Rep. William Jefferson says Louisiana may have to donate 11,000 freezers full of cash to bail out Katrina recovery program

[Tiger in Spain 0]

State could be required to pitch in up to $1 billion for Road Home bailout

BATON ROUGE -- As Louisiana's $29.6 billion budget plan moves to the Senate without a dime for the state's beleaguered homeowner rebuilding program, pressure continues to mount for Gov. Kathleen Blanco to direct at least some state money toward an impending Road Home deficit now pegged at as much as $5 billion by the state's auditor.

Congressional Democrats and New Orleans state legislators have joined the Republican Bush administration in saying that it's not exclusively a federal responsibility to eliminate the shortfall, as Blanco has insisted since Road Home's finances became political fodder last month.

The House voted 96-6 late Thursday for a 2008 budget that was fundamentally similar to the one Blanco introduced. In doing so, the lower chamber beat back several proposed amendments from New Orleans lawmakers seeking to secure more money for the Road Home.

Despite those actions, budget chairmen in both legislative chambers, Rep. John Alario, D-Westwego, and Sen. Francis Heitmeier, D-Algiers, indicated Thursday that the session will not end without Road Home getting state money, either from a $827 million surplus left unspent from fiscal 2006, more than $1.2 billion in unobligated revenues in the current budget year or the spending plan for the fiscal year that begins July 1.

U.S. Rep. Bill Jefferson, D-New Orleans, who waded into the issue behind the scenes this week, said the state's investment must be "significant," which he pegged in the range of $700 million to $1 billion, simply to send a message to a Congress where members are angry over how Louisiana has handled the money it's already gotten. Of particular concern, he said, are a $200 million grant last year to Entergy New Orleans and the $750 million contract inked with ICF International, the private firm hired to run Road Home.

"They think we've wasted a billion dollars or more," he said. "These two things are real inhibitors to us getting anything done."

Asked whether he felt he could lobby his colleagues for more money without a state commitment to show them, Jefferson said, "I'm already asking. That's how I know the answer."

Those declarations come amid ongoing conversations involving varying combinations of state and federal officials: Blanco and her top aides, New Orleans area legislators, Jefferson and President Bush's recovery chief, Donald Powell.

Interpretations of the meetings varied among participants.

Rep. Juan LaFonta, D-New Orleans, said he was "encouraged" after talks with the Blanco administration. LaFonta said the delegation wants at least a $750 million investment. "They've gone from a point of (committing) no state general fund to now where they're looking for options to funding the Road Home program," LaFonta said.

Alario confirmed the administration has backed off it refusal to spend state money on Road Home.

Jimmy Clarke, Blanco's chief of staff, offered a more measured view and echoed the governor's usual contention that the U.S. government should pay for damages linked with breaches of federal levees. "The administration has steadfastly stated it's a federal obligation," he said. "At the same time we continue to work and communicate with all factions to see how we can fulfill the promises made to the people of Louisiana relative to the Road Home program."

Jefferson said Blanco representatives with whom the congressman spoke this week at first "were trying to hold pat to their position that it's a federal responsibility" but seemed to give some ground. He declined to identify with whom he spoke.

At the federal level, Jefferson predicted that Powell is willing to back off -- or at least ignore -- his previous statements that the shortfall is due entirely to the state covering wind damages that the federal government allegedly didn't agree to pay. The caveat, Jefferson said, is a financial commitment by the state.

Susan Aspey, a spokeswoman for Powell, said, "The chairman's not opposed to more funding if the state can make a case for it. And there are a number of things that he's going to be looking at, including how the state has spent federal resources it's already received and how the state plans to use some of its own resources."

Whatever the translation of the negotiations, a consistent theme emerged: Political realities in Washington, D.C., and a lagging recovery at home require that Louisiana politicians not play the blame game -- even if they are right.

That view gained even more credence Thursday with the release of Legislative Auditor Steve Theriot's report estimating the Road Home deficit at $5 billion, an amount that exceeds the previous projections of $2.9 billion to $4.7 billion, depending on the methodology offered by ICF or the Louisiana Recovery Authority.

Theriot did not assume, as did LRA, that federal officials will allow the transfer of $1.14 billion in hazard mitigation grant funds that are not yet slated for homeowners. The state audit also assumes a higher average award than was used in calculating earlier shortfalls.

"It's unbelievable," Jefferson said of the revised estimates. "That's what makes this so hard. ... Even our best friends in Congress are asking questions. ... They just don't trust our numbers."

Jefferson said Louisiana's most practical course of action is to earmark money for Road Home, and continue paying out what's left of federal block grant money until it runs out. Road Home, which has set a July 31 application deadline, would have an exact, rather than projected shortfall to put before Congress once the money runs out, but never interrupt grant payments because of the state back-up, Jefferson reasoned.

While no decisions have been made about where the state would get the money, New Orleans lawmakers have identified, among other sources, $300 million that had been set aside for a steel mill project that is going to Alabama. They do not want any money to be shifted from other hurricane recovery programs.

The congressman and LaFonta both said they agree with Blanco's view that the Bush administration has not treated Louisiana fairly, particularly compared to Mississippi, since 2005. Jefferson said many Democrats in Congress feel the same way, and he noted their support for a recent appropriations bill that sent Louisiana more federal money than any other state, while waiving the state's local match requirement for post-storm assistance.

But Jefferson said congressional Democrats also believe that the $200 million bailout to Entergy New Orleans -- after Congress had already rebuffed the utility's similar request in Washington -- should have been a loan, at best, particularly as long as its parent company, Entergy Corp., maintained a healthy surplus. And Jefferson said ICF's decision to go public after getting a large state contract, then pay hefty bonuses to its executive, further soured members.

Nonetheless, if Blanco and the Legislature come through, Jefferson predicted Louisiana would claim another success on Capitol Hill. "I don't believe the members of Congress are going to stand there and not make (homeowners) whole," he said. "But they are not going to let the state sit there and spend billions of dollars in surplus money without putting some of it in Road Home. That's a formula that's not going to play out."

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[otterinbham 0]

Poor Louisiana. What a terrible indictment of their political leadership.

I think it's doomed to be the next Mississippi, especially since both Alabama and Mississippi are clawing their way up out of the basement.