(1) There is created a special fund in the State Treasury to be designated as the 2026 Local Governments Disaster Recovery Emergency Loan Fund. The emergency fund shall consist of any monies deposited to the credit of the emergency fund. The emergency fund may receive deposits by the State Treasurer, bond proceeds, grants, gifts, donations or funds from any source, public or private. Except as otherwise provided in this section, the emergency fund shall be credited with all repayments of principal and interest derived from loans made from the emergency fund. Unexpended amounts remaining in the emergency fund at the end of a fiscal year shall not lapse into the State General Fund. Any interest earned on amounts in the emergency fund shall be deposited to the credit of the fund.
(2) The monies in the emergency fund shall only be expended subject to appropriation by the Legislature. Monies in the emergency fund shall only be disbursed for purposes authorized under this article. Except as otherwise provided in this article, all monies deposited in the emergency fund, including loan repayments and interest earned on those repayments, shall be used only for providing loans to local governments as the agency deems appropriate. Subject to the availability of funds, loan proceeds under this article shall be disbursed to local governments in one or more installments or on a rolling basis, in the discretion of the agency.
(3) In addition to any other purpose authorized under this article, subject to appropriation by the Legislature, any amounts in the emergency fund may be used to defray the reasonable costs of administering the emergency fund and conducting activities under this article in an amount not to exceed one-half of one percent (0.5%) of loan proceeds.