Emergency management is a complex policy subsystem that involves an intergovernmental, multiphased effort to mitigate, prepare for, respond to, and recover from disasters. This article develops a framework for analyzing the fiscal and functional aspects of disaster policy. It uses established theories of intergovernmental relations to offer a rationale for examining the capabilities required to implement disaster policy and the behavioral incentives that drive policy formulation. In particular, the article identifies the extent to which the capabilities and political objectives characteristic of each level of government are aligned, and illustrates the interplay between incentives and competencies by reviewing the federal disaster funding process. The current rules for federal budgeting may inappropriately promote spending on disaster response and recovery, while de-emphasizing mitigation and preparedness. Various proposals for reform could establish more coherent incentives, making disaster spending more consistent with the relative functional capabilities of the various levels of government.Disasters are calamitous natural or human-caused emergency events that suddenly result in extensive negative economic and social consequences for the populations they affect. While disasters vary in scale, all threaten the general welfare of some populace; thus, government intervention to minimize the negative consequences of disaster and-ultimately-to restore order, is warranted and expected. As Schneider asserts, "When a natural disaster occurs, few people stop to ask whether the government should intervene. Instead, citizens tend automatically to view the situation as a serious public problem requiring immediate governmental action" (1995, 9). In the United States, government involvement in emergency management has evolved through time into a complex policy subsystem. 2 Implementation of disaster policy is the province of a public administrative function known as emergency management, 3 the modern approach to which involves a multidimensional effort to reduce the threat of the occurrence and the magnitude of disasters and to prepare for, respond to, and recover from those that do occur.Emergency management presents a formidable challenge for governments because of the extraordinary demands these events impose on the decision-making and service-delivery systems of the communities they affect. By definition, disasters exceed the capacity of the governments whose jurisdiction they strike. That is, the needs of the community during a disaster overwhelm the administrative and resource capabilities of the community's government and, as Granito notes, dealing with disaster "requires outside resources and the abandonment of the usual organizational routines" (1995, 44).In the context of a federally structured government, when the capacities of government jurisdictions at lower levels Amy K. Donahue is an assistant professor in the political science department at the University of Connecticut, where she teaches intergovernmental r...