I believe you are correct as to where the funding comes from, which is why it makes even more sense from a state government perspective. State secures federal funding to preserve their own tax revenue. It's essentially playing with house money. You are completely correct that Joe Cornfield's federal tax dollars are going towards saving these high-value oceanfront properties. Is it right? Absolutely not, but states are allocated federal dollars to play with. So if they can use free money to ensure they keep getting paid, they will. The flip argument here: just let the sand castles crumble into the ocean. It sounds like a great idea in theory, but if those homes go swimming, your local governments are just going to try to find a way to generate more revenue from you; increased property taxes, vehicle toll charges, vehicle excise tax, state income tax, etc. Uncle Sam is gettin' his no matter what, double freedom-rockets blazing.
This quote from that article jumped out at me: "The project has been in planning for several years, is estimated to cost between $50 million and $100 million, and will be paid for mostly by the federal government. The Corps' contractors are to lay 3.56 million cubic feet of sand in late November, starting at Route 623 in Ocean City and ending at Townsend's Inlet, the southern terminus of Sea Isle City." The project has been in planning stages for years, is two months from starting constuction, and the cost estimate is "between $50 and $100 million" . Sounds like the project managers are really on top of things