I think a viable alternative would be to flow the cost down to the elected or appointed officials in charge who created such an environment.

The town should have bylaws to force resignation and emergency elections in the event that this happens. Then the town should have legal precedent to bring the administration to civil court for damages. The town administration, personally, should be collectively on the hook to the town the cost of the ransom.

It really does amount to a dereliction of duty.