By Dan Wiessner
KEENE, New York (Reuters) - Residents of normally picturesque upstate New York towns struggled on Wednesday to dig out from devastation left by Hurricane Irene, which destroyed homes, cut off roads and threatened the local economy.
The Ausable River overflowed its banks and inundated the tiny towns of Upper Jay and Keene, both popular tourist destinations, where local merchants were surveying their damaged buildings and ruined merchandise.
This summer had been a good one for local tourism prior to the storm, and merchants feared the devastation could keep visitors away over the typically busy Labor Day holiday and beyond.
Shop owner Gary Burke said he had recently reduced the flood insurance on his gift shop and home, which sit on the banks of the river, after a threatened storm in the spring turned out to be harmless.
Now a massive tree is lodged in the rear door of his store, and mud covered most of the merchandise.
"This is a very hard place to live, and now I'm fed up," he said.
National Guard units, state workers and convicts from a nearby prison were deployed to repave roads and chop up downed trees.
In Upper Jay, a house was lifted off its foundation and swept a quarter-mile away, where it settled in a field.
"It just gently rolled down the stream," said Julie Robards, who runs an antique store in the town that was filled with several feet of water. "This was such a charming town, and now it's devastated,"
She said at least a thousand antique books, pottery, upholstered furniture and a gallery of paintings by local artists were destroyed, she said.
The town's firehouse, where $25,000 worth of renovations was completed two weeks ago, and its library were ravaged as well. Fire Chief Jeff Straight said the firehouse may have to be condemned.
Local bakery owner Paul Johnson said his home a few yards from the river, in his family for 150 years, had never flooded until Sunday.
In Keene, where the roof of the firehouse partially collapsed, locals gathered at the unscathed Tip-a-Canoe restaurant to trade stories and commiserate.
"It's a tough little town," said Brooks Townsend, who works at the restaurant. But he said he was fearful that local businesses would take a heavy blow as tourists stay away.
Governor Andrew Cuomo, who toured Keene on Tuesday, said Irene had caused about $1 billion in damages across the state. President Barack Obama has declared more than a dozen New York counties as disaster areas, paving the way for them to receive federal aid.
"These are not communities of deep pockets, and these are communities that will need economic help to restore themselves," Cuomo said.
Despite the extent of the damage, many residents of the towns remained optimistic.
"We have a fighting spirit in this town," said Robards, who lives in Upper Jay.
(Editing by Ellen Wulfhorst and Cynthia Johnston)