Louisiana to get hit with $3.7B bill from feds

Louisiana is facing a tax loss because of hurricanes Katrina and Rita. A wrecked fishing boat dramatizes the devastation.

NEW ORLEANS - Louisiana anticipates a $3.7 billion bill to repay the federal government for its share of the hurricane recovery, far exceeding anything the governor had previously expected.

The estimate was presented to Gov. Kathleen Blanco this week and now the state must figure out how to pay while dealing with its own crippling budget problems, including dramatic jumps in unemployment, business shutdowns, and a state budget deficit of nearly $1 billion in tax revenue alone.

States are required to pick up part of the cost for certain types of federal disaster assistance, including repairs to state infrastructure, efforts to minimize future damage from flooding or storms, and some home repairs for individuals.

Blanco spokesman Denise Bottcher said officials will look at possible loan arrangements and federal help to cover the state's share, but she said stretching the payments out for 30 years still would cost the state more than $100 million a year.

A FEMA report, provided by the governor's office, estimates the total cost of the federal response to Hurricanes Katrina and Rita will be $41.4 billion, or about $9,200 for each state resident. The federal government's share is about $37.6 billion.

Mark Merritt, a former Federal Emergency Management Agency official working as a consultant for the governor, said FEMA's rules allow for some flexibility in states paying their cost but not anything lengthy enough to be practical for Louisiana.

FEMA has picked up the complete cost of emergency assistance after Katrina and

Rita, including debris removal and overtime pay for emergency workers. That 100 percent reimbursement is for emergency work only, and it ends later this month - unless the White House agrees to extend it. Governor Blanco asked for that extension from the Bush Administration and asked for Congress to approve a year of full reimbursement for other types of FEMA assistance.

The biggest portion is the $2.8 billion that the state is estimated to owe for the individual federal assistance given to families to help with damage to homes and personal property and other expenses. The state picks up 25 percent of that cost but doesn't determine who receives the help.

Using a sophisticated satellite inspection system, FEMA has declared 60,000 houses in New Orleans and other communities hit hardest by Hurricane Katrina damaged beyond repair, clearing the way for the homeowners to receive the maximum federal aid.

The declaration will mean an immediate distribution of up to $1.6 billion. Each household is entitled to as much as $26,200, officials said.

The Federal Emergency Management Agency is also moving to distribute $181 million in loans to local governments in Louisiana to help them stay in business after losing much of their tax revenues.

New Orleans will receive $120 million, which should be enough to keep basic government functions operating through early next year.

Meanwhile, Prince Charles and his wife, Camilla, flew into New Orleans yesterday for a brief glimpse of the ravaged city and shook their heads in disbelief at the devastation wrought by Hurricane Katrina.

Charles and Camilla, the Duchess of Cornwall, were to travel to San Francisco later yesterday.