State Dribbling Disaster Money to Close Budget

Despite all the bad budget news you’ve been reading about in recent weeks, the state does have some good news for the equally embattled city. Recently, Albany joyously noted that it will deliver $650 million in new aid to the city.

It may surprise youtoknow, however, that the moneyactually willbecoming notfromAlbany’s treasury, but from Uncle Sam’s. The $650 million has been allocated by the Federal Emergency Management Agency to the city as part of the promised $21.4 billion appropriated for rebuilding after Sept. 11.

At a news conference in late January, Governor George Pataki was asked how he could take credit for giving the city money that actually came from FEMA. “Because,” he said, “the money comes through the state.”

That bit of fiscal sleight of hand is just the latest example of how federal rebuilding money has become the funding source of last resort for cash-starved officials at the federal, state and local levels. Officials desperate for cash have allocated the money several times over to fund their special projects.

U.S. Representative Carolyn Maloney, a Democrat who represents the East Side and parts of Brooklyn and Queens, called the Governor’s maneuver “fuzzy math.” But it is firmly in the 18-month tradition of claiming the World Trade Center money for a litany of needs.

In the last year, members of Congress have tried to route money from the Lower Manhattan Development Corporation to the Bronx Zoo, the Downtown Athletic Club and a Chinese American cultural center. Congressional staffers say there was serious talk among state officials about taking some of the recovery aid for the development of Governors Island.

Other requests have a more direct relation to the attacks. Senator Hillary Clinton obtained $90 million for a health study of some 35,000 Ground Zero workers. And Mayor Michael Bloomberg has been agitating for $650 million to meet expenses he says the federal government never helped out with, like overtime for police and firefighters. But because the Mayor has already spent that money, the $650 million would go to close the city’s budget gap. And for the Mayor to get it, Congress would have to vote to authorize it-and soon. (The proposed allocation inched closer to reality when the White House signaled on Feb. 6 that the President would support the expenditure.)

There’s more. Federal transportation money already has been claimed by a new transit hub downtown ($750 million), a permanent PATH station ($1.5 billion), a refurbished South Ferry Station ($500 million), and Mayor Bloomberg’s proposed rail tunnel from lower Manhattan to the city’s airports ($3.7 billion). Burying West Street underground and building an underground parking garage and related projects near Ground Zero would cost another $1.65 billion. Even proponents of a Long Island Rail Road link to Grand Central Terminal tried to get a piece of the federal recovery money, government officials say.

The total tally? At least $7 billion, from a transportation-rebuilding budget of $4.5 billion ($2.75 billion from FEMA, $1.8 billion from the U.S. Department of Transportation). On Feb. 7, Governor Pataki released his own plan for spending the $4.5 billion. That plan had even more projects than those on the above list (and actually would cost more than $5 billion), including money for ferry terminals and covering the entrance to the Battery Park Tunnel with a park-two of Mayor Bloomberg’s pet projects. But to make the numbers come out right, Governor Pataki simply didn’t include a price tag on some of the projects, like the airport train and burying West Street, two big-ticket items.

There’s a reason the tab keeps growing. “There’s a lack of consensus among officials and business and civic groups,” said Gene Russianoff of the Straphangers’ Campaign, “and it’s only intensified since Sept. 11.”

To be sure, as Deputy Mayor Daniel Doctoroff has pointed out, some of the money for the airport tunnel could come from the Port Authority. “But it’s not as if we just have the cash lying around,” Port Authority vice chairman Charles Gargano told The Observer . “It’s already been accounted for.”

One of the problems is that there simply isn’t enough money to meet New York’s needs, officials said. “The initial $20 billion pledged for recovery was supposed to be a floor, not a ceiling,” said Congresswoman Maloney. “While we are all grateful for the help, FEMA and the Governor’s office seem to want to limit discussion on how to divvy what is in the FEMA account-and not talk about the remaining unmet needs of New York.”

A Pot of Funds

The most recent source of contention has been Governor Pataki’s proposed allocation of the $8.8 billion in FEMA money, the largest chunk of the $21.4 billion aid package. It has become the newest pot of funds for a Governor who spent his election year handing out goodies and making new friends, and who now finds the state cupboards are bare.

The ultimate authority on how the money will be spent comes from Congress through FEMA. But Brad Gair, FEMA’s recovery officer for the World Trade Center disaster, said

FEMA would “entertain any joint proposal by the Mayor and the Governor” on how it should be spent. And the Governor, who controls the flow of FEMA money, does have a rather loud bully pulpit. Even so, the timing of his spending proposal had all the earmarks of a plan the Governor would just as soon see buried.

The press release came late in the day on a Thursday-a day after the Governor unveiled his budget, and on a news day so busy the Governor’s press staffers said they were working until 3:30 a.m. The Mayor’s office wouldn’t offer any comment on anything having to do with the money, referring all questions to the Governor. The tight lips are part of a strategy, sources say, not to anger the Governor while the Mayor thinks he still has a shot at getting things like the commuter tax.

Even so, friction immediately arose around the Governor’s allocation of just $23 million for the Ground Zero health study. His press release quoted Denis Hughes, the president of the state A.F.L.-C.I.O; conspicuously silent were the firefighters, who felt betrayed by the allocation, sources say, and refused to be part of the press release. For her part, Senator Clinton released a statement saying she was confident the full $90 million would eventually be allocated. She was right: Congress approved the funds on Feb. 11.

Then there’s the $650 million Mayor Bloomberg asked for to cover unreimbursed outlays, mainly police and firefighter overtime. “I would go so far as to say ‘Thank you, Governor Pataki’ for putting in the request for the money,” said Jonathan Bowles, research director for the Center for an Urban Future. “But he can’t take credit for funds from the federal government the city is entitled to anyway.”

Even that money may be less than meets the eye. According to an analysis by Ms. Maloney’s office, while adding money for the unreimbursed expenses to its wish list, the state actually removed $222 million from the city’s column. A Pataki administration official acknowledged the figures had been “readjusted” to reflect preliminary expenditures.

Even so, the Governor’s tally actually adds up to $191 million more than the allocated $8.8 billion in FEMA. A footnote in his summary sheet says that this is because “it is anticipated that several programs will not fully spend out authorized obligations.”

Translation: Money for help to individuals, like mortgage and rental assistance (M.R.A.) and individual and family grant money (I.F.G.), may not all be handed out. This is something

FEMA disputes. Because people who applied for M.R.A. help by Jan. 31, 2003, are eligible for aid for 18 months, Mr. Gair of FEMA expects all of that money will be spent.

The Governor’s office has been loath to provide details of how, exactly, it wants to spend the FEMA money, releasing only a one-page list with broad categories. The less said, the more flexibility the state will have in spending that money in the future.