The Price of Katrina Hospitality

Overtime for workers processing a deluge of food-stamp applications. A satellite dish to bring Internet access to a summer-camp-turned-shelter. New textbooks and teachers. Dialysis. Chemotherapy. Security deposits for rented apartments.

As they plan budgets for 2006, officials in Texas, Georgia, Arkansas and elsewhere are first calculating the costs of providing for hundreds of thousands of people displaced by Hurricane Katrina.

They’ve come up with some daunting numbers -- and questions.

Although they expect reimbursement from the federal government for many expenses, officials say they aren’t sure how much they will receive or when the money will arrive.

More vexing for budget planners is uncertainty about the evacuees: How many will stay in their adoptive states, how many will find work and become self-sufficient, how many will continue to need public aid -- and for how long?

Georgia legislators recently warned that medical and education costs could rise $100 million next fiscal year if the 44,000 evacuees in the state decided to stay.

Texas officials say the evacuee population of 400,000 could cost the state as much as $550 million next fiscal year. They’re hoping the federal government will step up reimbursement.

“We’re not being mercenary about this, but we want to bring it to the attention of Congress and the administration,” said Texas Homeland Security Director Steven McCraw. “We want to provide first-class care to our neighbors. On the other hand, we don’t want to be disproportionately penalized because we opened our arms....

“We never envisioned, nor had we planned on, taking nearly half a million people into our state virtually overnight,” McCraw said.

Even states that have taken in fewer Katrina survivors face challenges, especially with ongoing healthcare needs.

In Nebraska, for instance, the lead agency helping 166 evacuees airlifted from New Orleans to Omaha spent $200,000 to help settle them in motels and to take care of urgent medical problems as diverse as snakebites and depression. The Federal Emergency Management Agency will cover many of those expenditures.

But FEMA will not cover the types of calls Beverly Griffith still gets daily -- from evacuees who don’t qualify for state Medicaid insurance but need a cab ride to a doctor’s appointment, or pain pills for an aching back, or an X-ray on a swollen arm.

She is director of the Eastern Nebraska Office on Aging, which has nearly drained its reserve fund; Griffith is not sure what she’ll do when the money is gone, except keep helping as best she can.

“We don’t feel it’s right to bring them into our community and then not give them ongoing support,” she said.

The federal government has agreed to pay five months of Medicaid insurance for evacuees in several hard-hit states. The federal Treasury will also cover at least several months -- and possibly up to a full year -- of educational costs associated with Katrina evacuees.

Many who stay beyond that point will presumably settle into their new states as productive citizens, paying at least as much in taxes as they take in services.

“I don’t see any reason these folks can’t be absorbed,” said Bernard L. Weinstein, director of the Center for Economic Development and Research at the University of North Texas.

“They are already making purchases, finding jobs, adding to the tax base,” said Georgia Gov. Sonny Perdue’s press secretary, Heather Hedrick.

But some analysts warn that the new host states can expect swelling social-service caseloads.

“I think it’s almost guaranteed that those who stay will be those with the least economic opportunity ... the people who don’t have anyplace else to go,” said Barton Smith, director of the Institute for Regional Forecasting at the University of Houston.

If, as he expects, the disabled, elderly and impoverished stay in disproportionate numbers, “it will likely put a net burden on the Houston economy for several years to come,” Smith said.

The chief executive of Texas’ Harris County, which includes Houston, says that a substantial number of Katrina evacuees have chronic medical conditions, such as diabetes, coronary disease or mental-health issues, and require care at public hospitals.

“On balance,” said the chief executive, Judge Robert Eckels, the evacuee influx “should be good for our community.”

“But some costs will fall directly upon the property-tax payers of Harris County,” he said.

Charities will also continue to bear a heavy cost as they fill public-service gaps.

In Baton Rouge, La., which has taken in about 50,000 evacuees from nearby New Orleans, local aid groups such as Catholic Charities say they’re getting double or even triple their typical volume of calls, as families plead for help with utility bills, prescription drugs and groceries. The free afternoon lunch at the St. Vincent de Paul Society has been packed; attendance is up nearly 25% over this time last year.

And though aid workers haven’t yet done a formal census -- that’s scheduled for this month -- they are certain the number of homeless in Louisiana’s capital has soared.

Some on Baton Rouge streets were homeless in New Orleans before Katrina. Others had more settled lives in New Orleans but can’t find housing in a city crammed with evacuees and construction crews. Then there are the longtime Baton Rouge residents forced out by rising rents caused by the housing shortage.

“Some people were barely making a $350-a-month payment on a small affordable apartment, so when the rent goes up to $400 or $425, they become homeless. And we just don’t have any housing to put them in,” said Randy K. Nichols, executive director of the Capital Area Alliance for the Homeless.

“This is going to be a long-term issue,” Nichols said. “It’s difficult to think it will be anything less than 10 years.”

Though FEMA does not reimburse private charities for aid efforts, the federal government has appropriated $11.5 billion in community development block grants to states affected by the hurricane. Local governments can use the grants to support charities or their own social service agencies.

In Georgia, agency directors have been bombarding the Republican governor in recent weeks with pleas for more money to meet evacuees’ needs. Perdue has said he should be able to meet their requests without much juggling, thanks to an unexpected surge in state tax collection.

“We don’t anticipate draconian cuts elsewhere in the budget,” said Hedrick, his press secretary.

Georgia House Minority Leader DuBose Porter, a Democrat, is not reassured. “When we raise the question of cost, they answer, somewhat flippantly, ‘Oh, FEMA’s going to take care of that.’ But I have yet to see what FEMA will take care of.”

A few states report prompt and extensive reimbursement from FEMA. “We have not had any problems,” said Connie Atkinson, financial officer for the Arkansas Department of Emergency Management.

Other states, however, remain mired in uncertainty, in part because their officials have not yet compiled a definitive list of Katrina expenses. That’s part of the job legislators will face when they return to work after the winter break.

And few expect the political debates to end when this fall’s costs are tallied.

“With 750,000 displaced households,” said Matt Fellowes, a senior research associate at the nonpartisan Brookings Institution think tank, “there’s no doubt that this spending issue will be with us for a long time forward.”