Texas disaster plan – an ill conceived pork barrel

Texas’ just released plan for $1.3 billion in federal Community Development Block Grant funds for Hurricanes Dolly and Ike fails to provide the type of plan required by federal law. The plan proposes an arbitrary, pork barrel style allocation of disaster recovery funds that will leave the critical housing needs of Texas families unmet.

The good news is that the plan is so poorly conceived and presented it will doubtless be rejected by the federal government. The bad news is that this false start will delay the release of the badly needed rebuilding funds that are desperately needed to help restore the homes of Texans. It also is a distraction from the difficult choices that the Governor must ultimately make regrading how to spend the inadequate amount of disaster fund available.

The big question is what on earth are state officials thinking in putting out this plan? It represents a complete abdication of state and gubernatorial leadership in the critical recovery effort.

I will post my analysis of the plan over the course on the next few days. This is the first entry.

I was impressed with the thoughtful and responsible Hurricane Rita disaster plan that came from Governor Perry. That a document like this new Hurricane Dolly/Rita plan actually got released is a huge disappointment. There were warning signs however. I predicted that the plan would have problems when I learned the Governor had entrusted disaster recovery planning and administration to the Texas Office of Rural Community Affairs (ORCA). ORCA is a state agency so inept that it was recommended for abolition just two years ago by the state agency that assesses the effectiveness of state government.

The Texas Sunset Commission staff report on ORCA, a small agency charged with promoting the needs of rural communities found that, “ORCA lacks the leadership and focus needed to effectively serve rural Texas.”

ORCA is simply way out of its league in undertaking to plan and oversee the largest public assistance program in Texas history. According to the independent Sunset review of ORCA, the agency could not even manage to oversee efforts to aid rapidly shrinking Texas rural communities.

Sunset staff found that the agency effectively manages the two rural programs under its purview, but cannot serve the role of setting priorities and charting a clear course of action for tackling the issues facing rural Texas. …

“ORCA has not met the Legislature’s expectations to create a rural policy and provide recommendations to improve rural programs across state agencies. ORCA continues to rely on an overly-complex process for awarding rural community development grants, contributing to delays in getting funds to local communities.”

ORCA’s main role is to oversee the allocation of the annual Community Development Block Grant program for small cities and rural counties. Yet even in this modest program, that has been in place for more than twenty years, ORCA has experienced problems getting the money out the door. The Sunset review that advised abolishing ORCA cited slow CDBG expenditures in its report…

“ORCA continues to rely on a complex system for awarding regionally allocated rural CDBG funds, using multiple entities to score and approve grant applications … This structure can create delays in funding and may not make the best use of existing local resources. Sunset staff found that ORCA’s process for approving rural CDBG grants can delay funding to cities and counties by several months, and may have contributed to Texas having an unexpended balance of about $4.5 million from its 2005 HUD allocation. HUD encourages states to timely expend their CDBG funds, increasing expenditures to at least equal the annual grant amount. Typically, Texas receives its rural CDBG allocation from HUD in March, however ORCA does not award the grants until June. This can delay the start of projects by about three months, making it more difficult for recipients to expend the funds within the time provided for in their project contracts.”

Why has Governor Perry selected an agency with a track record for slow allocation of the state’s regular CDBG allocation of just $80 million to manage $1.3 billion in urgently needed CDBG disaster funds?

I would suggest two factors have led to this.

First, the lead agency for disaster recovery for Hurricane Rita, the Texas Department of Housing and Community Affairs (TDHCA) has been the recipient of some recent political criticism over the slow pace of the department’s ambitious, complex and, in my opinion appropriate, housing rebuilding and rehabilitation program. I’ll blog in detail about this situation in a few days.

Second, and more important, ORCA advocated a philosophy of “devolution of responsibility” down to the local government level with the Governor and ORCA retaining little responsibility for the disaster recovery program. Hurricane recovery has become the “third rail” of Texas politics.  ORCA’s devolutionary approach has some political and practical appeal, yet as we will see later, is flat out irresponsible and illegal.

I’ll first describe the proposed plan as best I can from its highly incomplete and confused rhetoric and then look at the multitude of ways the plan fails Texas hurricane survivors. [I have posted a copy of the plan here].

The plan acknowledges that the $1.3 billion in Community Development Block Grant (CDBG) funds represent the primary source of funds available for rebuilding. The plan proposes (in tortured language) a “triangular approach” to disaster recovery through three activities: public infrastructure, economic development and housing. These three broad activities comprise all of the activities permitted under federal law. The plan notes…

“The Proposed Action Plan is being prepared considering a triangular approach to disaster recovery – public infrastructure, economic development, and housing – with each piece critical to the recovery effort. A common framework is being established that incorporates a balance of public infrastructure, economic development, and housing that can work with the other initiatives taking place of the federal and state levels.”

The “framework” and the “balance” between public infrastructure, economic development and housing are nowhere to be found in the plan.

The 22 page plan (including maps and attachments) says nothing about what the money will be spent for nor does it detail the programs that will be created to assist hurricane survivors to rebuild. The plan simply states that any activities that are permitted under federal law might be undertaken with the funds, but that no plan is yet ready. This is a problem because the plan is the only opportunity that anyone has to learn about and comment upon the state’s disaster recovery plan. The ORCA plan simply says give us the money and we will consult privately with who we choose and spend the money how we wish. That won’t cut it. This is the first of many fatal flaws in the plan. Program allocations and the program details are elements that are required to be included in the plan to gain federal approval.

The empty rhetoric of the plan offers no definitions for the types of public infrastructure, economic development and housing that will be allowable activities nor does it prioritize in any manner between these activities. Instead the plan continues in confused and opaque language to suggest that instead of the State and Governor providing leadership and setting priorities for the use of the federal funds (as explicitly required in federal statute) the Governor passes off all his responsibilities to “local communities”.  The plan states…

“The development of the Proposed Action Plan considers a locally driven process with priorities established at the local level and then working with the Office of the Governor, community leaders, advisory groups, Councils of Government (COGs), and others to maximize the funds and place funding where the highest needs exist. This approach allows for local communities to take ownership and pride in rebuilding their communities in a way that will rebuild the coastal region to a level that will not only allow them to rebound from these disasters, but to help grow Texas stronger.”

Despite the rhetoric about “communities” making decisions, the proposal actually turns over authority not to the community but to self elected boards of “Councils of Government” (COGs). This is familiar turf for ORCA. ORCA administers the annual state small cities and rural CDBG program in a similar manner. ORCA exercises no effective leadership or direction in the state’s annual CDBG program, transforming it instead into a revenue sharing program for small cities and rural counties. Each year the money is divided on a pro rated basis among the 24 COGs that cover the state and their self appointed boards which, in conjunction with regional review committees composed of the same local politicians who make up the COGs, divvy up the money among themselves.

The most extreme example of political self dealing takes place among COGs that have adopted an approach known to ORCA officials as the “Gentleman’s Agreement.” Instead of going through the process of allocating funds to the most worthy projects or to the most needy areas, funds are allocated on a revolving basis among the cities and counties to use for any projects regardless of the projects merit or the public need addressed by the project. This process allows one county to build recreational boat launching areas with CDBG funds while nearby communities of poor families live without sewer or drinking water.

The “Gentleman’s Agreement” method of allocating CDBG funds has been allowed to operate for many years by ORCA despite our calls for reform. Now that same bankrupt process is being proposed through the ORCA Dolly/Ike plan for the allocation of $1.3 billion of disaster recovery funds.  Here again is language from the ORCA plan…

“After the allocation for each COG is determined, the COG region will be responsible for allocation of funding between housing and non-housing activities based on input from the local communities. This allocation of funding will be determined by the COG using damage assessment data collected, public input, and will give special consideration to those areas impacted by storm surge and sustained wind speeds greater than 55 mph for Hurricane Ike.”

“All available funds will be allocated in this fashion with the exception of 5% for state administrative costs and 15% for planning activities. The [federal] requirement for the 10% for repair, rehabilitation, and reconstruction of affordable rental housing stock where there is demonstrated need will apply at the regional level.”

Let’s label this process what it is. The ORCA plan turns a disaster recovery program into a “pork barrel” program. Pork barrel is defined as “a government project or appropriation that yields jobs or other benefits to a specific locale and patronage opportunities to its political representative.” ORCA’s plan establishes a program that is not directed at individual assistance but instead at arbitrary transfers of money intended to help individuals into the hands of local politicians to use as they please.

Local politicians are concerned principally with spending public money for public works projects and economic development projects that benefit private business. A local politician given a choice between spending funds to undertake a public works project, an economic development project that benefits a major campaign contributor and helping a limited number of families rebuild their homes, as the plan does, which will most politicians choose? I suggest that it will not be the housing program. Politicians can defer a tax increase by funding the public works project and can curry favor with campaign contributors with the economic development project. Getting the families back into their homes offers a politician far less political payoff.

Think this is too cynical? Consider the track record for ORCA’s annual small cities and state CDBG program.  That program operates under this same approach of letting local officials decide how to spend the money. The result: it has been years since one dollar of CDBG funds have been spent under the Texas CDBG program to directly help a Texas family with their housing needs. All of the money instead is allocated by local politicians on economic development and public works.

While the ORCA plan offers no direction as to what sort of disaster assistance the COGs may undertake, it does deal with the one issue of most concern to those who want to get access to the pork barrel, namely how to regionally divide the money among the COGs.  ORCA did not take the time or make the effort to envision program to help the hurricane survivors but instead devoted the bulk of the plan on to how to divide up the money.

Yet, even in this seemly straightforward task, ORCA got it wrong.

I’ll take up this in tomorrow’s blog.