The bill also puts into law the department's re-organization plan, which strips the Federal Emergency Management Agency of some of its tasks preparing for catastrophic disasters - transferring them to a new Preparedness Directorate, which also absorbs the troubled infrastructure protection operation.

A conference of House and Senate appropriators last week finalized the bill, accepting by voice vote a Democratic amendment that obliges the administration to provide far greater detail in the weekly reports on Hurricane Katrina-related spending required by the emergency supplemental bills passed last month.

Details of any single contract for more than $50 million will have to be reported in the weekly letters to appropriators, as well as the levels of spending through credit card purchases, thought to be especially vulnerable to fraud, and an itemized account of every exception to procurement or purchase rules granted by officials and their reasons.

The two department's two largest law enforcement elements - the Bureau of Customs and Border Protection, which guards the borders and ports of entry, and Immigration and Customs Enforcement which enforces immigration and customs law inside the country - will get a raise of 12.5 percent to $9.2 billion under the bill.

HR 2360, as it is designated, is expected to come to the floor of both chambers on Thursday, according to congressional officials. It provides long-sought discretion for homeland security officials to allocate cash grants to state and local governments based on risk, rather than population, but that begs some important questions about what risk-based funding actually means post-Katrina.

And the three biggest grant programs that fund training and equipment for state and local first responders are also cut back sharply in the bill - to $1.7 billion in 2006, from nearly $2.4 billion in 2005 - a 28 percent reduction.

One of the reasons for the swinging cut seems to be that appropriators accepted arguments from industry lobbyists that a hike in the security fee charged to airline passengers would be another blow to the nation's struggling commercial aviation sector.

The president's budget proposal included a $3 hike in the security surcharge -- from $2.50 to $5.50 for a single leg trip and from $5 to $8 for a multi-stage journey.

But congress ditched the fee hike, leaving a $1.5 billion hole in the department's finances.

Two areas of grant funding will grow in fiscal 2006. Emergency Management Performance Grants, the federal government's main funding stream for state and local emergency management professionals will be hiked by $5 million to $185 million, with the funding handled by the Department of Homeland Security's Office of Domestic Preparedness, on the basis of specialist advice from FEMA.

There will also be a $25 million increase in port security funding.

In one of the three programs cut, grants to the so-called High-Threat, High-Density Urban Areas, are already allocated on the basis of a departmental risk assessment. The other two, the State Homeland Security Grant Program and the Law Enforcement Terrorism Prevention block grant, are currently allocated on a per capita basis, with each state and territory guaranteed a minimum 0.75 percent of the total.

The bill maintains the small state minimum, which swallows about 40 percent of the money, but allows Homeland Security Secretary Michael Chertoff to allocate the remaining 60 percent according to risk.

But risk of what? Appropriations staff say the department has used a series of different indices to allocate funds under the high-threat, high-density program, which is already risk-based.

"It's different every year," said one Democratic congressional aide.

During last week's conference, the ranking member of the House appropriations sub-committee on homeland security, Rep. Martin Olav Sabo, D-Minn., complained that a city in his district had gotten nothing in the program's first year, $20 million in 2004 and just $5 million last year.

He said he had asked department officials to explain the discrepancy, but "To say that their responses lacked clarity would be an understatement."

The other question, which - congressional staff say - poses itself with particular urgency in the wake of Hurricane Katrina, is what weight to give natural disasters in the risk-funding index.

At the moment, the department is working on a formula which factors in threat and consequence to the equation, based on the likelihood and likely casualties from 15 hypothetical major disasters, known as the National Planning Scenarios.

But 13 of those concern terrorism, and only two deal with natural events - a major earthquake and a category four or five hurricane.

"How do you weigh the risks of a natural disaster against that of a terrorist attack?" one senior appropriations staffer asked rhetorically.

The bill includes language that requires the department to provide its indices and working methodology on risk-based funding to the Government Accountability Office so that they can report to Congress by Nov. 17.

"It's not science," said the staffer.

"It is complicated," the staffer added of the process of determining which parts of the country are at greatest risk and deserve the most money. "Everyone is using their judgment and we just want another set of extra expert eyes on the job," which is why lawmakers had asked the GAO to report.

Lawmakers representing the nation's major cities and their states - and especially the New York delegation - have campaigned hard for an end to population-based distribution. But they gave an at best cautious welcome to the bill.

"While New York will get a bigger piece of the pie, the overall pie is smaller, and it is unclear whether New York will get more money than last year," said Sen. Charles Schumer, D-N.Y., in a prepared statement.

The bill also adjusts spending to recognize other elements of the department's planned reorganization, which legally took effect this weekend, 90 days after Chertoff's formal notification to congress.

Some democrats had hoped to use the bill to halt Chertoff's reorganization, but the language approved by the conference leaves FEMA "buried in the bowels" of the Department of Homeland Security agency, according to full committee ranking member Rep. David Obey, D-Wisc.

Despite okaying the restructuring of FEMA, lawmakers did try to block some other proposed changes.

The bill will fund a new policy office - including a full-time representative to the European Union based In Brussels, Belgium. And there's money for a new Office of Screening Coordination and Operations, but lawmakers tell the department not to move any of their screening programs - like the successful U.S. Visitor and Immigrant Status Indication Technology, US-VISIT - into the new office.

The bill also denies funding for a three dozen or so-strong team working on the re-organization and reporting directly to Deputy Secretary Michael Jackson. The "operations integration staff" is unnecessarily duplicative, said the appropriations staffer.

"Each of the functions you would expect an integration staff to fulfill is there in the (Homeland Security Operations Center)," the staffer said, adding that the center, in the reorganization plan, was assigned the task of coordinating the department's operational elements.

The Coast Guard's Deepwater modernization program will receive $933.1 million in 2006 - the latest in a series of annual appropriations for the decades-long, multi-billion dollar program to replace the guard's aging fleet of deep water vessels.

The allocation is just $33 million less than the department's budget request, but at one point it looked as if the program's funding might be slashed in half by House Republicans - angered by what they said was the Coast Guard's failure to plan for and keep Congress informed of the vast recapitalization.

But that was before the Coast Guard earned such high praise for its performance on the Gulf Coast following Hurricane Katrina, when its ships and helicopters carried out photogenic rescues of thousands of stranded and drowning victims.

House appropriators said the agency had provided them with the information they need.

"The oversight ... worked," said House appropriations homeland security subcommittee Chairman Rep. Harold Rogers, R-Ky., "We were unable to get that (information) until we withheld money."

Republicans defeated on party-line votes a series of Democratic amendments that, in the wake of the London subway bombing and Hurricane Katrina, would have increased grant spending for mass transit security and disaster preparedness. They said that Democrats, in proposing the extra monies, had irresponsibly failed to provide offsetting cuts elsewhere in the budget.

Following the failures that trapped thousands of people - overwhelmingly black and poor - in a drowned and devastated New Orleans, lawmakers included language requiring the department to develop guidelines for the mass evacuation plans being made by state and local governments.

An amendment accepted from ranking Democrat Sen. Robert Byrd of West Virginia urged state and local governments "to develop multi-state and multi-jurisdictional plans" for a mass evacuation "from an urban area to neighboring rural areas."

Byrd aides said the language required the department to think through the consequences of the evacuation of a major eastern seaboard city like Boston or New York for the rural areas to their west -- and consider the costs of pre-positioning food, water, and medicine in such areas when allocating first responder funds.

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