Looking for reconstruction funding after Sandy

By Cate Long
November 12, 2012

Governor Andrew Cuomo is preparing to ask for about $30 billion from the federal government ahead of President Obama’s trip to New York this week. These funds would go toward disaster relief for New York City and other affected areas of the state. Cuomo also wants to rustle up some federal funding to strengthen the region’s infrastructure, The New York Times writes:

He is looking at a proposal to replace the region’s power grid with a so-called smart grid that would improve the ability of utility companies to pinpoint areas with power failures and respond to them. That proposal could cost at least $30 billion over 10 years, according to senior aides to the governor.

In addition, Mr. Cuomo is looking at a plan to have the federal government invest billions of dollars to modernize the fuel supply capacity of the New York City region to avoid the kind of gas shortages that have plagued New Yorkers since the storm barreled through.

The plan would include building new oil and gas pipelines from the New England states to reduce New York’s dependence on fuel that arrives through ports in New Jersey, a state that was also hobbled by the storm and was thus unable to continue to fully supply the region with fuel.

Mr. Cuomo is also considering the creation of an emergency petroleum reserve for the state, much like the one the federal government has at its disposal in the event of a national crisis.

Energy is the lifeblood of our economy. Upgrading these systems would be an outstanding investment for Governor Cuomo. I have written about smart grids, saying that the electric grid is more important even than the national highway system. Smart grids build on existing infrastructure to increase electric system integration and reduce peak loads. It’s a massive efficiency boost.

But the problem is that the federal government didn’t fund projects like this in the aftermath of Hurricane Katrina. The figure used by the Cuomo administration for Katrina funding actually covered the damage from three 2005 hurricanes, including Rita and Wilma. The CBO laid out the 2005-06 Congressional appropriations:

Thus far, five emergency supplemental spending bills have provided a total of $94.8 billion in budget authority to multiple federal agencies for cleanup, rebuilding, and mitigation efforts related to the hurricanes (see table below). In addition to that amount, some agencies have used portions of their annual appropriations to respond to the disasters. However, because most of those agencies are not required to provide a separate accounting of such spending, CBO has been unable to track those funds.

Katrina spending was more for disaster relief than for infrastructure. And now there is the primary problem of the federal government just being very strapped. From the Times:

It is far from certain whether Mr. Cuomo will get what he is looking for despite the president’s reassurances. The amount the governor is apparently seeking would exceed the roughly $12 billion in FEMA disaster aid currently available in Washington without action from Congress, where there is likely to be strong opposition to more spending.

Mr. Cuomo’s plan, which is still being drafted by his aides, rests in part on persuading the federal government to make an emergency appropriation in the coming weeks during a lame-duck session of Congress that begins on Tuesday.

I feel confident that Governor Cuomo, previously the head of the Department of Housing and Urban Development, can wrestle some disaster funds from Congress. But he also needs to discuss getting the Federal Reserve to buy a couple months of infrastructure bonds, instead of the $40 billion of mortgage-back securities that it has been buying. As Wall Street contracts in size, it will send less tax revenue to New York and New Jersey. These states will need extra support in rebuilding for the future.

Further:

Reason: The Myths of Hurricane Katrina: Part One

CBO: The Federal Government’s Spending and Tax Actions in Response to the 2005 Gulf Coast Hurricanes

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