The damage inflicted by Hurricane Katrina left no question that taxpayers would be paying a hefty bill for rescue and reconstruction.  In the immediate aftermath of the disaster, more than $39 million of that bill was paid for by federal employees with government credit cards.  The Government Accountability Office (GAO) will soon release the first comprehensive audit of Katrina-related emergency expenditures.  A December 27, 2005 Associated Press article provided a glimpse at what the report might include; namely, charges that were excessive or used for purposes other than Katrina relief.

Hurricane Katrina slammed into the Gulf Coast on August 29, 2005.  Federal agencies aiding in the crisis were given the authority to bring their employees’ credit card limits from $15,000 to $250,000.  That authority was repealed on October 3, but in the intervening period some federal employees had free reign to purchase any supplies they deemed necessary.  Charges from the Federal Emergency Management Agency include $150,000 worth of Jockey underwear, $3,200 for golf carts, and six nail clippers.  The Department of Transportation’s expenses totaled more than $400,000, including $5,728 for boots and T-shirts with DOT logos.  Charges on government credit cards ultimately get billed to taxpayers. 

Federal officials admit that little was done to purchase items at volume prices and below cost.  More than $215,000 was charged for sleeping bags, golf carts, and underwear at regular store cost.  The GAO estimates that the federal government could have shaved at least 10 percent from total credit card charges by leveraging its power to pay lower-than-retail cost.

Federal auditors also suspect that government credit cards were employed for personal use.  It would not be the first instance of such abuse.  Previous audits of government credit cards have exposed purchases for remote control helicopters, breast implants, and Victoria’s Secret clothing.  For Gulf Coast recovery spending, the current GAO audit has so far exposed thousands of dollars in duplicate charges, $1,412 for a leather manager’s chair, and $5,300 for a paper shredder that was accidentally declared as a hurricane expense.

The GAO’s findings offer an important lesson for establishing adequate oversight and controls when future disasters inevitably strike.  Congress has so far appropriated $67 billion for the Gulf Coast – an amount regarded by some as a mere down payment. 

Since the hurricane hit, CAGW has argued for the appointment of a chief financial officer to oversee all federal recovery spending.  In September 2005, Sens. Tom Coburn (R-Okla.) and Barack Obama (D-Ill.) co-sponsored the Oversight of Vital Emergency Recovery Spending Enhancement and Enforcement Act of 2005 (OVERSEE).  The primary purpose of this bill is to establish an officer that will oversee the relief effort and costs from Hurricane Katrina for one year.  OVERSEE was unanimously passed out of the Senate Homeland Security Committee and the Governmental Affairs Committee.  Unfortunately, there has not been any further action on the bill. The appointment of a chief financial officer to oversee emergency spending is crucial for maintaining fiscal accountability in the wake of such an unprecedented disaster, and to help prevent waste, fraud, and abuse in the future.

  -- Katherine Walkenhorst