January 3, 2006
WWL, New Orleans

Louisiana's first bills from FEMA for its share of federal hurricane recovery efforts arrived over the holidays, and they were a doozy: $155.7 million, with a 30-day due date before interest starts accruing.

And more bills are expected to arrive in the coming months as federal officials tally their costs after hurricanes Katrina and Rita.

States are required to pick up part of the cost for certain types of disaster aid from the Federal Emergency Management Agency, including repairs to state infrastructure, efforts to minimize future damage from storms and some assistance for individuals.

Louisiana's Office of Homeland Security and Emergency Preparedness received collection statements from FEMA on Dec. 29 for $139.7 million in aid for Hurricane Katrina and $16 million for Hurricane Rita.

State officials don't know how they're going to pay for the first bills or any others. They have been working with federal officials on possible payment plans, but a November estimate projected a daunting price tag that Louisiana ultimately could owe FEMA more than $3 billion.

"The clock's ticking. I don't know that we're any closer to a remedy than we were when we started, although in this situation every day counts," said Denise Bottcher, a spokeswoman for Gov. Kathleen Blanco. "We're in the same place, except we have an actual bill that has to be paid in 30 days or interest starts accruing."

The Dec. 29 bills were for the biggest piece of assistance doled out by FEMA, the aid given so far to individual families to help cover the damage to homes and losses of personal property, up to $26,200 per household. The state's cost was much less than estimated, but more bills for individual assistance could be on the way.

States are required by law to pay the costs of 25 percent of that assistance, a provision that only could be changed by Congress, according to FEMA spokeswoman Nicol Andrews. The governor helped determine who could receive federal aid when she requested that certain parishes be included in the disaster area and eligible for help from the federal government.

"We're required by law to send the letters. We're required by law to receive 25 percent of this cost share, and obviously, we're going to be working closely with the state of Louisiana because of the circumstances," Andrews said.

Alabama received a roughly $8 million FEMA bill, and Mississippi got a $55 million statement, Andrews said.

The bills — signed by FEMA Chief Financial Officer Margaret Young — include a collection stub, with notification of "Make your check payable to FEMA" and an Atlanta address to a FEMA lockbox to send the check.

They outline the payment period and explain that after 30 days, FEMA tallies interest and administrative charges on any unpaid balance and could withhold other payments to Louisiana. After 90 days, penalty charges begin if the state hasn't started a repayment plan of some type, the bills say.

Andrews said the interest and payment due dates are specified in law.

Young also sent the state's homeland security office a letter with the bills, saying Louisiana could arrange for installment payments with interest over three years.

"The 2005 hurricane season was undoubtedly the worst that this Nation has faced. The Federal Emergency Management Agency (FEMA) understands the catastrophic effects of hurricanes Katrina and Rita and the financial burden that they have placed on your State, and is committed to working with your State as you continue the recovery efforts," Young wrote.

FEMA estimates the total cost of its response to Katrina and Rita in Louisiana could top $41 billion. The state will owe different cost-share percentages depending on the type of aid.

State officials are seeking some congressional relief for Louisiana's FEMA bills. Blanco talked to U.S. Homeland Security chief Michael Chertoff about help with the hefty price tag. Proposals floating in Congress would waive some or all of the debt or assist with payment.

Louisiana Legislative Auditor Steve Theriot, who is monitoring the flow of FEMA relief aid, is pushing a proposal that would let the state apply assistance from the American Red Cross, Habitat for Humanity and other aid groups toward the FEMA bill as an in-kind contribution that would offset what the state owes.

"If these outside agencies hadn't stepped in, the feds would have had to pump more money in," Theriot said, explaining the theory behind the proposal.

Meanwhile, Theriot said he doesn't believe the state should start paying for the first FEMA bills until Louisiana officials can comb through the documentation to see how the money was spent, documents Andrews said FEMA will provide after receiving a written request from Louisiana and ensuring release of the information doesn't violate privacy laws.

"Why should we paying for something upfront without the necessary documentation?" Theriot said.

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