One in five of the Louisiana sheriffs, school boards, parish councils and other storm-ravaged local government agencies who borrowed federal funds after hurricanes Katrina and Rita won’t have to repay a dime of the loans.
Those 11 agencies — in New Orleans and surrounding St. Bernard and Jefferson parishes — were deemed to be so financially struggling after the 2005 storms that their federal disaster loans were forgiven by FEMA. That includes the City of New Orleans, its sheriff’s office and its port.
Other towns, sheriffs and local agencies had part of their loans wiped away.
The total debt “forgiven” by FEMA was $501 million of the $822 million borrowed in Louisiana, according to data provided to the State Bond Commission on Thursday.
But more than 40 fire districts, parish governments, towns and municipal agencies owe the federal government $296 million — nine agencies that had part of their loans forgiven and 32 agencies that owe total repayment. Many are in areas devastated by the storms and still trying to rebuild.
Local government offices denied outright by FEMA include the school board, sheriff, tax assessor and police jury in Cameron Parish, which was nearly wiped away by Rita, and the parish government and sheriff’s office in Plaquemines Parish, where Katrina came ashore.
Gov. Bobby Jindal’s chief financial adviser, Paul Rainwater, said the state is haggling with federal officials about the loans, arguing more of the borrowing shouldn’t have to be repaid.
“We’re going to push back,” Rainwater told the commission.
Financially troubled local governments received the community disaster loans after Katrina and Rita to help cover the costs of regular operations and services after the storms wiped out much of the local tax bases and parish government income.
Congress agreed not to require loan repayment if agencies met certain criteria involving operating deficits and revenue losses, based on 75 pages of rules devised by FEMA. Local governments apply to FEMA for the loan forgiveness and have to show deficits in their operating budgets for three fiscal years following the storms.
Rainwater said state and local recovery officials disagree with some of the ways FEMA calculated the revenue drops and are gathering documents to plead their case, while also requesting that the rules governing the repayment criteria be tweaked.
Whit Kling, director of the Bond Commission, said agencies can appeal FEMA’s decision about loan repayment. But he added, “It’s going to be difficult to overcome this determination.”
The loans had a five-year repayment period, but included provisions for getting extensions. According to the report given to Bond Commission, only one entity has repaid its loan: the City of Mandeville, which had borrowed $650,000.
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