say changing some of the rules and boosting aid are top priorities, but they have yet to make much progress. And skeptics of their efforts abound, not least the Bush administration.
Pie slicing. Yes, Congress has appropriated $110 billion in aid, but it has been divvied up among many different federal agencies for a variety of purposes. For starters, $21 billion goes to the National Flood Insurance Program, a federal insurance effort designed as an alternative to direct disaster assistance. The rest, $89 billion, covers the effects of all three of 2005's hurricanes (Katrina, Rita, and Wilma) across five states (Alabama, Florida, Louisiana, Mississippi, and Texas). "A substantial portion" of that money went to immediate needs like emergency housing and debris removal, the Government Accountability Office testified in mid-April. But a "relatively small" amount is left over for long-term rebuilding of housing and infrastructure. Stanley Czerwinski, director of strategic issues for GAO, says that it's "virtually impossible" for even Congress's main auditor to arrive at exact price tags. Louisiana officials estimate that of the $59 billion in federal money the state has been allotted, only $26 billion is for rebuilding projects; they say they need an additional $34 billion to fully rebuild.
Whatever the slicing and dicing, the $110 billion is moving at a snail's pace toward actually reaching victims. "Every dollar," says Rep. Charlie Melancon, a Louisiana Democrat, "is literally a fight for the state and the communities to get their hands on." Since late 2005, according to federal records, the two federal agencies playing the biggest roles have paid out only about half the money that's available. By early May, $3.1 billion, or 18 percent, of $17.1 billion in Department of Housing and Urban Development aid had been disbursed. Of the $41 billion in Federal Emergency Management Agency funds, $28.5 billion, or 70 percent, had been paid out. In Orleans Parish, the FEMA percentage was much lower: Less than one quarter of the money budgeted for public assistance was spent by mid-May.
Rebuilding programs in Louisiana have been particularly slow to get off the ground. The most notorious has been the Road Home program, a $7.5 billion federally funded, state-administered, privately contracted effort that makes homeowners who decide to rebuild or to walk away from their homes eligible for up to $150,000. The program has been riddled with inefficiencies, such as sluggish processing of claims. To date, only 17,000 of the 137,000 applicants have been able to complete the cumbersome process. "It has not satisfied anyone with its pace," says Andy Kopplin, head of the Louisiana Recovery Authority, the state agency overseeing rebuilding. The program has sped up in recent months, but now there is a new catch: If it continues to pay out money at the current rate, Road Home could be more than $3 billion short because there are more applicants than originally estimated and the average payouts are higher than predicted.