Galveston Suffering From 1-2 Punch: Ike, Economy

It's been more than two months since Hurricane Ike smashed the upper coast of Texas. Galveston was ground zero. The city has asked Congress for more than $2 billion in assistance. But that was before a new cyclone of bad economic news blew in last week.

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And now we're going to follow up on another natural disaster. It's been more than two months since Hurricane Ike smashed into the Texas coast. Galveston took winds of more than a hundred miles per hour and a 12-foot storm surge. Three out of every four structures on the island were damaged. The graceful city has requested more than $2 billion in assistance from Congress to get back on its feet. But as NPR's John Burnett reports, a new cyclone of bad economic news blew in last week.

JOHN BURNETT: There are striking parallels between Galveston and New Orleans beyond the commonalities of two eccentric tropical cities in decay that love to party. Some people even call Galveston "The Little Easy." With their populations and economies in decline in the aftermath of punishing hurricanes, what now? In Galveston, last week was supposed to bring a burst of good news for a city that badly needed it.

Unidentified Man: On behalf of the University of Texas Medical Branch, I want to welcome and thank you for participating in this historic occasion, the dedication of our Galveston National Laboratory.

BURNETT: The city was excited about the opening of this eight-storey, beige-and-white fortress, the country's first national lab for the study of infectious bio threats. But the very next day brought crushing news. The island's biggest employer, the sprawling University of Texas medical complex, where the new lab is located, is going to lose a third of its workers. The university regents had decided to downsize John Sealy Hospital, laying off 3,800 employees in January. Even before Ike hit in mid-September, the hospital was running up deficits of a hundred million dollars a year for all the free indigent care it provides, says Dr. Joan Richardson, head of the renowned neonatal unit.

Dr. JOAN RICHARDSON (Director of the Neonatology Division, University of Texas Medical Branch): What Ike did was around $700 million worth of damage. Now a large proportion of that was lost revenue. So you can do the math and realize that we've got some problems.

BURNETT: Most visitors don't know it, but the Medical Branch is more important than tourism to the island's economy. In fact, most of the hotels, surfboard rentals, and seafood grills along Galveston's storied Seawall Boulevard have already reopened. But the reduction of the hospital from 550 to 200 beds may turn out to be a harder blow than the hurricane. Buddy Hertz(ph) is a leading lawyer whose family goes back here 140 years.

Mr. BUDDY HERTZ (Lawyer): What kind of community are we going to have when this is all over with? Where we go depends a lot on what happens at the medical branch.

BURNETT: Like New Orleans, Galveston had been losing its middle class, in part because of inadequate housing and poor schools. The pre-storm population was 57,000. For some residents, like Cleda Sereno(ph) whose house was flooded by the storm, then condemned by the city, Ike may be the tipping point.

Ms. CLEDA SERENO: One day, I'm feeling nostalgic, and I'm looking at my house and I want to be here. But then the next day, I'm thinking we're getting older. We don't know if we want to put that much money back into a house that might get blown away next year. So it's difficult.

BURNETT: It's difficult especially for the island's black community for whom the city holds a special meaning. It was in Galveston, then Texas' most important city, where a Union general read the Emancipation Proclamation in 1865. As Katrina decimated the Lower Ninth Ward, Ike inundated the mostly black historic neighborhood north of Broadway. On a recent drive around, the only person spotted was David Coyle(ph), a landlord checking on his properties.

Mr. DAVID COYLE (Landlord): This is kind of a low-income area here, and a lot of people here were renting. A lot of people here inherited this property, and they didn't have insurance either. And so a lot of people just won't be able to rebuild it.

BURNETT: Which means there'll be fewer African-Americans in Galveston.

Mr. COYLE: Most definitely.

BURNETT: It was 108 years ago when the Gulf rose up and swallowed this barrier island. The great 1900 hurricane killed more than 6,000 people and nearly obliterated the city, which never regained its prominence. History has a way of echoing itself in Galveston. In the years after the catastrophic 1900 storm, a wealthy cotton merchant named Isaac Herbert Kempner joined the city government and helped guide Galveston's phoenix-like rebirth. Today, his granddaughter, Mayor Lyda Ann Thomas, shoulders the responsibility of helping to bring her city back from the hurricane that bears her grandfather's name, Ike.

Mayor LYDA ANN THOMAS (Galveston, Texas): You know the good thing about it is there's something called the Galveston spirit. And I'm just so pleased and proud of our citizens. Yeah, it's sad. But there's a will to come back, a will to rebuild. So we're all hard at work.

BURNETT: Locals say the city's revival depends on how much of the Galveston spirit is still there a century after the last great storm. John Burnett, NPR News.

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