The Pew Charitable Trusts

The president's budget proposal, which was released Feb. 7, would restructure state and local grants for first responders to target money to areas that face the greatest threats and are the most vulnerable. It would:

• Scrap the current population-based funding formula for the State Homeland Security Grant Program and instead require states to compete for money by demonstrating -- through state-generated security plans - how their homeland security needs are in line with national preparedness goals.
• Create a new grant program to supplement state, local and private critical infrastructure protection efforts, including development of nuclear and chemical materials detection capabilities as well as protection of ports and other transportation facilities.
• Provide more funding than ever before for the Urban Area Security Initiative, which targets 50 cities that face a high risk of a terrorist attack.

The State Homeland Security Grant Program and the Urban Area Security Initiative each would receive roughly $1 billion, while the new program, dubbed the Targeted Infrastructure Protection Program, would receive $600 million.

Overall, the proposed $2.6 billion in grants to state and local governments is a slight increase from the $2.5 billion Congress approved for fiscal 2005. State and local grants comprise only a fraction of the $34.2 billion proposed for the entire U.S. Department of Homeland Security, one of few federal agencies whose budget would increase under Bush's tightest-ever budget proposal.

Senior department officials underscored language throughout the budget document indicating that funds increasingly should be tethered to assessments of risk and said a nationwide vulnerability assessment - the results of which are slated for release in late March - would guide future funding decisions.

"We've restructured our grant process to help expedite the flow of funding and, at the same time, ensure that resources are getting to those with the greatest security need," Acting U.S. Homeland Security Secretary James Loy said. "Risk and vulnerability -- those are the needs that need to be addressed as part of delivery of those dollars to the local areas."

The focus on risk and vulnerability comes on the heels of criticism that not enough money is flowing to areas that need it the most. The bill overhauling intelligence agencies, passed late last year, calls on the current Congress to "reform the system for distributing grants" to state and local governments, but it remains unclear how such an effort will fare on Capitol Hill.

Congress shifted more money for fiscal 2005 to the Urban Area Security Initiative from the State Homeland Security Grant Program, but lawmakers punted calls to significantly revamp the homeland security funding scheme for state and local governments.

The proposed changes to the State Homeland Security Grant Program, through which the lion's share of $11.5 billion to state and local governments has been appropriated, would address some of the concerns voiced.

They include a reduction - from three-quarters to one-quarter of 1 percent - in the minimum amount each state would receive. The change would mean that about 14 percent - rather than roughly 39 percent - of total funds would be doled out equally to each state.

But Congress would have to adopt such a change; the current state mandatory minimum is spelled out in the USA Patriot Act.

Meanwhile, a cadre including Michael Chertoff, President Bush's nominee to replace Tom Ridge as head of the Department of Homeland Security, now agrees that threat and vulnerability should be the driving factor in allocating the funds.

"My philosophy is a risk-based, vulnerability-based system," Chertoff said at his Feb. 2 U.S. Senate confirmation hearing. "We have to be sensitive to where the infrastructure is and what the potential damage and risk is. Sometimes that may be a function of population density. Sometimes it may be infrastructure that's located in a state that doesn't have a large population but serves a large population."

As it stands, sparsely populated states such as Wyoming, Alaska and North Dakota are flush with security dollars, while states such as New Jersey, Connecticut, Pennsylvania and Virginia, which not only are densely populated but are home to large amounts of critical infrastructure, are near the bottom of the list in terms of overall per-capita funding.

In New Jersey, for example, the population density is more than 14 times the national average, and there is a large confluence of critical infrastructure such as highways, railroads and chemical plants. Yet the state ranks 37th in terms of per-capita homeland security funding for fiscal 2005, according to a report from the Congressional Research Service, the analytical arm of Congress.

Kelly Ruiz, spokeswoman for the Wyoming Office of Homeland Security, said the state would not oppose the proposed changes, even though they might result in less money there.

"Whatever they decide, we are with," Ruiz said. "They have the broad system in mind."