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October 29, 2002

Honorable Carolyn B. Maloney
U.S. House of Representatives
Washington, DC 20515

Dear Congresswoman:

This letter and the attached tables provide the information on enacted funding for assistance to the city of New York, as outlined in my letter of October 11, 2002. Of the almost $65 billion in budget authority enacted through the three emergency supplemental appropriations acts dealing with recovery from and response to terrorist attacks on the United States (Public Laws 107-38, 107-117, and 107-206), $15.7 billion was provided for assistance to the city of New York. In addition, CBO and the Joint Committee on Taxation estimate that businesses and individuals in New York City will receive about $5 billion in tax relief over the 2002-2012 period under Public Law 107-147. Table 1 summarizes the appropriations for New York City, as well as the estimated revenue impact for Public Law 107-147. The above amounts exclude compensation to victims of the September 11 attacks--the majority of which will go to families who lost relatives in the attack on the World Trade Center.

Funds Appropriated for New York City

Three emergency supplemental appropriations acts enacted in fiscal years 2001 and 2002 provided $15.7 billion in budget authority for assistance to New York City. The three acts, and the amount of assistance provided are:

• The 2001 Emergency Supplemental Appropriations Act for Recovery from and Response to Terrorist Attacks on the United States (Public Law 107-38), which provided $1.9 billion,



• The Department of Defense and Emergency Supplemental Appropriations for Recovery from and Response to Terrorist Attacks on the United States, 2002 (Public Law 107-117), which provided $7.3 billion, and



• The 2002 Supplemental Appropriations Act for Further Recovery from and Response to Terrorist Attacks on the United States (Public Law 107-206), which provided $6.4 billion.

About 95 percent of these funds have been allotted to three agencies: the Federal Emergency Management Agency (FEMA), the Department of Housing and Urban Development (HUD), and the Department of Transportation (see Table 2). The Disaster Relief Fund administered by FEMA received about $9 billion to assist both the city of New York and the state of New York following the terrorist attack. FEMA has spent some of these funds on rescue efforts following the attacks, debris removal, and economic assistance to individuals and public agencies, among other activities (see Table 3). As of October 9, 2002, FEMA had obligated approximately $2.1 billion and spent about $1.5 billion of that amount. Based on information from FEMA, CBO expects that an additional $2.75 billion will be obligated early in fiscal year 2003 to rebuild mass transit infrastructure under lower Manhattan.

The Community Development Block Grant (CDBG) program administered by HUD received almost $3.5 billion to help New York City recover following the terrorist attack. According to HUD, $2.7 billion is being used for grants to renters and homeowners to subsidize housing expenses and for grants to businesses for economic loss and relocation expenses. HUD has obligated all of this money, and has spent about $250 million to date. HUD expects to use $783 million to assist utilities such as phone and electricity companies to reestablish services around the World Trade Center site. To date, none of that $783 million has been obligated.

The federal Department of Transportation received about $2.4 billion to repair roads in New York City, increase security on public transit lines and Amtrak, and replace and rebuild mass transit systems in lower Manhattan. Of the amount appropriated, less than $200 million has been obligated. Based on information from the Department of Transportation, CBO expects, however, that significant amounts will be obligated early in fiscal year 2003 to rebuild mass transit systems.

Based on reports prepared by the Office of Management and Budget on obligations from the Emergency Response Fund (the emergency transfer fund established by Public Law 107-38) and information provided by FEMA, CBO believes that in total a little more than $5 billion of the $15.7 billion has been obligated to date. This figure is somewhat inexact because it isn't possible for some agencies to separate obligations for New York City from obligations for other purposes. The Appendix to this letter provides additional detail on the appropriations for New York City and the status of obligations of those funds.

Estimated Tax Relief for New York City

In addition to the nearly $16 billion appropriated for New York City, CBO and the Joint Committee on Taxation estimate that title III of the Job Creation and Worker Assistance Act of 2002 (Public Law 107-147) will provide tax relief to businesses and individuals in New York City worth about $5 billion over the next 10 years. These benefits are generally targeted to businesses operating in the New York Liberty Zone (Manhattan Island south of Canal Street) and include expansion of the Work Opportunity Tax Credit to include employees in the Liberty Zone, accelerated depreciation for assets located in the zone, and expanded authority to issue private-activity bonds to finance construction there.

If you wish further details about this information, we will be pleased to provide them. The CBO staff contacts are Matthew Schmit and Julie Middleton.

Sincerely,

Dan L. Crippen
Director
 

Attachments: Tables 1, 2, 3, and Appendix

Identical letters sent to Honorable Gary L. Ackerman, Honorable Eliot L. Engel, Honorable Maurice D. Hinchey, Honorable Nita M. Lowey, Honorable Michael R. McNulty, Honorable Jerrold Nadler, Honorable Major R. Owens, Honorable Charles B. Rangel, Honorable José E. Serrano, and Honorable Edolphus Towns.