Katrina’s red tape

SHOULD LOUISIANA have to cover part of the federal government’s cost to rebuild public works destroyed by hurricanes Katrina and Rita? President Bush says yes, Congress says no, and while the two sides bicker, Washington’s red tape is preventing crucial projects from being built in New Orleans.

Traditionally, the Federal Emergency Management Agency has asked state and local officials to cough up 10% to 25% of emergency reconstruction funds for infrastructure items -- such as roads and schools -- so that they have a stake in the rebuilding effort’s success. This is a sensible approach, but sometimes the requirement is waived because the damage is just too extensive.

The federal government footed 100% of the bill after Hurricane Hugo in 1989, hurricanes Andrew and Iniki in 1992 and the Sept. 11 terrorist attacks in 2001. Federal spending on Sept. 11 repairs amounted to $390 per resident of New York state, a historic amount at the time. But that was dwarfed by the $6,700 per Louisiana resident for Katrina and Rita.

The administration’s main argument against granting Louisiana a waiver on the nearly $8 billion in FEMA-funded projects is that Congress already appropriated the money to cover the state’s share. That money, $775 million, was part of a $4-billion block grant from the Department of Housing and Urban Development to repair homes and buy out flooded property owners. In other words, the federal government required Louisiana to use some of its housing funds to help repair bridges and sewer lines.

This carve-out became a bureaucracy-making machine. The state identified about 20,000 urgent infrastructure projects that could be completed with the $8 billion, but because the money came from two agencies, each expenditure had to comply with two exhaustive sets of regulations. The paperwork alone costs almost $40,000 a project, state officials say. With more than half of the planned improvements having a construction budget of $300,000 or less, the result was predictable: The state has been able to spend less than 2% of the $775 million, and many of the projects remain in limbo.

Rebuilding New Orleans and other Gulf Coast cities will be enormously expensive, but if the country is in for a penny, it should be in for a pound. There’s no point in trying to squeeze more money out of Louisiana for repairs -- it has enough problems coping with its fractured tax base and ineffective governance. Doubling the regulatory burden not only creates pointless busywork, it runs counter to Bush’s political philosophy. The administration should require Louisiana to spend the aid wisely, but that goal isn’t served by tying up the money in red tape.