Sunday, February 05, 2006


Once again, our legislators do us a disservice

Source article here

I'm pretty upset by this, because we can only blame ourselves for not receiving greater federal funding. First, there was the big $250Billion bill that was proposed by Landrieu & Vitter that was laughed away once the Washington Post reviewed the bill and pointed out the ridiculous requests that were included. Now, we have the failing of our legislators to get the Baker Bill through, and this looks mostly because we are inflating the numbers of damaged houses in the Katrina affected area. Take a look at this passage from today's T-P:

The latest federal estimate is that 167,000 homes across the state were damaged during Hurricanes Katrina and Rita , Arrington said, about 45,000 fewer than the state's most recent estimate. The number includes homes with minor problems to houses that were destroyed during the storms. It appears that the state numbers included severely damaged rental units along with the owner-occupied homes that have been the focus of most bailout discussions.

The fact that we came in 45,000 houses over the federal estimate, and that we haven't worked together to resolve any disputes on what the actual number is, is a failing of our elected officials. There's no excuse for that.

There's been a lot of talk about the Community Block Grants, that we have $6.2Billion to distribute there, and probably another $1.5Billion in Hazard Mitigation dollars that will cover buyouts and other projects intended to prevent future damage. We can't just blanket this money over every homeowner, there's just not enough. This should be focused, and I like Mel Lagarde's ideas below:

While the group has not zeroed in on specific numbers, Chairman Mel Lagarde said the operating theory is that homeowners in "nonrecovery neighborhoods" would be eligible for more generous buyouts than those offered in areas expected to rebound. There is also talk of offering grants to homeowners who want to rebuild their damaged houses, as long as they are in areas expected to flourish.

The one state elected official that consistently impresses me is treasurer John Kennedy. This guy is sharp, and always seems to come up with pragmatic solutions to difficult issues. If we don't come up with the federal dollars that we need, it's going to take more ideas like his to help our state in the long run:

Treasurer John Kennedy has suggested refinancing some of the state debt using tobacco settlement funds, which could potentially raise about $1.6 billion over five years.

Interesting stats about the federal estimates:

Out of the 167,000 figure, the federal government estimates that there were 20,000 homes outside the flood plain that lacked flood insurance, while another 17,000 homes outside the flood zone had some flood coverage.

Inside the flood plain, a total of 90,000 homes had flood insurance, according to the estimate. About 40,000 homes inside this zone weren't covered, with 20,000 lacking flood insurance and another 20,000 lacking any insurance coverage, Arrington said.

Powell's staff emphasized that the numbers are critical because they show that 64 percent of houses will be covered for at least some of their flood losses. Powell has said repeatedly that people outside the flood plain who did not have flood coverage are the most deserving of assistance, with his latest evaluation of the type of damage to those houses showing that they could be helped for about $1 billion, leaving at least another $5 billion that could be spent on assistance to other homeowners.

(Note: Be careful of federal claims that they have spent $85 Billion on recovery efforts already, this inflated number includes flood insurance expected payouts: "The White House has estimated the federal government has provided at least $18 billion more in flood insurance and other assistance." As my compatriots in the blogsphere have noted, I didn't realize that paying claims was optional.)

I don't like the government's idea of giving the grant money to homes outside of the FEMA flood plain more money than others, it's just ridiculous. If this is going to be an argument about having flood insurance or not, let's make it just that. Help the people who had insurance, don't help the others. There were flood events in 24 states last year according to the FMEA website. I'm sure that many of them did not have flood insurance, and were probably not the benefactors of such a generous program as the community block grant that Powell is proposing.

Another issue that is often lacking in discussion is the whole reason that flood insurance is a federal program in the first place. It is expensive! If insurers thought they could make money writing it on their own, they would. Guess what? They can't. It's a behemoth of a risk, because houses don't flood one at a time, they flood one neighborhood or city at a time. The average homeowner's claim in the area is currently around $10,000, the average flood claim is over $100,000. Homeowners don't pay the premiums that are necessary to support this program, and it is just going to get worse, in light of paying for federal recovery programs here. From all that I have seen, flood insurance rates haven't gone up, but they probably need to, and are very likely to.

That's enough ranting for today, or for now at least.

On the overstated federal aid claims, now that the media seems to be accepting it at face value (and since I suspect that the new $18B that the prez mentioned also will end up including $5.6B to keep the flood insurance program solvent), I suggested on another blog that everyone who spends time blogging or commenting on blogs, actually email CNN or MSNBC or WAPO or The NYT. Not to accuse them of bias, just to ask them to question the figure. It couldn't hurt, could help.
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