As Tennessee Copes With Flooding Disaster, FEMA Faces Own Financial Crisis

With a flooded Tennessee becoming the latest disaster to strike the United States, the Federal Emergency Management Agency is confronting its own emergency as its relief funds run perilously low.

Last month, FEMA Director W. Craig Fugate wrote a letter to Congress warning that its relief fund had fallen to $693 million as of April 7 but the agency owed $645 million to 47 states for past disasters. That doesn't include the $1.7 billion settlement the agency owes to the Gulf Coast state and city governments for Hurricane Katrina.

Now FEMA is handing out money to the residents of Tennessee after deadly floods ravaged the region last weekend.

FEMA has already approved $4.1 million in individual assistance and more than 16,200 Tennesseans had registered with FEMA for disaster assistance by Saturday morning with 650 inspections complete.

White House spokesman Robert Gibbs said Friday that FEMA will probably need a shot of supplemental funding. The administration is seeking $5.1 billion in emergency funding from Congress.

Homeland Security Secretary Janet Napolitano toured the area Saturday and found residents already repairing their homes and business owners pushing to re-open.

"DHS and the entire federal government will do everything possible to support the people of Tennessee and across the Southeast in getting back on their feet quickly -- coordinated every step of the way with our state and local partners," Napolitano said.

The outlook for the devastated areas of Tennessee, Mississippi and Kentucky remained grim Saturday as the death toll climbed to 31 with the discovery of a missing kayaker's body in Kentucky. Twenty died in Tennessee alone.

Nashville Mayor Karl Dean raised the damage estimate for his city to $1.5 billion Friday, with 17 percent of Davidson County still to be checked. Already officials know 9,300 properties have been damaged and almost 2,000 of those are residences. Dean said the damage total will go up because it doesn't include damage to roads, bridges or the contents of the buildings.

"While the numbers seem daunting, and they truly are large, Nashville is in the process of recovering," Dean said.

But some analysts believe FEMA was never meant to be -- and shouldn't be -- the disaster response agency for the nation.

"From an operational standpoint, disaster response should be driven by state and local governments, as they are the owners of most of the response resources and they are the first on the scene when disaster strikes," Jena Baker McNeill and Matt Mayer of the Heritage Foundation said in a report published last month. "Supplanting this funding encourages state and local governments to not be prepared, knowing that the federal government will bail them out."

The report found that the yearly average of FEMA declarations has tripled from 43 under the first President Bush to 89 under President Clinton to 130 under the second President Bush.

President Obama issued 108 declarations in his first year in office – the 12th highest in FEMA history – without the occurrence of one hurricane or other major disaster, the report said. In the first three months of 2010, Obama has issued 32 declarations, putting him on pace for 128 declarations for the year – the sixth most in FEMA history, according to the report.

The report says the reason behind the increase is governors, as their state budgets decline, are more likely to seek emergency declarations from FEMA that requires the federal government pay up to 100 percent of the disaster response bill.

"Truly catastrophic disasters that overwhelm state and local governments are a welcome forum for FEMA intervention; that is, after all, the very purpose of FEMA declarations," the report reads. "However, all too often disaster politics, rather than effective policy, drive decisions on disaster response. Washington policymakers simply do not know how to say 'no' to spending more on disasters. Consequently, FEMA can no longer meet its financial commitments."

The Associated Press contributed to this report.