ABSTRACT
Despite the important relationship between natural disasters and economic growth, few studies have explored the impact that natural disasters have on local-government finances (Pelling et al. 2002). The more quickly industries are able to rebuild and provide employment following a major disaster, the more quickly a local government will recover economically. In fact, a disaster may stimulate economic growth through the infusion of capital from disaster relief provided by state and federal agencies and casualty-insurance companies. This chapter uses a case study to compare trends in local sales-tax revenues in two Texas cities to assess the effect of disasters on local budgets.
