Louisiana Governor Finds $700 Million to Rebuild Damaged Homes in New Orleans

BATON ROUGE, La. -Gov. Kathleen Blanco said her administration has found up to $700 million in state money to put into Louisiana's grant program for rebuilding hurricane-damaged homes, which faces a deficit of as much as $5 billion.

The announcement Saturday marked the first time Blanco has backed off from saying the federal government should pay for the entire Road Home program, which provides rebuilding and buyout grants to people whose homes were damaged by hurricanes Katrina and Rita.

"Congress has forgiven some of our state obligations for this unprecedented recovery. We, in turn, will now use state dollars for the Road Home shortfall. We have currently identified between $600 (million) and $700 million in state funds to put towards this effort," Blanco said in a news release.

She did not say where the money would come from.

Blanco's proposed budget does not include a dime for the program, despite a surplus of $827 million from the last fiscal year and unobligated state money available in the current budget year. The state House passed a budget similar to Blanco's on Thursday after rejecting requests from New Orleans lawmakers to put money into the Road Home.

Blanco's announcement came two days after the state's auditor estimated the program's potential deficit at $5 billion — as much as $2.1 billion higher than previous estimates — and after growing insistence by Democrats in Congress and the Legislature that the state would have to put in money toward the deficit.

Earlier in the week, U.S. Rep. William Jefferson, a Democrat from New Orleans, had said the state would have to put $750 million to $1 billion into the program if it wanted to help. Legislators had said the administration was looking for sources for a state contribution.