Did NYC Get its Promised 9/11 Disaster Aid?

Not yet. But go ahead and be complacent.

Last winter, there was a brief flurry of stories (including one Chatterbox column) about the Bush administration’s apparent reluctance to make good on its pledge to give New York City $20 billion in aid to help it recover from Sept. 11. The public fuss probably helped nudge the Bush administration into reasserting its promise in March. The money was finally appropriated in July. (By then, the amount had risen to $21.4 billion.) So, why did New York City Comptroller William C. Thompson Jr. say in a Sept. 4 speech that “only a small down payment” of $2.7 billion had thus far been paid out?

Because money appropriated isn’t the same thing as money spent. When Congress appropriates money, it doesn’t actually fork the cash over itself; rather, it gives the money to the relevant federal agency and instructs that agency to fork the cash over, which the agency does in its own good time. Thus far, the relevant federal agencies have doled out $2.7 billion (see chart below).

Federal ProgramWhat the money’s forHow much was appropriated?How much does NYC have now?
Federal Emergency Management AgencyEmergency construction, housing, and transportation projects$9.1 billion$2.3 billion
Liberty Zone economic packageIssuance of tax exempt bonds; accelerated depreciation for equipment and property; tax credits to small businesses$5 billion$0
Lower Manhattan Development Corporation and Empire State Development CorporationCommunity development building grants; business assistance$3.5 billion$445 million
Other New transit station; highway repair; relocation of federal offices; Small Business Administration loans$3.8 billion$0
Total $21.4 billion$2.7 billion

Source: New York City comptroller’s office.

Does that mean New York City is getting screwed? Comptroller Thompson’s speech certainly made it sound that way. So did a press release for a report on the economic impact of Sept. 11 issued that same day by Thompson’s office. (“Federal officials have pledged $21.4 billion in total federal assistance to the City. But only $2.7 billion has been released to date.”) When Chatterbox pressed Thompson’s office for details, however, he found that the only significant money dispute between the city and the feds had to do with whether some of the $9.1 billion in New York City assistance funds appropriated through the Federal Emergency Management Agency could be used to reimburse the city for stepped-up police protection during the past year at places other than Ground Zero, such as the United Nations or the bridges and tunnels leading into Manhattan. The city argued that the FEMA funds ought to be available to reimburse the city for the overtime paid to the police to help repel, or at least deal with, a feared second terrorist attack in some other part of New York City. FEMA (no doubt calculating that other cities would quickly put out their hands, too) said nothing doing. Otherwise, said city comptroller spokesman Scott Taffet, “The money that the city has needed thus far, FEMA has come through with.”

Are other federal agencies dragging their feet on Sept. 11-related aid to New York City? Actually … no. The Liberty Zone Package, which is supposed to contribute $5 billion to the $21 billion in aid, consists largely of tax breaks for businesses that elect to remain in lower Manhattan during the next 10 years. The program has only been up and running since March, so there’s been little reason thus far for anyone to calculate its economic impact. (Tax breaks aren’t really “appropriations” in the sense that the federal government hands out money; they’re an agreement on the part of the government to forego an estimated amount of tax revenue.) The Lower Manhattan Development Corporation and the Empire State Development Corporation, which provide government grants to assist real estate and other business concerns, have barely gotten started on Sept. 11 projects, hence have quite logically spent less than one-sixth of the total allotted amount. And the Ground Zero rebuilding efforts due to receive federal funds, such as the new rail hub planned for Ground Zero, have barely entered the planning stages, which explains why no federal money has yet been spent on them.

What lesson should we draw from all this as we approach the first anniversary of 9/11? It takes longer than you think to spend $21.4 billion. Even in Manhattan.