The total long-term funding for helping the Gulf Coast recover from the 2005 hurricanes hinges on numerous factors including policy choices made at all levels of government, knowledge of spending across the federal government, and the multiple decisions required to transform the region. To understand the long-term federal financial implications of Gulf Coast rebuilding it is helpful to view potential federal assistance within the context of overall estimates of the damages incurred by the region. Although there are no definitive or authoritative estimates of the amount of federal funds that could be invested to rebuild the Gulf Coast, various estimates of aspects of rebuilding offer a sense of the long-term financial implications. For example, early damage estimates from the Congressional Budget Office (CBO) put capital losses from Hurricanes Katrina and Rita at a range of $70 billion to $130 billion while another estimate put losses solely from Hurricane Katrina—including capital losses—at more than $150 billion. Further, the state of Louisiana has estimated that the economic effect on its state alone could reach $200 billion. The exact costs of damages from the Gulf Coast hurricanes may never be known, but will likely far surpass those from the three other costliest disasters in recent history—Hurricane Andrew in 1992, the 1994 Northridge earthquake, and the September 2001 terrorist attacks. These estimates raise important questions regarding how much additional assistance may be needed to continue to help the Gulf Coast rebuild, and who should be responsible for providing the related resources. To respond to the Gulf Coast devastation, the federal government has already committed a historically high level of resources—more than $116 billion—through an array of grants, loan subsidies, and tax relief and incentives. The bulk of this assistance was provided between September 2005 and May 2007 through five emergency supplemental appropriations. A substantial portion of this assistance was directed to emergency assistance and meeting short-term needs arising from the hurricanes, such as relocation assistance, emergency housing, immediate levee repair, and debris removal efforts. The Brookings Institution has estimated that approximately $35 billion of the federal resources provided supports longer-term rebuilding efforts. The federal funding I have mentioned presents an informative, but likely incomplete picture of the federal government’s total financial investments to date. Tracking total funds provided for federal Gulf Coast rebuilding efforts requires knowledge of a host of programs administered by multiple federal agencies. We previously reported that the federal government does not have a governmentwide framework or mechanism in place to collect and consolidate information from the individual federal agencies that received appropriations in emergency supplementals for hurricane relief and recovery efforts or to report on this information. It is important to provide transparency by collecting and publishing this information so that hurricane victims, affected states, and American taxpayers know how these funds are being spent. Until such a system is in place across the federal government, a complete picture of federal funding streams and their integration across agencies will remain lacking. Demands for additional federal resources to rebuild the Gulf Coast are likely to continue, despite the substantial federal funding provided to date. The bulk of federal rebuilding assistance provided to the Gulf Coast states funds two key programs—FEMA’s Public Assistance (PA) program and HUD’s Community Development Block Grant (CDBG) program. These two programs follow different funding models. PA provides funding for restoration of the region’s infrastructure on a project-by-project basis involving an assessment of specific proposals to determine eligibility. In contrast, CDBG affords broad discretion and flexibility to states and localities for restoration of the region’s livable housing. In addition to funding PA and CDBG, the federal government’s recovery and rebuilding assistance also includes payouts from the National Flood Insurance Program (NFIP) as well as funds for levee restoration and repair, coastal wetlands and barrier islands restoration, and benefits provided through Gulf Opportunity Zone (GO Zone) tax expenditures. The PA Grant program provides assistance to state and local governments and eligible nonprofit organizations on a project-by-project basis for emergency work (e.g., removal of debris and emergency protective measures) and permanent work (e.g., repairing roads, reconstructing buildings, and reestablishing utilities). After the President declares a disaster, a state becomes eligible for federal PA funds through FEMA’s Disaster Relief Fund. Officials at the local, state, and federal level are involved in the PA process in a variety of ways. The grant applicant, such as a local government or nonprofit organization, works with state and FEMA officials to develop a scope of work and cost estimate for each project that is documented in individual project worksheets. In addition to documenting scope of work and cost considerations, each project worksheet is reviewed by FEMA and the state to determine whether the applicant and type of facility are eligible for funding. Once approved, funds are obligated, that is, made available, to the state. PA generally operates on a reimbursement basis. Reimbursement for small projects (up to $59,700) are made based on the project’s estimated costs, while large projects (more than $59,700) are reimbursed based upon actual eligible costs when they are incurred. As of the middle of July 2007, FEMA had approved a total of 67,253 project worksheets for emergency and permanent work, making available about $8.2 billion in PA grants to the states of Louisiana, Mississippi, Texas, and Alabama. A smaller portion of PA program funds are going toward longer- term rebuilding activities than emergency work. Of the approximately $8.2 billion made available to the Gulf Coast states overall, about $3.4 billion (41 percent) is for permanent work such as repairing and rebuilding schools and hospitals and reestablishing sewer and water systems, while about $4.6 billion (56 percent) is for emergency response work such as clearing roads for access and sandbagging low-lying areas. The remaining amount of PA funds, about $0.2 billion (3 percent) is for administrative costs. (See fig. 1.) Of the funds made available by FEMA to the states for permanent rebuilding, localities have only received a portion of these funds since many projects have not yet been completed. Specifically, in Louisiana and Mississippi, 26 and 22 percent of obligated funds, respectively, have been paid by the state to applicants for these projects. The total cost of PA funding for the Gulf Coast hurricanes will likely exceed the approximately $8.2 billion already made available to the states for two reasons: (1) the funds do not reflect all current and future projects, and (2) the cost of some of these projects will likely be higher than FEMA’s original estimates. According to FEMA, as of the middle of July 2007, an additional 1,916 project worksheets were in process (these projects are in addition to the 67,253 approved project worksheets mentioned above). FEMA expects that another 2,730 project worksheets will be written. FEMA expects these worksheets to increase the total cost by about $2.1 billion, resulting in a total expected PA cost of about $10.3 billion. Some state and local officials have also expressed concerns about unrealistically low cost estimates contained in project worksheets, which could lead to even higher than anticipated costs to the federal government. A senior official within the Louisiana Governor’s Office of Homeland Security and Emergency Preparedness recently testified that some of the projects were underestimated by a factor of 4 or 5 times compared to the actual cost. For example, the lowest bids on 11 project worksheets for repairing or rebuilding state-owned facilities, such as universities and hospitals, totaled $5.5 million while FEMA approved $1.9 million for these projects. The extent to which the number of new project worksheets and actual costs that exceed estimated costs will result in demands for additional federal funds remains unknown. In addition, PA costs may increase until a disaster is closed, which can take many years in the case of a catastrophic disaster. For instance, PA costs from the Northridge earthquake that hit California in January 1994 have not been closed out more than 13 years after the event. Our ongoing work on the PA program will provide insights into efforts to complete infrastructure projects, the actual costs of completed projects, and the use of federal funds to complete PA projects. HUD’s CDBG program provides funding for neighborhood revitalization and housing rehabilitation activities, affording states broad discretion and flexibility in deciding how to allocate these funds and for what purposes. Congress has provided even greater flexibility when allocating additional CDBG funds to affected communities and states to help them recover from presidentially-declared disasters, such as the Gulf Coast hurricanes. To date, the affected Gulf Coast states have received $16.7 billion in CDBG funding from supplemental appropriations—so far, the largest federal provider of long-term Gulf Coast rebuilding funding. As shown in figure 2, Louisiana and Mississippi were allocated the largest shares of the CDBG appropriations, with $10.4 billion allocated to Louisiana, and another $5.5 billion allocated to Mississippi. Florida, Alabama, and Texas received the remaining share of CDBG funds. To receive CDBG funds for Gulf Coast rebuilding, HUD required that each state submit an action plan describing how the funds would be used, including how the funds would address long-term “recovery and restoration of infrastructure.” Accordingly, the states had substantial flexibility in establishing funding levels and designing programs to achieve their goals. As shown in figure 3, Mississippi set aside $3.8 billion to address housing priorities within the state while Louisiana dedicated $8 billion for its housing needs. Each state also directed the majority of its housing allocations to owner- occupied homes and designed a homeowner assistance program to address the particular conditions in their state. As discussed below, each state used different assumptions in designing its programs, which in turn affects the financial implications for each state. Using $8.0 billion in CDBG funding, the Louisiana Recovery Authority (LRA) developed a housing assistance program called the Road Home to restore the housing infrastructure in the state.