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      ST. PAUL (AP) - The head of the state's Department of Employment
and Economic Development fielded a series of tough questions and
criticism from legislators Wednesday as they met to discuss how to
better assist southeastern Minnesota communities recovering from
the August floods.

      Agency commissioner Dan McElroy promised to work toward a
resolution with officials in Rushford, the city of about 1,700 that
officials have said was hardest hit by the disaster.

      During a Senate Economic Development Budget Division meeting
that lasted more than four hours, several DFL senators accused the
department of failing to carry out the "legislative intent" of
the flood relief package lawmakers passed during a special session
last month.

      "This legislature passed one of the largest and fastest flood
relief bills in our history," Sen. Sharon Erickson Ropes,
DFL-Winona, said, referring to the nearly $160 million aid package
approved Sept. 12. "The flood relief is not working."

      Much of the discussion focused on $35 million being administered
by local governments through collaboration with DEED to help
damaged businesses in the seven-county flood area. While as much as
a third of the money is available in the form of forgivable loans,
the remaining funds would be distributed as low-interest loans.

      But several Rushford business owners told the Senate panel they
didn't see how they would be able to repay the loans.

      "It's very difficult to take on hundreds of thousands of
dollars in debt on top of the debt we already have," said Jim
Hoiness, owner of Rushford Foods grocery store.

      Lawmakers also questioned a part of the plan that calls for some
of the $35 million to be returned, though loan repayments, to the
Minnesota Investment Fund for help in future disasters.

      "The legislative intent was ... to get the dollars in the bill
into the communities to help those in dire need," Rep. Lyndon
Carlson, DFL-Crystal, said, telling McElroy he had no recollection
of funds being repaid to a fund for future disasters.

      But McElroy said the program was similar to others administered
during previous floods in the state and said policies adopted now
would likely be a model for the next disaster.

      He also said that changing the policy to better address
Rushford's needs could mean having to change the other agreements
DEED has already made with the other affected city and county
governments.

      "I have some obligations to the other communities that have
already said what was fair," McElroy told the committee.

      "We want to see Rushford succeed," McElroy said. "I commit to
you that we will try to resolve these issues as quickly as we
can."

Gallery

Disasters

The head of the state's Department of Employment
and Economic Development fields questions from lawmakers on state flood aid.

Tough questions about flood relief

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