Mississippi’s decision to divert $600 million from a hurricane housing program to a port improvement project will be one of the key topics of a congressional hearing on the use of federal block grant funds.

U.S. Rep. Maxine Waters, D-Calif., will chair Thursday’s hearing in Washington before a House Financial Services subcommittee. Waters and U.S. Rep. Barney Frank, D-Mass., were some of the most vocal critics of Mississippi’s plan, which won federal approval earlier this year.

Waters said the hearings will provide much needed oversight of Community Development Block Grant programs administered by the Department of Housing and Urban Development.

Congress approved $11.5 billion in federal block grant funds for Alabama, Florida, Louisiana, Mississippi and Texas after Hurricanes Katrina, Rita and Wilma.

“I look forward to hearing from the witnesses about how the programs have worked in their states, what problems or challenges they have encountered, and how the program can be improved,” Waters said in a recent news release. “In addition, it is important that the hearing shed light on Mississippi’s transfer of housing funds to the Port of Gulfport.”

Pete Smith, a spokesman for Mississippi Gov. Haley Barbour, said representatives from the state’s hurricane recovery office will be at the hearing, but the governor won’t.

In January, then-Housing and Urban Development Secretary Alphonso Jackson approved Barbour’s proposal to take $600 million from a housing program to improve operating capacity and restore public infrastructure and publicly owned facilities at the State Port at Gulfport.

In a letter to Barbour, Jackson expressed concern about unmet housing needs on the Mississippi Gulf Coast, where thousands still live in federal trailers and others are squeezed out of the housing market by escalating costs.

That Jackson sent the letter to Barbour “was extraordinary,” HUD spokesman Brian Sullivan said Tuesday.

“We don’t usually use the bully pulpit to encourage states to use money one way or the other,” Sullivan said, adding that HUD “has nothing to defend” for approving the project. He said the agency reviewed the proposal to determine if it met eligibility requirements.

“Why would they even submit it to HUD if it didn’t have some sort of oversight ability? What’s the point?” asked Reilly Morse, an attorney with the Mississippi Center for Justice, one several advocacy groups that requested the hearing.

Morse said he hopes Congress will require Mississippi to put the money back into housing or approve additional federal money for housing or the port.

The $600 million was part of about $5.5 billion Congress allocated for the state after Katrina destroyed much of the Gulf Coast region. Of those funds, Mississippi only has $410,000 that hasn’t been budgeted for a Katrina-related project, Sullivan said.

The CBDG program is designed to provide federal money to communities to benefit low to moderate-income residents, eliminate blight or meet some other urgent need, Sullivan said.

After the storms, Congress provided waivers to Mississippi and others states, freeing them from meeting all the criteria for using the money “so states could put it to work as soon as possible,” Sullivan said.

“If Congress wants to tie more strings on these federal funds, that’s fine,” Sullivan said.