WASHINGTON (AP) -- A congressional investigation has found New York did not follow instructions from Congress on the spending of $44 million in Sept. 11 aid and should give the money back or get lawmakers to pass a law allowing the expenditure.
The bad news for New York comes just as the House is considering whether to take back another $125 million in Sept. 11 workers' compensation aid because the state has yet to spend it nearly four years after the 2001 terror attack.
The General Accounting Office, the investigative arm of Congress, said in a 10-page memo Tuesday that the Department of Labor ''should seek recovery of $44 million improperly transferred'' or get specific congressional approval for New York's use of the money.
The GAO found the state was not entitled to distribute the $44 million through other agencies. The state used the other agencies because officials said it would be a quicker method of getting aid to victims.
The House will consider later this week whether to take back an additional $125 million in unspent workers' compensation aid provided by Washington. The White House Office of Management and Budget has sought to retrieve the money, saying the state has not spent it and the needs did not match the amount of money available.
New York lawmakers have vowed to fight efforts to take back the money.
The GAO's legal decision suggests a possible solution for Labor Secretary Elaine Chao to settle accounts on both the $44 million and the $125 million.
''If the Secretary wishes to forego recovery of the improperly expended funds, she should seek and obtain congressional ratification of the grant expenditures to date and permission to authorize use of the remaining grant funds,'' said the memo written by Anthony Gamboa, a GAO lawyer.
The GAO took issue with the state's decision to distribute the $44 million through the New York State Crime Victims Board and the New York State Insurance Fund for benefits paid to Sept. 11 victims or their survivors, saying the federal law that provided the money did not allow it to be used that way.
In such instances, Gamboa wrote, the money ''must be recovered ... even when those expenditures have been incurred innocently.''
Jon Sullivan, a spokesman for the state workers' compensation board, defended the state's actions as fully approved by the Labor Department and said the state would seek a new law allowing it to keep the money.
''It was entirely appropriate that the Crime Victims Board and the State Insurance Fund be reimbursed for costs related to the attacks, which would have otherwise fallen upon New York state,'' said Sullivan.
The federal government granted more than $20 billion to New York to help recover and rebuild after the attacks.
Rep. Carolyn Maloney, D-Manhattan, had requested the original GAO investigation into the workers' compensation program run by the state, but on Tuesday said it made no sense for the government to start taking back even more money when workers at ground zero still have unmet health needs.
''Let me get this straight _ first the Bush administration wants back $125 million of 'unspent' 9/11 funds that were meant to help sick workers. Now, the GAO is saying the money that the state has spent to help sick workers was not properly authorized and needs to be given back to the federal government. Only in Washington,'' Maloney said.
''We need to stop the administration's money grab and figure out how we can get help to the those injured in 9/11 who are still suffering,'' she added.
Denis Hughes, president of the New York AFL-CIO, said the new finding just made a bad situation worse.
''I can't imagine that these guys really understand what's going on here,'' said Hughes. ''They have to straighten it out, they have to send the rest of this money, they have to get this right.''
A spokesman for the Department of Labor did not immediately comment.
