Is federal disaster assistance an entitlement?

The back-and-forth between the Texas governor and the US Secretary of Homeland Security over who will pay for the removal of disaster debris from Hurricane Ike raises the question, “Is federal disaster assistance an entitlement?”

Governor Perry has blasted the federal government for paying to bail out Wall Street banks but refusing to bear 100 percent of the cost over an 18 month period for the removal of disaster debris in Texas. Speaking to a group of local elected officials, Homeland Security Secretary Michael Chertoff suggested that the State of Texas bear part of the cost, especially given the fact that the State maintains a “rainy day fund”.   Governor Perry has countered that the federal government is penalizing the State of Texas for being fiscally responsible enough to maintain such a fund.

Few people appreciate the fact that the federal government determines the level of assistance it extends to state and local governments in the wake of disasters on a case-by-case basis. Governor Perry, in making a request that the federal government bear the entire cost, cites the precedent of the federal government absorbing 100 percent of the costs of the State of Louisiana in the wake of Hurricane Katrina. Whether this exceptional level of federal generosity was a one-time gesture or a precedent is unclear.

Texas harbors substantial ill feelings about the way it perceives itself treated by the federal government in the wake of Hurricane Rita which struck Texas just weeks after Hurricane Katrina struck Louisiana. Texas officials claim the federal government shortchanged Texas in the provision of disaster assistance while providing extraordinary levels of assistance to the State of Louisiana.

The question is whether Hurricane Katrina funding levels established a new rule or were a one-time exception.

The State of Texas was extremely aggressive in the damage estimates for Hurricane Ike that it’s submitted to the Federal Government. The state tally totals $29 billion in damages including some $4 billion of housing related damages. As I noted in my previous blog posting, the feds allocated $1.3 billion of CDBG disaster assistance to Texas.

I think it is appropriate that Governor Perry has been aggressive in pursuing federal disaster assistance. It will probably be up to the next administration in Washington to come up with a new policy setting forth what level of assistance states can reasonably expect to receive.

Yet, there are difficult questions that need to be addressed. Historically Congress has provided states different levels of funding for long-term disaster recovery in the wake of each disaster. This makes the process a purely political one. If a state has a particularly effective political delegation in Washington, or if a disaster evokes broad national sympathy, then the level of assistance provided to the states to allocate among disaster survivors is greater. Studies of appropriation levels between different disasters indicate a correlation between the level of federal assistance and the political interest that the federal administration then in power has in the state affected by the disaster. Clearly, this is not fair nor equitable.

On the other hand, covering 100% of damages would clearly oppose a “moral hazard” for the federal government, not to mention a huge, open-ended and unpredictable fiscal obligation.

City and county governments in Texas allowed people to build homes in coastal areas that were known to be particularly vulnerable to wind and flood damage. State government has not imposed sufficient building standards nor mandated building inspection requirements to ensure that homes are built standards such that they can survive coastal wind loads. State government has also failed to create an affordable insurance program for lower income homeowners with the result being almost none of them maintain private insurance.

If the federal government is to assume that the fiscal responsibility for rebuilding, it is unlikely that city, county or state government will impose these costly requirements on their citizens.

These are tough questions that need to be answered. In the meantime Texas officials and individual victims of Hurricane Ike are likely to continue to look to the federal government for assistance, and when the Feds refuse to provide enough money to raise the cry, “you are treating us differently than you treated to Louisiana and Mississippi!”