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FEMA chief: Loans to cities have limits

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FEMA's R. David Paulison testifies Thursday before a Senate panel.

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WASHINGTON (CNN) -- A day after a Louisiana sheriff in a hurricane-devastated parish complained he couldn't meet payroll, the Federal Emergency Management Agency's acting director said Thursday that FEMA could loan communities money to pay law enforcement and other personnel.

The FEMA official, R. David Paulison, told a Senate panel that his agency could loan up to 25 percent of a community's taxable revenue but said federal law capped those loans at $5 million.

"I'm not sure that that $5 million would have a big impact in a city the size of New Orleans or Baton Rouge or some of the others," Paulison told the Senate Committee on Homeland Security and Governmental Affairs during a hearing into the way FEMA has responded to Gulf Coast hurricanes.

He said that FEMA also could pay cities and counties back for the any overtime paid during an emergency under the Stafford Act but said it was not allowed to pay workers' regular salaries.

On Wednesday, St. Bernard Parish Sheriff Jack Stephens complained he couldn't make payroll for his law enforcement personnel, and he pleaded with state and federal officials for help in the devastated area east of New Orleans.

"Now I have 182 enforcement personnel, who have been working under the most extreme conditions for the past few weeks, in danger of not getting a paycheck," Stephens told CNN's "American Morning."

The sheriff's plea followed New Orleans Mayor Ray Nagin's announcement earlier this week that he was laying off up to 3,000 employees because of a cash crunch.

Denise Bottcher, a spokeswoman for Louisiana Gov. Kathleen Blanco, said the state has been funding payrolls in St. Bernard and other affected parishes since September but could no longer help because it's facing a $1 billion deficit, which is rapidly increasing.

U.S. Sen. John Warner, R-Virginia, raised the issue with Paulison at Thursday's hearing, saying he wanted to offer an amendment to legislation that would lift the $5 million cap.

Paulison has run FEMA since Michael Brown stepped down as director September 12 amid criticism of the agency's response to Hurricane Katrina.

Paulison: No-bid contracts sometimes necessary

Senators also expressed concerns about some no-bid contracts awarded after the storm hit.

Paulison said he was no fan of no-bid contracts but that sometimes the contracts were necessary.

"I can assure you that we are going to look at all of those contracts very carefully, and you know hopefully we can put things in place for the future where we will not have to depend on no-bid contracts for future use," he said.

Paulison said that all of those contracts would be re-bid.

He also defended his agency's decision to send trucks filled with ice to Maine and keep them there, responding to a question about why 150 trucks of ice remain in the New England state at a cost of $800 a day per truck.

Paulison said the ice had been ordered to aid victims of Hurricanes Katrina and Rita and future storms.

He said one of FEMA's problems has been its inability to get commodities such as ice when needed, and he noted there are "two storms out there."

"Until we get through hurricane season, we're not going to get rid of the ice. We're going to keep it," he told Sen. Susan Collins, R-Maine, the committee's chairwoman.

However, Paulison said there is a question about whether FEMA should be in the business of providing ice, and he admitted, "FEMA does not have a good tracking system" to keep up with ice and other commodities it orders.

Collins said she became concerned when one of her constituents took her to a location in Maine and showed her a line of trucks filled with ice, their systems running 24 hours a day to keep the ice frozen.

After staff inquiries, FEMA initially responded that about 30 trucks had been sent to Maine, according to Collins.

However, she said figures provided Wednesday indicated 250 trucks filled with ice had been sent to Maine and 100 of them eventually moved to the Gulf Coast to provide relief for hurricane victims.

Paulison said suppliers often are unable to provide supplies in the quantity the agency needs.

When FEMA contracts for commodities such ice, he said, it must hold on to them until needs are met.

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