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FEMA chief says will need more money for Sandy costs

U.S. President Barack Obama (R), sitting with Federal Emergency Management Agency (FEMA) administrator William Craig Fugate (L), talks to re
U.S. President Barack Obama (R), sitting with Federal Emergency Management Agency (FEMA) administrator William Craig Fugate (L), talks to re

By Ian Simpson

WASHINGTON (Reuters) - The disaster fund likely will run out of money by early spring because of costs from Superstorm Sandy, the head of the Federal Emergency Management Agency (FEMA) said on Tuesday.

FEMA's Disaster Relief Fund has about $4.88 billion but will need to be refilled as part of a supplemental spending bill the White House is readying to cover costs from the October 29 storm, FEMA Director Craig Fugate told Congress.

"We would look at early spring. We would probably reach the point where we have to go to immediate needs funding," he said in testimony before the House Transportation and Infrastructure Committee.

The Disaster Relief Fund had $7.1 billion at the start of the fiscal year in October. As of November 26, more than $1.93 billion had been earmarked for Sandy relief, Fugate said.

Even before Sandy struck, the fund had been paying for recovery from such disasters as Hurricane Katrina in 2005, Hurricane Irene in 2011 and a tornado in Joplin, Missouri, last year, Fugate told the hearing held on Sandy relief efforts.

Sandy is the costliest storm to hit the northeastern United States, with New York and New Jersey the hardest-hit areas. New York Governor Andrew Cuomo estimated on Monday the cost of Sandy damage at $40 billion to $50 billion in his state.

Cuomo said the White House was expected to send a Sandy emergency aid request to Congress by the end of the week. The bill could come as the White House and congressional Republicans hold tense talks over spending cuts and tax hikes set to take effect next month.

Committee Chairman John Mica, a Florida Republican, and other lawmakers told Fugate it was crucial to cut red tape to speed rebuilding. A measure the House passed this year aimed at speeding relief efforts is before the Senate.

Fugate said that one way to simplify reconstruction was to give grants to local and state governments rather than renegotiating disbursement of FEMA funds as cost estimates for projects change.

(Editing by Cynthia Osterman)

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