La. Homeowner Aid Program Cash-Strapped

BATON ROUGE, La. - Louisiana may have to draw from other hurricane aid programs to cover a projected $3 billion shortfall in the program that provides rebuilding grants to homeowners, the head of the Louisiana Recovery Authority said Friday.

State officials earmarked $7.5 billion in federal hurricane relief to pay for grants under the Road Home program for homeowners with severe damage from hurricanes Katrina and Rita.

But more people applied than were expected and they are receiving bigger awards than projected, some as much as $150,000. Officials say that without the additional money, nearly 17,700 applicants may not receive grants.

Andy Kopplin, executive director of the LRA, said the agency may ask state lawmakers to approve a temporary shuffling of other federal recovery dollars to Road Home to keep grants flowing while officials look for other ways to keep the program from going broke.

Congress sent Louisiana $10.4 billion in flexible recovery aid dollars, called Community Development Block Grant money, after Katrina and Rita devastated New Orleans and the state's coast in August and September 2005.

Most of the money was set aside for homeowner aid, but some has been targeted for business loans and grants, rental property repair, work force training, college education and research programs, and state and local building repairs.

More than 137,000 people have applied for aid through Road Home, and about 17,600 have received grants, according to latest available statistics.

Kopplin told the Legislature's joint budget committee that storm damage was worse than federal estimates suggested, more people were eligible for Road Home than expected and insurance proceeds covered less of the damage than projected.

Some lawmakers want to use part of the $2 billion in unspent state general funds to help cover the Road Home shortfall. Republican U.S. Sen. David Vitter said the state must use some of its own money to solve "a sizable percentage" of the problem.

"If leaders at the federal level are going to be any part of the solution, they absolutely want to see leadership and action at the state level first," Vitter wrote in a letter this week to Gov. Kathleen Blanco and state legislative leaders.