Budget deal offers limited fix to SBA loan issue for Louisiana flood victims, but Graves and Gov. Edwards say it falls short

Advocate, The (Baton Rouge, LA)

Feb. 09--A massive $90 billion disaster-relief package awaiting a vote in the U.S. Senate would give Louisiana potential access to hundreds of millions in federal funds for flood-control projects like the Comite River Diversion and offer a partial fix to the SBA loan duplication-of-benefits issue.

But the disaster-relief provisions could have done far more to help recovering flood victims, said U.S. Rep. Garret Graves, R-Baton Rouge, and Gov. John Bel Edwards. Although homeowners who turned down offers of Small Business Administration loans would be able to tap Restore Louisiana recovery grants, Graves noted that thousands more homeowners who borrowed from the SBA would still have those loans held against them when applying for the grants.

Sen. John Kennedy, R-Louisiana, said he and Sen. Bill Cassidy pushed hard to get as much included for Louisiana as possible. But Kennedy said his colleagues in the Senate weren't willing to go further in changing the law on SBA loans.

"The votes just aren't there to do it," Kennedy said. "The next-best thing is what we've done."

Kennedy likewise highlighted additional funding Louisiana could secure from several pots of flood-prevention funding, which the senator said were more generous under his chamber's version of the bill.

Fitzhugh Elder IV, a deputy staff director for the Senate Appropriations committee, said though the policy changes are more narrow in the Senate bill than those backed by the House, the larger Senate bill would deliver more in federal funding for flood prevention and mitigation projects in Louisiana. The bill includes billions more in grant funding, he said, for states that have suffered repeated floods and the eligibility requirements in the Senate bill are tighter than those in the House bill. The Senate bill would restrict eligibility to five states, including Louisiana, and the two U.S. territories, meaning a smaller group would be competing for the money, while the House bill was broader and would allow more than 30 states to apply for funding from that pot.

Richard Carbo, Edwards deputy chief of staff, said while the state would appreciate additional federal funding, the SBA issue addressed by Graves is currently the state's top priority.

"The biggest challenge facing Louisiana homeowners right now is the duplication of benefits issue," Carbo said.

About 3,800 Louisiana homeowners were approved for SBA loans but turned down the offer, according to the Louisiana Office of Community Development, which is administering the recovery program. Those homeowners would potentially gain access to federal recovery grants under the changes proposed in the Senate bill.

But the bill wouldn't change things for the 8,500 homeowners hit by the 2016 floods who took out SBA loans, often at the urging of federal disaster officials. Both Graves and Edwards said those flood victims shouldn't be left out of a fix.

Graves said Thursday afternoon that he was furiously working to amend the package's disaster-relief provisions -- which he called "awful policy" -- or secure a commitment from leaders on Capitol Hill to revise it in later legislation. The congressman said he's also been reaching out to members of Congress from the hurricane-hit states of Texas and Florida to build broader support for changes.

An initial draft of the Senate bill -- circulated to House members, including Graves, late Wednesday morning -- left Louisiana out of the SBA duplication-of-benefits fix altogether, limiting the changes to victims of a series of 2017 hurricanes that slammed Texas, Florida and the U.S. Caribbean territories of the Virgin Islands and Puerto Rico.

Graves blasted the draft in a video posted online Wednesday afternoon, warning that the Senate just "screwed" Louisiana. The SBA fix was expanded to cover all disasters from 2014 to 2017 in the version publicly released late that night.

But Graves raised further concerns Thursday that the specific legal language in the bill might limit the SBA duplication-of-benefits changes only to grants funded by a specific $12 billion pot of money in the latest package -- and not apply to the Restore Louisiana program at all, which is being run on federal dollars Congress already sent to the state.

A staffer for the Senate Appropriations Committee, which is handling the bill, said the change was intended to apply to previously appropriated federal funds as well.

The fate of the disaster package, part of a broader budget deal struck earlier this week by U.S. Senate leaders, remained unclear. Sen. Rand Paul, R-Kentucky, blocked efforts to schedule a quick vote on the deal over his demands that lawmakers consider deep cuts to government spending.

If the overall Senate-brokered deal -- or a similar substitute -- doesn't pass by midnight Thursday, the federal government will shut down.

A broader change to the SBA duplication-of-benefits issue was included in the U.S. House of Representatives' disaster relief package, which it passed by a large bipartisan margin in December. Graves and U.S. Rep. Cedric Richmond, D-New Orleans, crafted the SBA language in that bill, which would have allowed homeowners who borrowed from the SBA to pay back those loans with Restore Louisiana grants.

The U.S. Senate never took up that House-passed disaster-relief package.

That bill also included a raft of other reforms to federal disaster-recovery policy Graves has championed. The proposed changes would've streamlined the way local governments are reimbursed by the Federal Emergency Management Agency, reduced penalties on school districts who didn't carry insurance on flooded buildings and set up an arbitration process for disputes between FEMA and state and local agencies, among other provisions.

"We are continuing to fight this legislation and fix this because it is ridiculous that we have a bipartisan solution that passed with an overwhelming majority in the House of Representatives only to have this thing gutted like this," Graves said in a Thursday video posted to his Facebook page.

The U.S. Senate's bill would send an estimated $600 million to Louisiana to fund flood-prevention projects, including potentially the long-stalled Comite Diversion Canal. The state could also apply for further funding from a multi-billion pot the bill would send to the U.S. Army Corps of Engineers to beef up flood and hurricane protections in states that have flooded repeatedly in recent years, a group that includes Louisiana.

Edwards sent a letter Thursday evening to U.S. Sen. John Kennedy, R-Louisiana, urging him to use his post on the Senate Appropriations Committee to alter the disaster package. Edwards also criticized him for signing onto the more limited SBA duplication-of-benefits fix when Florida Sen. Marco Rubio proposed it earlier.

"The language crafted by Congressmen Graves and Richmond would provide critical assistance to not only Louisiana, but also Texas, Florida, Puerto Rico and other states that have experienced natural disasters," Edwards wrote.

But Kennedy said blame for problems with the state's flood-recovery efforts rests at the Governor's Mansion in Baton Rouge. Edwards' "incompetent handling" of federal funds Congress has given Louisiana made his colleagues question further requests from the state, Kennedy said. And state officials should have warned flood victims against applying for SBA loans in the immediate aftermath of the flood, Kennedy said, given that future recovery grants -- which hadn't yet been approved by Congress -- could be impacted.

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