Cover Story: Is FEMA broke?

CHARLOTTE, NC (WBTV) - Is Hurricane Irene breaking the FEMA piggy bank?  The feds are getting dangerously low on disaster relief funds.

What happens to us when the money runs out?

First, here's the update on Irene's aftermath.

The Red Cross says as many as 3,500 homes in North Carolina are destroyed or severely damaged.  That's more than triple the number mentioned earlier this week.

The state is now officially a disaster area.  President Obama on Wednesday cleared the way for federal funding for seven coastal counties.

It means grants for temporary housing and home repairs, as well as low cost loans to cover uninsured property loss.

But FEMA, the Federal Emergency Management Agency, is running out of money fast.

Irene is almost certain to be the costliest category one hurricane in history and one of the 10 costliest ever.

The price-tag could top $10 billion.  But FEMA has less than $800 million in its coffers.

Even so, the head of FEMA says recovery efforts will proceed regardless of the dwindling emergency fund.

They'll pay the bills on the east coast, in part, by freezing future aid to tornado-ravaged Joplin, Missouri.

The agency says it has to focus on the immediate needs when the fund runs low.

In the aftermath of Irene, there's Tropical Storm Katia lurking around out in the Atlantic.  It could become a major hurricane. It's still too early to tell if and where she'll strike.

But say Katia takes a sharp left at North Carolina. How will FEMA pay for that disaster?

Uncle Sam will just have to take out his credit card.  Problem is some of the ones in charge now don't want to do | refuse to do that.

Floods in the Dakotas.  Fires in the Southwest.  Tornadoes in Missouri, Alabama and Mississippi.

Now Irene.  The 10-th storm this year to cause more than $1 billion damage.  There hasn't been a year like this in 30 years of record-keeping.  And it's depleted FEMA's budget.

FEMA administrator Craig Fugate said on the CBS Early Show Wednesday:  "Once we get damage assessments completed on Irene we'll have a better idea of the funding needs not only for the storm but all the other disasters we're still working."

Times past Uncle Sam would pull out the credit card and charge it.  Not this year.  With deficit hawks like Virginia Congressman Eric Cantor and others in charge - they're saying before FEMA gets more disaster funding cuts have to be made in other federal programs.

And with North Carolina looking at millions in storm damage that burns people like David Price, a Congressman from the Raleigh area.

"There's no reason to do this. And it shows a certain kind of insensitivity to the kind of assurance these communities need. So I don't like it a bit," said Price.

Money for the seven North Carolina counties declared disaster areas from Irene - counties that saw homes torn apart and farmland flooded - that's not in doubt.  They will see FEMA help.

Previous storm will have to stand in line.

And what happens if there's another hurricane that makes landfall?

"I'm actually captivated by the fact that this program in particular has been caught up in the budget battle in Congress."

Chair of the UNC Charlotte Political Science Department Dr. Bob Kravchuk and an expert on budgeting and finance says Congress historically has always come through with emergency funding.  This appears to be a first.

The case Republicans in the House are making, says Kravchuk: "There has to be some program that goes first.. in order to increase spending under the spending caps that were agreed to when the debt ceiling was raised."

What will end up happening?

With pictures of devastation and destruction etched in the minds of Congress and those back home no one doubts FEMA will get the needed funds.

A new Gallup poll out this week found that only 17-percent of Americans have a favorable view of the federal government - a new low.

This dust up will certainly add fuel to the fire.

FEMA started registering people in North Carolina Wednesday.

Individuals and businesses with losses in the seven designated disaster counties can apply for assistance on line.  Go to

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