The Fema Bill

For a limited time only folks FEMA, that is the Federal Emergency Management Agency - currently funded by you, will show up late to your next emergency do a killer job and only charge you an additional 3.7 billion dollars for the privilege.

FEMA projects that it will spend a total of $41.4 billion in Louisiana, about $9,000 per resident. Federal law requires state and local governments to pay a portion of disaster relief costs. That share can be as much as 25%. The $3.7 billion estimate is roughly 9% of FEMA's projected costs in Louisiana.

The $3.7 billion represents just under half of the $8 billion the state spends per year and comes as the extensive flooding around New Orleans has severely undercut tax revenue. The state is in the midst of heavy cost-cutting to whittle down a projected $1 billion shortfall.

And it gets better...

The bulk of the money Louisiana must pay will go toward paying for personal property lost in the storms. FEMA pays up to $26,200 per household for uninsured losses. Blanco's office estimates that 60,000 households in New Orleans and St. Bernard Parish alone will qualify for the payments. FEMA this week began notifying people that they will receive money.

I don't even know how to comment on that. The feds acting as insurer for 60,000 plus residents and bankrupting their state in the process seems more than a little myopic. Lousiana's biggest disaster may ultimately end up being the financial fallout brought on by the governments trying to help them.

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The writer is somewhat

The writer is somewhat mischaracterizing the personal assistance payments. Primarily, those go toward temporary housing. If the person in question suffered a wind loss, then they'd get what are called "extra living expense" payments on their private homeowners policy. But if they suffered a flood loss -- which is the case for the overwhelming majority of those in New Orleans -- their flood coverage is written by the National Flood Insurance Program, and NFIP doesn't cover extra living expenses (it also doesn't cover "business interruption" losses on its commercial policies.) Those losses would always be "uninsured," because the insurance doesn't exist.

Sometimes, a homeowner who suffered flood losses may also get some additional assistance for contents losses, and in that case, there's a better argument to be made for displacement of an insurable peril. Contents are not covered under a basic NFIP policy, but you can purchase up to $100,000 in additional coverage for contents if you opt to. It's very expensive, so relatively few do.

But beyond that, I think her numbers are a little wonky. My understanding, and I've been covering this pretty closely myself, is that the bulk of the direct payments from FEMA are not yet allocated, but will almost certainly go overwhelmingly into public infrastructure projects, not into personal property (and the "property" in question is not replacement of homes, which is what most folks would likely be thinking of when they think of "uninsured losses.") If the 60,000 New Orleans and St. Bernard Parishes (which is where the overwhelming majority of the flood losses were) each maxed out their $26,200 in personal assistance (which they won't,) that only comes to about $1.6 billion. $1.6 billion is hardly "the bulk" of $41.4 billion. Even if there twice as many eligible recipients outside New Orleans as there were inside it (which there weren't) that'd still only be about $4.8 billion total.