GALVESTON, Texas—An enormous amount of work remains on the road to recovery in Galveston.

Hurricane Ike sent a storm surge of about 10 feet into the shops and restaurants on The Strand.

Those businesses now promise they will reopen soon.

While it’s easy to be optimistic about the city’s future, the reality is, the storm is not over for Galveston.

In fact, the worst of the financial storm may have only just begun.

The city is taking in less money, and now must deal with the massive layoffs at UTMB and the downturn in the national economy.

“You know, three strikes, but we’re not out. Galveston will not be out. We will come back,” City Manager Steve LeBlanc said.

But they won’t be back without help.

The city has asked the federal government for more than $2 billion in aid. 

It may need every penny.

Revenue from property taxes, sales taxes and water customers is dropping in Galveston.

In fact, water usage has plummeted 35 percent as residents have stayed away after the storm.

The tourists who drive the island’s economy have, in large part, been replaced by construction and aid workers.

But while they are filling the hotels, they’re counted as long-term guests and are exempt from paying the island’s 15-percent hotel tax.

The city is also not getting tax revenue from the hundreds of beachfront rental homes that now sit empty.

Sand N Sea Properties manages 183 beach homes.  Ike destroyed three, and the rest are in need of repairs.

“We have been one of the top five contributors to the hotel tax,” Wendy Hagensick of Sand N Sea said.

Hagensick said the company hopes to have about half of the homes ready for spring break, and they are confident the renters will return.

“It’s not going to look like what it looked like last year at this time. We want to let people know,” she said.

Obviously, it’s going to be a tough couple of years on the island. But will the recovery change the city?

“I think it’ll be much higher-end. And Galveston may become the resort city you see around the country, higher-end resort cities,” LeBlanc said.

He even thinks it will be a more expensive place to live.

That’s because in lower-income neighborhoods, uninsured homes may never be rebuilt, meaning there could be fewer affordable homes in the future.

On the beach, Ike’s erosion not only took out poorly-built vacation homes, but also permanently washed away beachfront lots.

Again, that means there will be fewer properties, potentially sending prices up.

So when the economy improves and people return to rent and buy homes, things could be quite different.

“Don’t expect the same old Galveston, but don’t let that stop you from coming,” island resident Jennifer Stone said.

Stone, like other islanders, is confident that however challenged or changed, Galveston will be no less alluring in the future.