Mississippi lawmakers’ bid to help cities and towns affected by Winter Storm Fern has finally come to fruition. On April 28, state officials launched the long-awaited Local Government Disaster Recovery Emergency Loan Program, offering temporary assistance to municipalities struggling with weather-related expenses.
The program comes three months after Fern battered Mississippi with ice and freezing rain, causing widespread damage and triggering disaster assistance from the federal government. In response, state lawmakers have set up a $125 million loan pool for hard-hit cities and counties, aiming to help them fund recovery efforts while they await federal reimbursement.
Loans will be administered by the Mississippi Emergency Management Agency, and local governments must be on track to receive Public Assistance funds from the Federal Emergency Management Agency.
“Municipalities and county agencies have to already be in the process of seeking FEMA assistance,” MEMA spokesperson Scott Simmons told the Mississippi Free Press on April 29. “They have to reach a certain stage of the (authorization) process to warrant the loans being approved.”
Once a municipality is deemed eligible for a loan, MEMA will determine the amount based on the area’s documented storm damages. Loans aren’t capped at a specific dollar amount, though borrowed funds may not exceed 75% of an applicant’s reported expenses.
The program is designed to expedite loan repayments, and local governments are encouraged to return borrowed funds as soon as they are reimbursed by FEMA. A 3% annual interest rate will apply to any loans that remain outstanding after federal reimbursement.
“The inspiration is, the sooner you pay off the loan, the less likely you (are to) incur interest,” Simmons explained. Municipalities applying for loans must designate a source of funding—such as local tax revenue—to pay back any money that FEMA declines to reimburse, he added.
In the aftermath of Winter Storm Fern, many local governments borrowed funds from private lenders to pay for debris removal services and road repairs. Municipalities can use the new program to pay back those loans, which typically have yearly interest rates above 3%, Simmons said.
These include cities like Corinth, Mississippi, where local officials took out a $3 million bank loan to help cover storm expenses. In a March 5 interview with the Mississippi Free Press, Mayor Ralph Dance voiced support for legislation enacting the state-funded loan program, claiming it would ease financial burdens on local governments and their constituents.
“If we could do this through the state … that’s a big savings to our taxpayers on interest alone,” said Dance, noting that the city’s private loan has an annual interest rate of nearly 6%.
The new loan program has faced a bumpy path to approval since its introduction in February. Late in March, Gov. Tate Reeves vetoed a version of the program that capped annual interest rates on loans at 1%, claiming inaccurately that lawmakers made changes after it was sent to his desk for a signature. Reeves subsequently signed a separate measure that bumped yearly interest rates up to 3%.
MEMA will accept loan applications from municipalities on its website through April 30, 2027.
While state lawmakers may decide to implement similar lending programs for disasters moving forward, Simmons stressed that the current funding pool is reserved for winter storm damage.
“As it stands right now, we have $125 million allocated by the State Legislature, and we cannot loan out more than we have,” he said. “The hope is that this money will be repaid and this type of fund can be used for future disasters.”
