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This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.

The state of Mississippi has been widely praised for its quick, efficient response after Hurricane Katrina. It's often compared favorably to Louisiana. But that doesn't mean it's been problem-free. Advocates for low-income people claim Mississippi's efficiency has come at the expense of the state's poorest residents.

Here's what those advocates say as the latest example. Mississippi wants to divert $600 million of aid for homeowners to an economic development project.

NPR's Jeff Brady reports.

JEFF BRADY: Here in Biloxi, right along the water, there's lots of activity: construction equipment everywhere, huge cranes with condos and casinos rising up underneath them. Looks like there's new palm trees, the beaches - they're nice and clean. But travel just a few miles north, then east of here, to the small community of Moss Point, and the recovery is doing much more slowly.

Ms. LINDA TART(ph): And it's just disgusting. Oh, lord.

(Soundbite of opening door)

BRADY: Linda Tart pushes the front door with her shoulder. Her modest house still isn't livable, more than two years after wind blew the shingles off and rain soaked everything inside. Unfortunately, she doesn't have insurance.

Ms. TART: When you have space heaters, it's hard to get a house insurance. And this house as the old all houses, this house is about 100 years old.

BRADY: Like a lot of houses in this area, it was passed down from her parents.

Ms. TART: Because right now, we're staying in my mother's and my dad's bedroom. And it breaks my heart, you know. I just stand here and just see the house like it is. And they didn't leave it like that.

BRADY: Church groups helped some putting up sheet rock, installing wiring. But Tart really needs money to finish repairs. More than $2.75 billion of federal aid was set aside to help homeowners in Mississippi. Tart says she's applied for some of that money. What she doesn't know is she'll probably never receive any of it.

The federal government gave states broad discretion in deciding how to spend their relief money. Governor Haley Barbour praised that in his state of the state speech last January.

Governor HALEY BARBOUR (Republican, Mississippi): I especially appreciate and want to thank HUD Secretary Jackson, who has not tried to substitute Washington's judgment for the judgment of Mississippians about how best to rebuild and renew our state.

BRADY: Mississippi decided to bar homeowners with wind damage from receiving federal aid because that's typically covered by private insurance, even those without private insurance like Linda Tart are excluded. Governor Barbour told Congress in 2005 the state didn't want to bail out irresponsible people who chose not to have insurance.

Louisiana's Road Home program does cover wind-damaged houses. That's one reason the state recently went back to Congress for $3 billion more. Reverend Richard Young of the Greater First Baptist Church in Escatawpa says there's plenty of money in Mississippi, but it's not coming to his community.

Reverend RICHARD YOUNG (Greater First Baptist Church, Escatawpa, Mississippi): I want the American people to know that the poor in South Mississippi is being cut out of the process.

BRADY: Young gets riled up when he hears how well Mississippi is recovering.

Rev. YOUNG: What they are saying is that Mississippi's up. The Gulf Coast is up. The Gulf Coast is nowhere near. And if it weren't for the churches that come from across the world, we would still be in the dump.

BRADY: NPR requested an interview with Governor Barbour for this story. His director of communications, Buddy Bynum, responded with a two-word e-mail - No, thanks.

Local control is an important element of the federal hurricane aid program. The Department of Housing and Urban Development oversees community development block grants. Richard Kennedy is an acting deputy assistant secretary at HUD.

Mr. RICHARD KENNEDY (Acting Deputy Assistant Secretary, Department of Housing and Urban Development): We think that it's important. I think Congress thinks that it's important for the communities to be able to decide which are their highest priority needs and which might work the best.

BRADY: That said, HUD does require that half of the hurricane aid benefit low and moderate-income people. For a family of four in Gulfport, the upper limit is $39,000 a year. Mississippi requested a series of waivers to exempt itself from the 50 percent requirement. HUD rejected their request three times.

But then it approved piecemeal waivers that covered the bulk of five-and-a-half billion dollars in federal grants. Riley Morse is an attorney with the Mississippi Center for Justice.

Mr. RILEY MORSE (Attorney, Mississippi Center for Justice): You know, in the poorest state in the nation, hitting a 50 percent income target ought to be like, you know, shooting at a barn door. We don't even have to hit that barn door. We don't have to shoot at anything. Well, that's just wrong.

BRADY: Louisiana has not requested a waiver from the 50 percent requirement even though median incomes in its hardest hit areas are higher than similar areas in Mississippi.

Mr. MORSE: The injustice here is fundamentally an economic injustice. And that injustice, because is in the South here, economics and race are so closely paired, it's a racial injustice.

BRADY: Morse and other advocates for the poor had been upset all along with how Mississippi is choosing its federal aid, but now they're hopping mad. That's because the state wants to divert $600 million that was first allocated for a housing aid to rebuild and expand the Port of Gulfport.

The port was badly damaged by Katrina. Workers still are cleaning up. This looks like it was a metal building before, now it's just a twisted mess.

(Soundbite of construction noise)

BRADY: Look the other way and huge cranes are loading the ship with containers that have the Chiquita logo on the side. Bananas are the main import here. The primary export was frozen chicken until Katrina destroyed the storage freezers. Six hundred million dollars would expand this port beyond chicken and bananas and provide 1,300 new jobs. The state has promised to give some of those low and moderate-income people.

Donna Sanford is with the Mississippi Development Authority. That's the state agency that doles out the hurricane aid.

Ms. DONNA SANFORD (Mississippi Development Authority): We were concerned about jobs, giving people homes is not the only thing. Well, they need a job to maintain their home. So we put money into the economic development programs, which this includes the Port of Gulfport.

BRADY: Sanford says this expansion will not come at the expense of homeowners because there's still enough money to pay for all those qualify for aid. She says after the hurricane the state tallied up the cost of repair for flood-damaged homes - again, exempting those with wind damage - and asked Congress for that much money.

Ms. SANFORD: And so that's how we came to the dollars, although that was an overestimate, if you will, of the money that was needed for that program.

BRADY: But advocates for the poor think the leftover money should be spent to help Mississippians who are exempt from federal aid now and those are facing high rents after the storm. Those advocates are appealing to the federal government to force the state's hand.

Mississippi needs a waiver in order to divert the money. HUD rules say economic development projects must cost less than $50,000 per new job. The port expansion would cost more than $450,000 a job.

Jeff Brady, NPR News.

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