Audit: La. hurricane grants face $5B gap

Louisiana's grant program to help people rebuild homes damaged by hurricanes Katrina and Rita is estimated to be as much as $5 billion short as the six-month Atlantic storm season began Friday.

Gov. Kathleen Blanco says the federal government should pay for the entire program, called "Road Home," but pressure is mounting for the state to cover up to $1 billion of the shortfall if it wants to receive more federal aid.

State Legislative Auditor Steve Theriot estimated the deficit at $5 billion in a report released Thursday, $2.1 billion over previous estimates. Theriot assumed the Road Home would not receive a transfer of $1.14 billion in federal grant money the state slated for homeowners but is now the subject of disputes with federal officials. The state audit also assumes a higher average award than in previous estimates.

Blanco's proposed budget does not include a dime for the program, despite more than $2 billion in surplus and unobligated state money available. The state House passed a budget similar to Blanco's on Thursday after rejecting requests from New Orleans lawmakers to put money into the Road Home.

U.S. Rep. William Jefferson of New Orleans said Congress is angry about how Louisiana has handled the money it has already received, particularly a $200 million grant to the city's utility, Entergy New Orleans, and its $750 million contract with ICF International Inc., the private firm hired to run Road Home.

"They think we've wasted a billion dollars or more," he said.

The state's investment in Road Home must be "significant _ $700 million to $1 billion _ to send a message to Congress, Jefferson said.

President Bush's recovery chief, Donald Powell, has previously said the shortfall is due to the state covering wind damages to homes that the federal government allegedly did not agree to pay. Louisiana Recovery Authority executive director Andy Kopplin has said FEMA underestimated both the number of homeowners who could be eligible for grants as well as the severity of damage to homes.

Jefferson predicted Powell would back off his statements if the state puts money into the program.

Louisiana House and Senate budget leaders indicated Thursday that the legislative session will not end without Road Home getting state money. Blanco and her top aides, New Orleans area legislators, Jefferson and Powell, have been meeting to talk about the shortfall and who should pay.

Jimmy Clarke, Blanco's chief of staff, repeated Blanco's position that the U.S. government should pay for damages linked with breaches of federal levees.

"At the same time, we continue to work and communicate with all factions to see how we can fulfill the promises made to the people of Louisiana relative to the Road Home program," he said.