Image: Haley Barbour
Rogelio V. Solis  /  AP
Mississippi Gov. Haley Barbour tips his Toyota hat at an event last spring in which the automaker announced its plans for a new plant near Tupelo.
By Mike Stuckey Senior news editor
msnbc.com
updated 2/13/2008 6:00:22 AM ET 2008-02-13T11:00:22

Two weeks after federal officials allowed Mississippi Gov. Haley Barbour to divert $600 million in post-Katrina housing funds to a massive expansion of the state’s port, the governor is seeking to shift another $25 million in hurricane recovery money to a highway improvement project far from the storm zone, which would chiefly benefit a new Toyota plant being built in the area.

Barbour’s  money-moving efforts, which have been criticized by Democrats in Congress and the state Legislature, come as other officials seek additional funding for what they say are unmet needs left by the devastating August 2005 hurricane.

The U.S. Department of Housing and Urban Development announced last week that it has asked Congress for another $39 million in the 2009 federal budget for permanent housing aid for elderly and disabled renters displaced by Katrina along the Gulf Coast.

And the state’s new U.S. senator, Roger Wicker, said upon taking the post last month that obtaining additional federal disaster relief funding would be his first order of business.

Critics say Barbour and other state officials have used much of the billions of dollars in federal aid that has poured into Mississippi after Katrina to benefit the business community and address infrastructure issues unrelated to the killer hurricane.

Critics say poor getting short shrift
Meantime, they contend, thousands of low-income residents, many of whom still live in FEMA travel trailers more than 2½ years after the storm, have received little help rebuilding their lives. And the state’s Medicaid program, which has an ironic link to the $25 million sought by Barbour for the highway project, is facing  huge deficits that could force drastic cutbacks in the poorest state in the union.

“We still have a lot of needs on the Gulf Coast and it just doesn’t make sense to prioritize a four-lane highway around a Toyota plant,” state Sen. David Baria told msnbc.com. Baria, from Bay St. Louis in the heart of the hurricane zone, was among six Democratic state legislators in Mississippi who signed a statement protesting the road funding plan proposed by Barbour, a Republican.

Barbour’s office says the funding in question is state money that Mississippi can spend as it likes, as long as state lawmakers approve, and the Toyota plant, 300 miles away from the Gulf Coast near Tupelo, aids the state’s recovery from Katrina.

“Not only does it serve our state's economic development strategy of seeking large-scale automotive manufacturing plants and suppliers, it creates thousands more good-paying, higher-skilled jobs than exist today,” press secretary Pete Smith said in an e-mail response to questions from msnbc.com. “Creating new jobs in Mississippi does help the cause of recovery because working people pay taxes to support state initiatives.”

The money the governor wants to use for the highway project is in the “state hurricane reserve fund” courtesy of post-Katrina federal forgiveness of some state costs for Medicaid, the joint state-federal health-insurance program for the poor.

Feds picked up state's Medicare costs
In addition to billions of dollars of aid that the federal government sent to Mississippi after the hurricane, it assumed the state’s share of Medicaid costs for the first half of 2006. The state used  a big part of what it would have spent on Medicaid, about $368 million,to create the hurricane reserve fund, anticipating that it would need the money to match other federal hurricane relief dollars. But the matching requirement was later waived and about $270 million remains in the fund.

“Yes, it was originally intended as match money for Medicaid, and, possibly, other things,” said Smith, Barbour’s spokesman.

Reilly Morse, an attorney with the Mississippi Center for Justice, a public interest law firm that has been a frequent critic of post-Katrina spending priorities, was incredulous. "Taking money from Medicaid and putting it into a road? Is there no low-income need so sacred that Gov. Barbour won’t rob it?"

The governor’s office also used economic arguments in defending its plan to shift $600 million in federal post-Katrina housing funds to expand state shipping facilities at Gulfport. In a Jan. 25 letter approving the switch, HUD Secretary Alphonso Jackson said he had “little discretion” to block the transfer, even though affordable housing in coastal Mississippi was a "more pressing need" than the port expansion.

So pressing that as the $600 million in housing funds flows to the port, Jackson’s agency is now seeking another $39 million from Congress for permanent housing aid for elderly and disabled renters displaced by Katrina.

Housing programs ‘apples and oranges’
HUD spokesman Brian Sullivan called the two housing programs “apples and oranges,” saying in an e-mail that “one funds the brick and mortar stuff, building the capacity to house people, repair/replace infrastructure, etc. … (and) the other provides ongoing assistance to subsidize rents.”

The port diversion already has drawn the attention of a pair of powerful House Democrats – Reps. Barney Frank and Maxine Waters -- who have vowed to probe how federal hurricane funds are being spent in Mississippi.

And Barbour is now facing the ire of state lawmakers from the Gulf Coast who believe the money sought for the road project would be better spent on hurricane recovery or the Medicaid budget gap.

Sen. Debbie Dawkins of the coastal town of Pass Christian, which was leveled by the storm, was another of the six Democrats who signed the statement protesting Barbour’s road-funding plan.

She said she's tired of hearing various pools of money called "apples and oranges" and rejected Barbour’s argument that a Medicaid shortfall shouldn't be fixed with a one-time funding source.

"It's green!" Dawkins exclaimed during a telephone interview with msnbc.com. “When we’re in a crisis with Medicaid, we use whatever money we can get. All states do!”

Medicaid program faces deficits
Mississippi has long struggled to fund its share of Medicaid, which served 568,000 state residents last year. The program is about $90 million short in the current fiscal year, which ends June 30, and faces a $170 million shortfall next year. State Medicaid officials have said the only solution may be to cut optional Medicaid services, such as prescription drugs and mental health care, or implement cost controls on mandatory services.

As for Barbour’s position that the Toyota plant benefits the overall hurricane recovery, Dawkins said, “How in the hell it would relate to coastal restoration, I just haven’t been able to make that leap in my mind.”

According to the statement signed by the Democratic lawmakers, “Many residents of the areas directly impacted by Katrina still reside in FEMA trailers, insurance remains unaffordable, small businesses are struggling."

As of Feb. 1, the Federal Emergency Management Agency said about 11,000 families – or approximately  30,000 people – who lost their homes to Katrina were still living in travel trailers in Mississippi. Another 1,200 families were living in FEMA-subsidized rental housing. Most of them were renters before the storm, and therefore ineligible for federal housing aid directed to homeowners.

While Barbour's office points out that allocations of $723 million are expected to foster construction of more than 20,000 units of affordable rental housing, the state official in charge of administering that money admitted to Mississippi lawmakers last week that ground has not yet been broken on a single project.

Work begins on Toyota plant
But work has begun on the Toyota plant, which was granted more than $300 million in state-funded incentives to locate outside Tupelo. Barbour appeared at ground-breaking ceremonies last week.

The governor is not without support for the road plan in the statehouse. “We’ve been on the receiving end the last 2½ years,” said Rep. Danny Guice, a Republican from coastal Ocean Springs. “The state of Mississippi has been very generous to the people of the south coast. … You could come up with all kind of projects to spend that money on but we have an opportunity to help another part of the state that’s been overly generous with us. Why not do it?”

One reason not to, says attorney Morse, is that moving hurricane funds to the port and the road "plays into the worst stereotypes about Mississippi having been overcompensated for the disaster."

But Smith, the governor’s spokesman, said the state can’t afford to worry about what others think. “We really don't have time to worry too much about stereotypical criticisms,” he said. “We're trying to build homes for families.”

Baria, the state senator from Bay St. Louis, believes that Barbour is likely to get his way on the road funding if he pushes for it in the statehouse. The governor, who passed out nearly $2 million to GOP legislative candidates in last fall’s elections, is owed plenty of favors.

Critics also believe that Barbour’s connections to the GOP establishment from past jobs as a White House political director and head of the Republican National Committee -- and his tenure as one of the most successful lobbyists to ever stroll the Capitol -- already have won Mississippi favorable treatment in the amount of federal money the state received after Katrina. That influence also has allowed him unusual freedom in deciding how to spend it, they say.

Barbour and other Mississippi Republicans are working to ensure that disaster relief dollars continue to pour into the state.

Mississippi’s new U.S. senator, Wicker, just appointed by Barbour to fill the seat of retired Sen. Trent Lott, made a fresh call for federal disaster relief funds his first order of business after taking his post last month.

"It's not unrealistic to think that the Congress will provide another billion dollars, that's billion with a 'b,' for additional appropriations involving the coast," Wicker told reporters after the swearing-in ceremony in Washington.

But such funding could face additional scrutiny.

Reps. Frank, D-Mass., chairman of the House Committee on Financial Services, and Waters, D-Calif., chairwoman of the Subcommittee on Housing and Community Opportunity, told HUD Secretary Jackson last month that they intend to hold hearings on the diversion of post-hurricane housing funds to the port in Gulfport.

Frank remains “very troubled” by the diversion, his spokesman, Steve Adamske, told msnbc.com. “I think there will be hearings. We just haven’t scheduled them yet.”

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