* $50.5 bln package goes to Obama three months after storm
* Republican effort to offset aid with cuts is thwarted
* Disaster aid became ensnared in partisan budget fight
By David Lawder
WASHINGTON, Jan 28 (Reuters) - A long-delayed $50.5 billion aid package for victims of Superstorm Sandy cleared the Senate on Monday, three months after the storm destroyed or damaged hundreds of thousands of homes and businesses in coastal New York, New Jersey and Connecticut.
The package, approved 62-36 in the Democratic-controlled Senate, now goes to President Barack Obama to be signed into law. Added to flood insurance legislation passed by Congress earlier this month, it brings Sandy aid appropriations to $60.2 billion.
All the opposing lawmakers were Republicans. But nine Republicans joined Democrats in voting yes to narrowly cross the 60-vote threshold required for passage.
The Senate also defeated a Republican amendment that sought to offset the Sandy aid with cuts to discretionary spending spread over the next nine years.
The vote was delayed last week as Senate leaders wrangled over new rules aimed at limiting procedural roadblocks known as filibusters.
Sandy's victims "have been waiting for three months for their federal government to step up and help them rebuild their lives and rebuild their livelihoods," said Appropriations Committee Chairwoman Barbara Mikulski of Maryland. "They have been waiting and waiting."
The package will provide $10 billion to repair public transport infrastructure, $5.3 billion to replenish the Federal Emergency Management Agency's disaster relief fund and $16 billion in Community Development Block Grant funding - money to be used by municipalities largely to rebuild homes and businesses.
"This bill meets the current needs of the recovery efforts," Mikulski said.
CAUGHT IN BUDGET DEBATE
The Sandy aid package became ensnared in a bitter partisan battle over deficit reduction. Many Republicans saw it as an opportunity to take a stand against a big spending increase after being forced to swallow tax hikes on the wealthy as part of the New Year's deal to avert the "fiscal cliff."
Republican Senator Mike Lee of Utah tried to rein in the Sandy package by seeking to offset the costs with a 0.5-percentage-point reduction in annual discretionary spending.
He said senators owed it to Americans to consider how the disaster spending might impair U.S. ability to fund other programs such as defense or healthcare.
"We have to stop and consider the fact that we are more than $16 trillion in debt and we're adding to that debt at a rate of more than $1 trillion every single year," Lee said.
His amendment was defeated 62-35 in another party-line split.
Conservative groups, including the Club for Growth and the Heritage Foundation, had urged senators to vote against the package without any offsets, saying it was filled with "pork."
The Republican-controlled House of Representatives passed the $50.5 billion package on Jan. 15 - largely with Democratic votes - after shaving off about $160 million and preventing any funds from being diverted to disasters in other states.
House Speaker John Boehner enraged East Coast politicians on Jan. 1 by canceling a previously scheduled vote on Sandy emergency funds. The storm wiped out many New Jersey and New York shore communities and flooded lower Manhattan transit tunnels on Oct. 29.
Since then, Congress has approved $9.7 billion to shore up the National Flood Insurance program to allow it to continue paying the Sandy-related claims of homeowners who bought flood insurance.
The $60.2 billion in aid is short of the $82 billion initially requested by New York, New Jersey and Connecticut.
The legislative delays marked a stark contrast with the congressional response to Hurricane Katrina, which devastated Gulf Coast communities and flooded New Orleans in 2005.
Within 10 days of that storm, Congress had approved $62.3 billion in aid. Subsequent measures brought total taxpayer funds to rebuild the region to more than $100 billion.