Mayor C. Ray Nagin announced that as many as 3,000 city employees, or about half the workforce, will be laid off because the flood-ravaged city government is unable to make the payroll.
The shrinking bureaucracy came as another blow to a city that has struggled fitfully to revive itself after its flooding and evacuation.
Nagin made the announcement on Tuesday with "great sadness," saying he had struggled for weeks to finance the payroll. Although businesses and some residents have been invited to return, New Orleans is still largely empty. The last checks will be sent out on Oct. 14.
"I wish I didn't have to do this," he said. "I wish we had the money, the resources to keep these people."
Nagin previously estimated that only half the city's residents -- about 250,000 -- would soon return. Many fear that the loss of city workers could crush hopes for the city's revival.
"We've had Hurricane Katrina, Hurricane Rita and now Hurricane Layoffs," said City Council President Oliver M. Thomas Jr. "When will some relief come for the people of this region? We're dying down here."
Thomas and other local officials have faulted the federal government for not bailing out the city. Of ongoing negotiations with federal politicians, Thomas said: "We're going to find out just how much juice our Republican delegation has with the U.S. Congress."
The cuts affect only "nonessential" employees, Nagin said, and not police, fire or emergency medical personnel.
"We are just not able to put together the financing to continue to maintain City Hall staffing at current levels," Nagin said.
Officials in neighboring St. Bernard Parish, which faced some of the worst of Hurricane Katrina's flooding, are facing similar cuts.
"I haven't heard anything from the federal government about any aid whatsoever," Parish President Henry "Junior" Rodriguez told radio listeners. But he added that he planned to travel to Washington on Wednesday to ask for it. Without aid, "we'll have to shut this parish down," he said. "At this point we should be hiring people -- not firing people. We have so much work to do."
He said, however, that "our tax base has been annihilated."
Meanwhile, the aftereffects of Hurricane Katrina continued to unfold across the region.
In Louisiana, the door-to-door search for bodies ended and the death toll stood at 972, eight more than Monday's tally, the state health department said. Mississippi's toll remained at 221.
Those numbers are substantially lower than originally feared. In the days after the storm, some officials said they thought that 10,000 or more may have died in the flooding.
In Baton Rouge, La., several dozen New Orleans area residents who are staying in a shelter in the convention center met former president Bill Clinton, who is working with his predecessor, George H.W. Bush, to raise relief money.
At the RiverCenter, where many evacuees have been staying for more than a month, some complained of a lack of showers, clean clothes, privacy and medical care, the Associated Press reported.
"My concern is to listen to you . . . and learn the best way to spend this money we've got," Clinton was quoted as saying.