Lawmakers brace for hurricane's final devastation

Jan. 12, 2009
The Associated Press

AUSTIN — Hurricane Ike was the big storm Texas officials feared would hit the coast — and the state’s coffers.

When lawmakers convene Tuesday, they’ll face the financial devastation left by the Category 2 storm, which walloped the upper Gulf Coast on Sept. 13, devastating Galveston and nearby counties.

They’ll look to restructure the state’s windstorm insurance association, which is filling in the gap left by private insurers that stopped issuing policies in some Gulf Coast counties, and consider whether to put money into a state disaster fund that Galveston officials found out the hard way was empty.

Overall, the state government’s bill for Ike could reach $6 billion to $8 billion, House Appropriations Chairman Warren Chisum, R-Pampa, said. Some of that impact may be spread over four years because of the way the Texas Windstorm Insurance Association is set up to allow companies to seek state tax credits over time, Chisum said.

AP/MARCIO JOSE SANCHEZ

A sign at a hurricane-damaged house in Seabrook in September reads, "Allstate help me." In Hurricane Ike’s wake, legislators are considering ways to deal with the financial devastation. AP/MARCIO JOSE SANCHEZ

Total Hurricane Ike costs are estimated to top $15 billion, but the state expects the federal government to cover most of that.

Revamping the windstorm fund has been on the minds of some legislators since companies began pulling away from the Texas coast after Hurricanes Katrina and Rita in 2005. The fund, replenished in large part by payments from private insurers, became the insurer of last resort for homes and businesses in 14 counties.

Since Hurricane Ike, the windstorm fund has moved into the statewide spotlight.

More than $750 million has been paid to windstorm association policy holders for claims from Hurricane Ike, and the final bill is not yet known.

Those who want to restructure the fund say allowing it to issue bonds may be one way to bring in money.

Besides attempts to rework the windstorm account, there are calls on many fronts for a better state disaster fund.

Republican Gov. Rick Perry’s office oversees a relatively small amount budgeted for disaster needs. He asked lawmakers to allocate $50 million to a disaster fund in 2007, but they didn’t.

The governor will ask legislators this time for $50 million to $150 million to help pay for evacuations and other immediate costs, Perry senior adviser Mike Morrissey said.

The money would be used to reimburse local governments and vendors, like evacuation bus contractors, even if their expenses are covered by federal disaster aid that is slow in arriving. The tardy federal money would replenish the state fund, which would not cover personal losses or expand existing reimbursement items, Morrissey said.