Section 18.5 of Chapter 6A of the General Laws, as so appearing, is hereby amended by inserting the following section:--

              Section 18.5A.  The State Emergency Response Fund, hereinafter referred to as the "fund", is hereby created in the state treasury. Any money donated to the fund or appropriated to the fund by the legislature shall be deposited in the fund. Monies in the fund shall be invested in the same manner as monies in the state general fund. Interest earned on investment of monies in the fund shall be deposited in and credited to the fund. Unexpended and unencumbered monies in the fund shall remain in the fund. Monies in the fund shall be appropriated, administered, and used solely as provided in Subsection B of this Section.

              Monies in the fund shall be appropriated at the discretion of the Director of the Massachusetts Emergency Management Administration (MEMA), and used to provide a source of funds to pay expenses incurred by local governments as a result of activities associated with the preparation for and response to an emergency or declared disaster following a declaration by the governor, if the local governmental unit or household is within the area designated under the declaration. The expenditure for such a purpose from another source may be eligible to be repaid from the fund if the using agency has certified the necessity of such action to the Director of the Massachusetts Emergency Management Administration (MEMA).  Assistance under this Section may be provided only during the 90-day period following the date of declaration of a major disaster or emergency.  Monies in the fund may also be utilized to provide bridge funding in anticipation of reimbursements from the federal government or another source. Any reimbursement received for expenses paid from the fund shall be returned to and deposited into the fund.

              The fund may make low-interest or interest-free loans to local government units to help fund all or part of emergency public works projects. Emergency public works projects shall include the construction, repair, reconstruction, replacement, rehabilitation, or improvement of any public infrastructure damaged or made otherwise unusable within a disaster area. The loans may be used less any reimbursement from any of the following sources: (1) Federal disaster or emergency funds, including funds from the federal emergency management agency; (2) state disaster or emergency funds; (3) insurance settlements; or (4) litigation.