Thousands of Louisiana residents who were affected by severe floods in 2016 and remain in a "duplication of benefits" trap likely won’t see a resolution for several more weeks, despite the state’s congressional delegation’s attempts to address the issue.
U.S. Sens. John Kennedy and Bill Cassidy met Tuesday with Housing and Urban Development Secretary Ben Carson and Office of Management and Budget acting director Russell Vought to figure out why recovery money hasn't started flowing to homeowners, despite the changes Congress made to the federal Stafford Act last fall. The senators came away from that meeting pointing to OMB as the driving factor behind the delay.
“It’s a process we are working through,” Cassidy, R-Baton Rouge, said after their meeting.
Louisiana received more than $1.7 billion from Congress to aid recovery from the catastrophic 2016 floods. The bulk of the money, about $1.3 billion, has been designated to go toward homeowner rebuilding assistance, but a federal rule has prevented those who received Small Business Administration loans from reaping the full benefits of the program.
Louisiana officials are hoping that a meeting next week will be the final push needed to break through the federal government logjam that has …
As in previous disasters, affected homeowners who sought SBA loans have been unable to tap into grant dollars that duplicated whatever loan amount they were deemed eligible to receive — even if they never accepted the loan money.
For example, a homeowner with an estimated $25,000 in damage who qualified for a $20,000 SBA loan would be eligible for only $5,000 in grant money, which doesn’t have to be repaid. Meanwhile, a homeowner who took on the same value of damage — $25,000 — but didn’t apply for an SBA loan could potentially receive for the full $25,000 grant if all other qualifications were met. In many cases, SBA loan awards were larger than the value of total damage, leaving homeowners without an opportunity for any grant assistance.
The rift has continued to impact communities as residents struggle to recover from the August 2016 floods in the Baton Rouge area and other parts of southern Louisiana and the March 2016 floods in north Louisiana. Officials have repeatedly said the “duplication of benefits” issue has created the biggest problems for homeowners and spawned the most complaints about the state’s efforts to rebuild.
Members of the Louisiana delegation spearheaded a push last fall to eliminate the requirement that SBA loans count against Restore Louisiana grants, and President Donald Trump signed their legislation into law.
But Cassidy said OMB “still has reservations about the whole policy,” chiefly that the change could drive up disaster recovery costs if people wait for grants, instead of seeking loans that they will repay.
Thousands of Louisiana homeowners who have been blocked from receiving flood recovery assistance because of the "duplication of benefits" trap…
If OMB doesn’t move toward allowing the recovery dollars to flow to people who applied for SBA loans, then Trump could ultimately have the final say.
“We thought we were pretty clear in the legislation that we wrote,” Cassidy said. “Their concern is that people in the future will choose not to take the SBA loan and will wait for a grant.”
Kennedy said he also is frustrated by the bureaucracy that has blocked the funds and he blames OMB for the holdup.
“They use language like ‘We are behind because of the shutdown. We’re in policy discussions. We have to be careful setting a dangerous precedent,’” he said. “Bureaucrats up here speak very fluent BS.”
“They’re unelected, they make their own rules, they interpret their own rules and enforce their own rules in a court they appoint,” he added.
It remains unclear when affected homeowners might be able to tap into the money but any timeline is “not soon enough,” Cassidy said.
“It will be several more weeks at least,” he said.
Kennedy said the federal government has interpreted changes to the Stafford Act in a way that doesn't meet the intent the delegation had navigating it through Congress.
“I asked (Vought) to look me in the eye man-to-man and tell me if OMB will comply with the law," Kennedy told reporters Tuesday after the meeting.
The senators will meet again with OMB on April 16 to discuss the issue.
“My people deserve an answer," Kennedy said. "I’m tired of my people being screwed around by the bureaucracy in Washington.”