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Congress approves hurricane aid with provision

Gulf Coast loans cannot be forgiven

WASHINGTON -- Congress yesterday approved as much as $1 billion in federal loans to help local governments pay employees in the devastated Gulf Coast region, but included a controversial provision stipulating that the loans cannot be forgiven.

Democratic critics said the provision barring cancellation of the loans singled out Louisiana and other Gulf states for harsh treatment.

They said the restriction has never applied to past disaster loans, which often have been forgiven.

Despite the concerns, the bill passed both the Senate and the House by voice vote and will be sent to President George W. Bush for his signature.

But the dispute over repayment signaled that bipartisan support for Katrina recovery measures has begun to erode.

The two parties also disagree about how deeply to cut spending for Katrina aid.

Louisiana Republican David Vitter, the Senate sponsor of the bill, said the provision was included because that was the only way the Republican-led House would pass it quickly.

''The Gulf Coast states have been basically forced by the Republican leadership in the House to accept help under conditions that have never been imposed on any state, city, region, county, sheriff, mayor ever before in the history of the country," said Senator Mary Landrieu, a Louisiana Democrat.

Splitting with her Louisiana colleague, Landrieu held a vigil on the Senate floor into the early hours yesterday, pushing lawmakers to drop the provision.

Republican leaders refused and the Senate passed the bill with the provision intact.

In the House, which took up the bill shortly after the Senate acted, Representative Carolyn Maloney, Democrat of New York, said New Orleans and other communities in the region will be ''strapped with mountainous debt."

The Republican majority ''is more forgiving to Iraq's cities than we are to our own local governments," she said, referring to $18 billion given for Iraq's reconstruction.

Representative Richard Baker, a Louisiana Republican who sponsored the bill in the House, said the Federal Emergency Management Agency had a great deal of freedom in determining conditions of repayment.

The Gulf Coast loans would come from funds already approved for hurricane relief.

Congress has approved $62 billion, of which about $42 billion remains unspent.

Landrieu said the White House backed the tougher language, but spokesman Scott McClellan refused to say whether Bush supported the provision or would have accepted a bill without the restriction.

Without mentioning Landrieu by name, Vitter criticized her efforts to push for more lenient language.

''The last 24 hours have been a frustrating and disappointing time for me . . . because as we face an unprecedented crisis along the Gulf Coast, some elements of the Senate have acted as they often do, by giving speeches and filibuster," he said.

Landrieu declined to respond to the criticism.

The legislation aims to help communities that have lost much of their tax base because of the devastation caused by hurricanes Katrina and Rita.

New Orleans Mayor Ray Nagin has said the city is being forced to lay off thousands of workers because there was no money to pay them.

The fight over the loan program reflects a broader desire by House Republicans that hurricane aid be paid for by cutting spending on other domestic programs.

House Speaker J. Dennis Hastert of Illinois, following a House Republican meeting Thursday, said they were monitoring Katrina spending.

''The spending that we are watching we are going to offset," he said.

Although Republicans came to no agreement, lawmakers said they discussed across-the-board spending cuts to cover Katrina costs.

In Louisiana yesterday, as cleanup efforts continued, state authorities said they were investigating allegations that New Orleans police officers broke into a dealership and made off with nearly 200 cars -- including 41 new Cadillacs -- as Hurricane Katrina closed in.

''It is a very, very active investigation," Kris Wartelle, spokeswoman for the Louisiana attorney general, said yesterday. ''We expect developments quickly."

Wartelle would not comment on why the officers may have taken the cars or whether they were used in the line of duty.

But the cars may have been taken before the hurricane roared into town Aug. 29, according to Doug Stead, the president and general manager of the dealership. Stead said the cars included 88 new Cadillacs and Chevrolets, 40 used cars, 52 customers' cars, and a restored 1970 El Camino and 1966 Impala. ''We put the loss on new cars at $3.7 million," he said. ''The used cars ran another $900,000."

Material from the Associated Press was included in this report.

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