NCPA - National Center for Policy Analysis


November 4, 2005

The issue of a state's obligation to pay disaster relief costs occasionally creates controversy. On rare occasions, FEMA has threatened to report local governments to the U.S. Justice Department because federal money wasn't reimbursed.

Now, a spokeswoman for Gov. Kathleen Blanco says flood-ravaged Louisiana can't pay the $3.7 billion that the U.S. government says is its share of hurricane relief.

The $3.7 billion represents just under half of the $8 billion the state spends per year and comes as the extensive flooding around New Orleans has severely undercut tax revenue.

Congress would have to enact legislation to forgive Louisiana's debt, says FEMA spokeswoman Nicol Andrews. President Bush has waived certain state and local costs, such as debris removal, but he is bound by law to collect the $3.7 billion from Louisiana, she says.

  • The Federal Emergency Management Agency (FEMA) projects that it will spend a total of $41.4 billion in Louisiana, about $9,000 per resident.
  • Federal law requires state and local governments to pay a portion of disaster relief costs; that share can be as much as 25 percent.
  • The $3.7 billion estimate is roughly 9 percent of FEMA's projected costs in Louisiana.

Before Hurricane Katrina, the largest FEMA disaster was the Sept. 11 attacks. FEMA spent $8.8 billion for relief in New York after Sept. 11, which equaled less than $500 per resident of the metro area, say observers.

Source: Alan Levin, "Louisiana can't pay Katrina, Rita bills: State told by FEMA it owes $3.7 billion," USA Today, November 4, 2005.


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