UPDATE 3-Obama seeks $60.4 bln for Sandy repairs, states want more

* New York, New Jersey senators: "very good start"

* Funding request could complicate "fiscal cliff" debate

NEW YORK/WASHINGTON, Dec 7 (Reuters) - President Barack

Obama asked Congress on Friday to approve a $60.4 billion aid

package to help East Coast states rebuild after Superstorm

Sandy, well short of their initial requests.

Officials from storm-battered New York, New Jersey and

Connecticut had said they needed at least $82 billion combined

to make emergency repairs and upgrade infrastructure.

New York and New Jersey lawmakers said they expect Obama

will seek more aid as the extent of Sandy's damage becomes

clearer. The two states were hit the hardest by the storm, which

made landfall in New Jersey on Oct. 29.

"This supplemental is a very good start, and while $60

billion doesn't cover all of New York and New Jersey's needs, it

covers a large percentage," said Senators Charles Schumer and

Kirsten Gillibrand of New York and Frank Lautenberg and Robert

Menendez of New Jersey.

"This is the first good news New York has had in a while,"

New York Governor Andrew Cuomo said.

Of the total, $15 billion would come in the form of

Community Development Block Grants, a mechanism that gives local

jurisdiction significant flexibility to provide aid and rebuild

quickly.

In addition, nearly $13 billion would go to an array of

projects aimed at better protecting the New York-New Jersey

coastal region and preventing damage from future storms.

Another $6.2 billion would be reserved for public

transportation infrastructure.

Officials said they could ask for more aid later on. There

is precedent for multiple funding requests to cope with a

disaster.

Less than two weeks after Hurricane Katrina slammed into the

Gulf Coast in 2005, Congress had passed two appropriations

totaling $62.3 billion. Within a year, two more packages were

passed worth a combined $48 billion, which also covered damage

from Hurricanes Rita and Wilma.

Multibillion-dollar supplemental appropriations for Katrina

were still being made as late as 2010.

COULD COMPLICATE 'CLIFF' TALKS

The disaster funding request, on a scale not seen since

Katrina, could complicate already tense negotiations between the

White House and Congress on a deficit reduction deal.

Lawmakers are trying to avert the year-end "fiscal cliff" of

automatic tax hikes and spending cuts that amount to a total of

$600 billion.

"We have the request and will review it," said Michael

Steel, a spokesman for House of Representatives Speaker John

Boehner. He did not elaborate.

Some Republican lawmakers have said they will demand

spending cuts elsewhere in the federal budget to offset the cost

of some projects in the aid package.

House Appropriations Committee Chairman Hal Rogers, whose

panel will review the request, said Congress has a

responsibility to help the region recover.

"It is also our responsibility during these tight-budget

times to make sure that the victims of this storm are getting

the most of every single recovery dollar, and to ensure that

disaster funds are timed and targeted in the most efficient and

appropriate manner," the Republican lawmaker said in a

statement.

Menendez said on Thursday that he expects that Congress will

be able to approve the spending request before the end of the

year.

Federal Emergency Management Agency chief Craig Fugate told

lawmakers this week that the FEMA disaster relief fund was down

to less than $5 billion and would run out by early spring at the

current pace of disbursements.

"We need a full recovery package to be voted on in this

session of Congress," said New York City Mayor Michael Bloomberg

in a statement. "Any delay will impede our recovery."

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