The District of Columbia will be forced to use nearly $12 million from their Homeland Security budget for the inauguration. The Washington Post:
...the Bush administration is refusing to reimburse the District for most of the costs associated with next week's inauguration, breaking with precedent...
The event is expected to cost $17 million -- way up from $8 million four years ago -- and only $5 million of that cost is covered so far.
"We want to make this the best possible event, but not at the expense of D.C. taxpayers and other homeland security priorities," said Gregory M. McCarthy, [Mayor Anthony A. Williams] deputy chief of staff. "This is the first time there hasn't been a direct appropriation for the inauguration."
"It's an unfunded mandate of the most odious kind. How can the District be asked to take funds from important homeland security projects to pay for this instead?" said [Rep. Tom Davis (R-VA)] spokesman David Marin.
Meanwhile, we still don't know the full federal cost of the inauguration (aside from the privately donated $40 million estimate).
Historical note... In 1945, President Roosevelt opted to forgo lavish inauguration ceremonies. From Bartleby:
[The] inauguration was conducted without fanfare. Because of the expense and impropriety of festivity during the height of war, the oath of office was taken on the South Portico of the White House... No formal celebrations followed the address.
Bush's decision? Spend more! Wahhh! I want a party!