Main Types of Disaster Recovery Assistance

In the event of a large-scale disaster, state and local governments, individuals and households, and businesses all can face damage to their properties and other possessions. Many of these losses ultimately are borne by these entities or individuals, their insurance, or the parties deemed responsible for the disaster, if applicable. However, both the federal government and the State of California provide various types of financial and in-kind assistance following certain disasters to offset some of the costs associated with recovering from disasters, as summarized in Figure 1. Notably, the type of federal and state assistance that is available can vary by disaster, with some assistance only available in the aftermath of larger state or federally declared disasters. (For more information on the various types of disaster declarations, see How California Governments Respond to Disasters.) In this post, we summarize some of the major types of recovery assistance that can be available.

Assistance Provided to Governments

Most of the recovery assistance provided by the federal and state governments goes to other governments to repair and replace public infrastructure, such as roads, schools, and other public buildings. Some of the main programs to assist governments recover from disasters are described below.

Federal Funding for State and Local Costs for Emergency Recovery. The Federal Emergency Management Agency (FEMA) administers the Public Assistance Program, which covers certain costs of disaster response and recovery, including rebuilding public infrastructure damaged in federally declared disasters. Through this program, the federal government typically pays 75 percent of eligible state and local government costs in responding to a disaster and repairing public facilities after a disaster. In the case of state activities, the state pays the remaining 25 percent. In the case of local activities, the remaining costs are typically shared between the state (19 percent) and the local government (6 percent). At times, the federal government has covered an even greater share of expenses—such as covering 90 percent of eligible debris removal costs after the late 2017 fires that affected Northern and Southern California

State Funding for Local Costs for Emergency Recovery. The state also provides local governments with assistance with costs associated with recovering from state or federally declared disasters. Notably, the California Disaster Assistance Act (CDAA) provides funding for disaster recovery activities such as debris clearing and rebuilding local public infrastructure. (CDAA also provides funding for certain other costs, such as response costs.) Local governments are typically responsible for 25 percent of the eligible costs under CDAA, with the state covering the remaining 75 percent. Also, in some cases, such as the late 2017 wildfires, the state has elected to backfill some local tax revenue losses as a result of natural disasters.

Federal Funding for Reducing Future Risks. FEMA administers the Hazard Mitigation Program, which provides grants to states after a Major Disaster has been declared. States can apply on behalf of other entities, such as local governments, individuals, and businesses. These grants provide funds to assist with the cost of mitigation measures like strengthening buildings to withstand future earthquakes and various fire risk reduction programs. The amount of the available grant is up to 20 percent of the total federal disaster assistance provided in the relevant disaster. Congress may appropriate additional funding for these types of activities. For example, in 2017, California was awarded $88 million through the Community Development Block Grant’s Disaster Recovery (CDBG-DR) program for preparedness and mitigation.

Assistance Provided to Individuals, Households, and Businesses

There are also a wide range of programs aimed at assisting individuals, households, and businesses recover from disasters. Some of the main programs are described below and include grants, loans, tax provisions, and other assistance. Notably, while there are a variety of types of programs to assist those affected by disasters, they are generally not designed to fully cover the losses that are sustained.

Grants for Disaster Losses

Federal Grants to Individuals and Households for Disaster Losses. FEMA administers the Individuals and Households Program (IHP). This program provides assistance to individuals and households for certain disaster related losses and expenses. These include various housing-related assistance, such as for housing repair and replacement, temporary housing construction, and rental assistance. They also include reimbursements for various non-housing related expenses caused by a disaster—including medical, dental, funeral, child care, heating, personal property, legal, and moving costs. (Some types of assistance—such as to replace personal property—may only be available for individuals that do not qualify for Small Business Administration [SBA] loans, which are described in further detail below). As of 2018, the maximum grant level was $34,000, which is adjusted annually based on inflation.

Additionally, the U.S. Department of Agriculture (USDA) provides grants of up to $7,500 to low-income homeowners age 62 or over in rural areas through the Rural Development Disaster Assistance Program. Also, Congress may appropriate additional CDBG-DR funds to assist those harmed by disasters. For example, California was awarded $124 million in CDBG-DR funds to assist with recovery related to the late 2017 fires. This funding is focused on covering costs associated with rebuilding single-family and multifamily housing that is not covered by other funding sources.

State Grants to Individuals and Households for Disaster Losses. The California Department of Social Services operates the State Supplemental Grant Program (SSGP) to provide additional funds to individuals who meet the federal IHP requirements and have received the maximum amount allowed under that program and private insurance, but still have additional unreimbursed eligible costs. A variety of costs are eligible, such as rental and housing assistance, personal property, and disaster-related medical costs. The maximum grant under the SSGP program is $10,000, though the grants typically range from $200 to $2,000.

Loans for Disaster Losses

Federal Disaster Loss Loans for Individuals and Households. The federal government provides low-interest loan programs to help individuals and households recover from disasters. Specifically, SBA provides two types of loans to individuals and households. First, a personal property loan is available for homeowners and renters. This loan provides up to $40,000 to help repair or replace personal property (such as clothing, furniture, and vehicles) lost in a disaster. Second, a real property loan is also available to homeowners. This loan provides up to $200,000 to repair or restore a primary residence to its condition prior to the disaster. Additionally, USDA provides loans to low-income homeowners in rural areas through the Rural Development Disaster Assistance Program discussed above.

Federal Disaster Loss Loans for Businesses. The federal government also provides two types of low interest loans to help businesses and nonprofits recover from disasters. First, it provides loans of up to $2 million to repair or replace damaged property, equipment, and inventory and fixtures that are not fully insured. Second, it provides loans (known as economic injury disaster loans) of up to $2 million for small businesses and certain nonprofits in order to assist them in meeting expenses—such as inventory or equipment—they are unable to pay because of the disaster.

State Disaster Loss Loans for Businesses. The state also provides loans programs for businesses affected by disasters. Specifically, the California Infrastructure and Economic Development Bank (IBank) administers the California Disaster Relief Loan Guarantee Fund Program, which provides loan guarantees of up to 80 percent to 95 percent of the loan for small businesses affected by natural and other disasters. Additionally, IBank’s Jump Start Loan Program provides loans from $500 to $10,000 to businesses in declared disaster and emergency areas.

Tax Relief

Income Tax Relief. Under federal law, taxpayers can claim an itemized deductions for property losses that are not reimbursed by insurance and that stem from federally declared disasters. (Prior to 2018, unreimbursed disaster-related losses were generally deductible regardless of whether they were attributable to a federally declared disaster.) Additionally, state law also allows taxpayers to deduct disaster losses.

Property Tax Relief. Under state law, the county assessor may reduce the assessed value of property damaged in a disaster to reflect the damage. The reduced value remains until the property is fully repaired, restored, or reconstructed. The repair, restoration, or reconstruction is not considered new construction (which would trigger a higher assessment) as long as it is substantially equivalent to the property prior to the damage or destruction. In addition, the State Constitution allows the owner of a damaged home to transfer the assessed value of his/her home to another dwelling within the same county. The law also provides, under certain conditions, a transfer between counties.

Other Disaster Assistance

Federal Unemployment Assistance. The federal government funds programs that provide assistance for individuals who become unemployed as a result of disasters. Specifically, the federal Department of Labor’s Disaster Unemployment Assistance Program provides financial assistance and employment services to jobless workers and the self-employed when they are unemployed as a direct result of a Major Disaster declaration by the President and are not eligible for other unemployment assistance. Additionally, the federal Secretary of Labor can award National Dislocated Worker Grants to states affected by disasters, which can be used to expand services for the unemployed through time-limited funding assistance. For example, California was awarded up to $43 million to help counties after the January and February 2017 storms.

Federal Food Assistance. The federal government also has programs to provide food aid during disasters. USDA provides food for people staying in shelters, and the Disaster Supplemental Nutrition Assistance Program (D-SNAP) provides food assistance to low-income households affected by disasters. Additionally, schools that participate in the National School Lunch Program can serve meals at no charge to students who have been rendered homeless or who participate in D-SNAP.

Federally Supported Disaster-Related Services. The federal government also funds services to help individuals who have been affected by disasters. These services include crisis counseling, case management, and free legal services.