Avoiding Fiscal Floods of Red Ink

As Washington gears up for big-ticket aid to the Midwest, some flood-state members of Congress are urging offsetting budget cuts

THE Army Corps of Engineers had delivered roughly 18 million sandbags in the Midwestern flood zone by midweek, and even dust-poor, flood-prone Bangladesh was offering tea and burlap for United States flood victims.

Now much bigger-ticket federal help is on the way. The House Appropriations Committee approved $3 billion in emergency funds - outside all budget limits - on Tuesday. The full House could vote as early as today.

But some flood-state members of Congress would rather not see the aid to their districts raise the red-ink levels in the federal deficit even higher.

"People don't necessarily want to compound a natural disaster with a fiscal disaster," says Rep. Fred Grandy, a Republican from heavily soaked Iowa, which probably lost 10 percent of its crops statewide this year.

Reps. Tim Penny (D) of Minnesota and Jim Nussle (R) of Iowa have scoured the budget for $3 billion in spending cuts to offset emergency aid. They have found the money by squeezing 16 percent out of unobligated funds for construction projects, repair and restoration at the Smithsonian Institution, hiring at some agencies, and other programs.

People in his district want help, says Mr. Penny, "but I think there's a question in their minds about where the money's coming from. ... They know the federal government's drowning in red ink." Penny and other members note that major natural or manmade disasters have been occurring virtually every year, yet every year they are treated as emergencies outside the budget process.

"In the past, this has been in other parts of the country," says Penny. "Now it's in my district, so it gives me more credibility to come forward and say we should pay for this."

"This is just ridiculous that we have to go in after every disaster and reinvent the wheel," says Mr. Nussle. The budget should include a revolving fund to cover such surprises, he says. Comparisons with Andrew

Some disasters get more attention than others, too, he notes, raising fairness questions. After Hurricane Andrew hit southern Florida last year, for example, President Bush announced that the federal government would pick up 100 percent of the tab for repairing the local roads, water and sewer systems, and public buildings. No such promises have come to flooded areas this year.

Federal help in the form of immediate relief, however, is already on the way. The Federal Emergency Management Agency (FEMA) is helping to restore drinking water in Des Moines while the Department of Agriculture delays deadlines for farmers to repay advance crop deficiency payments.

Federal disaster relief is also beginning to find its way into long-term recovery programs. As of Tuesday, FEMA had received 21,114 applications for federal housing assistance and loans and has already begun to process them, said Carl Suchocki, a spokesperson from FEMA's national office.

In Des Moines, where flood victims hope the worst is behind them, the disaster field office has received 4,645 applications for temporary housing assistance and has issued $251,874 in checks, said Keith Radakovich, a FEMA representative.

The Small Business Adminstration, which provides disaster victims with low-interest loans, also has conducted 1,727 interviews in Iowa and has approved almost a hundred loans already, Mr. Radakovich said.

But, as Clinton's list of disaster areas grows, Midwesterners are questioning whether Washington will come through this time.

Farmers in South Dakota, which was declared a disaster area on Monday, recall droughts that wiped out crops and left them looking to the federal government for aid and a comprehensive crop insurance plan. Partial replacement

Federal relief responded by replacing only 25 percent of farmers' losses and failing to come up with a new subsidizing program, said Rep. Tim Johnson (D) of South Dakota.

"People are now anticipating a similar situation which will involve a huge amount of frustration," Johnson said. "We need finally to be rethinking how to protect farmers from damages and losses without politics."

Federal and local emergency managers forecast that public assistance will be the most expensive part of relief efforts. Accurate assessments cannot be done until flood waters recede, but the House bill calls for $53 million in state and local government grants and more than $200 million to repair damages to public property.

For now, federal emergency workers say they are more concerned with the flood victims and their needs than with budgetary woes.

"We're going to let Congress deal with the dollars," Radakovich said.

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