Whenever a major disaster has been declared to exist in this state, the Governor shall be authorized:

(1) Upon his determination that a local government of the state will suffer a substantial loss of tax and other revenue from a major disaster and has demonstrated a need for financial assistance to perform its governmental functions, to apply to the federal government, on behalf of the local government, for a loan, and to receive and disburse the proceeds of any approved loan to any applicant local government subject to the terms of the loan. The Governor shall determine the amount needed by any applicant local government to restore or resume its governmental functions, and certify such amount to the federal government; and

(2) To recommend to the federal government, based upon his review, the cancellation of all or any part of repayment when, in the first three full fiscal years following the major disaster, the revenue of the local government is insufficient to meet its operating expenses, including additional disaster-related expenses of municipal operation.