Gulf states will need more aid than New York did, official says

Published 9:00 pm Monday, November 28, 2005

WASHINGTON – Congress hasn’t given the same attention and aid to states slammed by hurricanes Katrina and Rita as it did to New York after the 2001 terror attacks because the storms didn’t spark as much patriotism, Louisiana’s economic development chief said Monday.

State Economic Development Secretary Michael Olivier called Congress’ response to terrorism very different “from an act of God” such as a hurricane. “I guess it’s different because it was such a patriotic deal,” Olivier said.

Olivier did not say precisely how much federal aid Louisiana will need to rebuild New Orleans and other devastated parts of the state, but said it could range between $100 billion and $200 billion and take a decade to complete.

That’s up to 10 times more than the $20 billion pledged by President Bush and approved by Congress to help New York rebuild after the Sept. 11, 2001 attacks.

“But it’s 10 times the area also,” Olivier said. “So the magnitude has to be measured.”

“In many cases, we don’t ask for amounts,” he said. “In many cases, we ask for something to be done.”

The Louisiana Recovery Authority, which Olivier advises on economic development issues, is expected to announce a more precise aid request after a meeting Thursday, a spokeswoman said.

So far, Congress has approved $62 billion in disaster relief aid for victims of Katrina, which hit Aug. 29, and Rita, which followed on Sept. 24. But nearly all of that money was directed to the Federal Emergency Management Agency, which so far has spent about half of it on immediate victims’ needs – housing, food and clothing – instead of long-term rebuilding projects.

Earlier this month, the House approved legislation to give $8.2 billion in advance returns on tax-exempt bonds and other tax credits to help businesses get back on their feet in Louisiana, Mississippi and Alabama. But Olivier said Louisiana alone needs $30.5 billion from Washington just for short-term loans, grants and tax-exempt bonds to spur the state’s economy.

The Senate is still considering the legislation. The Congressional Budget Office estimates that the bonds, which are federally guaranteed, will cost the government $60 million over the next two years to cover credits that are not repaid.