"Areas struck by disasters, both natural and man-made, often experience a destruction of property and decline in economic activity. Tax collections for affected local governments may fall substantially as a consequence. At the same time, the financial and public service obligations of local governments persist and may actually increase. The unexpected loss of revenue coupled with the increased financial needs for responding to a natural disaster or terrorist act may lead local governments to seek assistance from the federal government. This report examines the federal Community Disaster Loan (CDL) program, authorized by Section 417 of the Stafford Act and administered by the Federal Emergency Management Agency (FEMA). The CDL program is intended to assist local governments that experience revenue losses and/or increased municipal operating expenses as the result of a presidentially declared major disaster."
CRS Report for Congress, RL33174