MuniLand

New Jersey Governor Chris Christie recently berated Congress for its lack of progress on funding recovery monies for Hurricane Sandy. He made the argument that New Jersey and New York are net contributors to the federal treasury and they therefore deserve the funds that they requested. Yet, it is members of Christie’s own party who are slow-walking the legislation that would authorize spending. Republicans have raised some concerns – among them the amount of the original request and the need to budget for it.

The Republicans are right. More study should be performed into how states and communities are reimbursed for hurricane damage. Senator Charles Schumer of New York and others who are pushing for the funding cite the speed and largess of the federal government toward the affected Gulf region after Hurricane Katrina. But a study conducted by the Federal Reserve Bank of New York determined that the economic costs of Katrina were over-compensated to a level of 125%:

In hurricanes prior to Katrina, the [federal government reimbursement] rate was generally between 75 and 90 percent. However, beginning with Katrina, state and local governments often received 100 percent reimbursement. With this expansion of federal disaster assistance, payments from private insurance companies and the federal government exceeded the total economic cost of events since Katrina by about 25 percent.

On December 7, President Obama sent a Sandy funding request for $60 billion to Congress, which was a substantial reduction from the initial $80 billion request made by Governor Christie and New York Governor Andrew Cuomo. Senate Majority leader Harry Reid introduced legislation that mirrored the president’s request. Senate Republicans countered with a $23 billion offer.

I have argued for Congress to more thoroughly vet the appropriation given the federal government’s lack of funds. There is no doubt that the tri-state area needs relief, but the process and rationale for the funds should be much more substantive and transparent. The numbers often seem inflated. For example Louisiana Senator Mary Landrieu, whose own state suffered horribly in Hurricane Katrina, was admonishing the Small Business Administration to amp up its efforts for small firms affected by Sandy (emphasis mine):

I clicked on the live webcast of the U.S. Senate floor proceedings to find New Jersey Senator Robert Menendez pleading for Congress to take up H.R. 1, the Supplemental Appropriations Act that provides $60 billion in disaster funds for Hurricane Sandy. Unfortunately, Senator Menendez, in making his case for federal funding, was showing photographs of affluent Mantoloking, New Jersey. His advocacy shows why it is necessary for Congress to move slowly on the funding request to ensure that the spending gets to individuals and communities who really need assistance.

The proposed spending seems to fail to make distinctions between helping low income people who have no resources, and giving scarce resources to rebuild the summer homes of the wealthy. There was immense suffering in the aftermath of Sandy, but America is not rich enough to make the wealthy and the poor whole from the disaster. That is not the social compact that most Americans believe they have made as residents and citizens. How do we know exactly where the recovery monies will flow?

Mantoloking is a shore community with a year-round population of 296 (according to the 2010 Census) and a summertime population of approximately 5,000. Average income per person is $79,555,  versus average income of $35,678 per person in New Jersey and U.S. average income of $27,915, according to the U.S. Census. In a time when the U.S. is asking for sacrifices from its citizens, funding repairs for second homes would seem the last thing Americans can afford. When President Obama sent his funding request to Capitol Hill, one of the parameters he outlined was (emphasis mine):

Cuomo: “New York will get the majority of it.”

— Capital Tonight (@CapitalTonight) December 7, 2012

Several days after hurricane Sandy slammed into the tri-state area, President Obama toured the devastated shore with New Jersey Governor Chris Christie and promised to deliver support. Last Friday, six weeks after the storm, the White House sent a $60 billion supplemental budget request to Capitol Hill for recovery funds. The request is likely to get tangled up in ongoing budget and debt-limit wrangling and intra-state politics. New York’s governor Andrew Cuomo is already showing some sharp elbows, as seen in the tweet above from his press conference last Friday with New York’s congressional delegation. Take that Chris Christie.

There seems to be a semi-resigned attitude among the senators from the affected states. Senators Charles Schumer (D-NY), Frank Lautenberg (D-NJ), Bob Menendez (D-NJ) and Kirsten Gillibrand (D-NY) said in a statement:

“This is going to be a tough fight in the Congress given the fiscal cliff, and some members have not been friendly to disaster relief,” they added.

The Long Island Power Authority (LIPA) has done a dismal job of restoring power for its customers after Hurricane Sandy. According to the New York Times, “[t]he bungling of the storm has called into question the Authority’s very future.”

There are three powerful forces descending on LIPA now, the credit raters, bond investors and New York Governor Andrew Cuomo. It seems like discipline is long overdue. The Albany Times-Union blog Capitol Confidential dug around in its archives about previous attempts of the Cuomo administration to audit what is happening at LIPA:

While the audit is directed at LIPA’s costs to customers, the quality of its performance comes up in the accompanying press release. From the list of concerns to be addressed:

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.