US: Katrina Costs Continue to Swell

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USA Today

The fiscal impact of Hurricane Katrina, the most costly natural disaster in U.S. history, shows no sign of ending.

Congress has already approved $122 billion in spending, and is now paving the way for Gulf Coast states to get billions more. As much as $20 billion for coastal restoration could come from offshore-drilling royalties in the next few decades. Louisiana has been seeking $14 billion for that purpose.

The Bush administration may need $2 billion more for public projects such as roads, schools and utilities. It awaits a study next year that could recommend even stronger levees in New Orleans than are now being built.

President Bush said Monday the government has made "a strong commitment" but added, "There is more work to be done, particularly when it comes to housing." That money has been appropriated, but much of it remains to be spent.

Most of the federal money has gone to compensate victims, clear debris, house evacuees and make repairs to New Orleans' levees. Local officials say the region's coast and infrastructure will require tens of billions more in years to come.

"Louisiana will not be made whole by what Congress has appropriated thus far," says Andy Kopplin, executive director of the Louisiana Recovery Authority. Sen. Mary Landrieu, D-La., says the Gulf Coast could need "a few billion dollars a year" in additional funds.

That appetite for federal funds could clash with lawmakers' wallets. Congress has approved $87 billion in cash, nearly $20 billion in flood-insurance payouts and billions in tax breaks for victims. As much as $1.4 billion was misspent because the Federal Emergency Management Agency lacked safeguards, according to the Government Accountability Office.

The White House is scrutinizing how federal aid is spent. "Should there be more requests, our job is to be sure it's based upon good data," says Donald Powell, federal coordinator of Gulf Coast rebuilding.

Some in Congress say enough is enough. "Not another dime should go," says Colorado Rep. Tom Tancredo, one of 11 Republicans who opposed the largest spending bill last year. Others want offsets in the budget. "Maybe we should stop funding Radio Free Europe," says Rep. Jeb Hensarling, R-Texas.

The flow of money has some worried about precedents. Sen. Judd Gregg, R-N.H., budget committee chairman, says when floods struck his state in May, "people were wondering why they didn't get the same amount as Katrina" victims did.

AMP Section Name:War & Disaster Profiteering
  • 21 Reconstruction