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Hard-hit New Orleans will lay off 3,000 workers

Big Easy 'can limp along for month or two,' mayor says

NEW ORLEANS -- Mayor C. Ray Nagin said yesterday that New Orleans will lay off 40 percent of its workers and warned of more belt-tightening ahead, a bleak reminder of the challenges the city faces as it recovers from two hurricanes.

The elimination of 3,000 jobs, which Nagin described as ''pretty permanent," is expected to save the hard-hit city $5 million to $8 million a month. New Orleans now pays about $20 million a month in salaries for city workers, Nagin said.

He said the city was not considering bankruptcy, at least for now. ''We can limp along for another month or two," he said at a news conference. ''Beyond two months we'll be talking again."

With virtually all businesses closed, the city's tax revenues have dried up.

Eighty percent of the low-lying city was flooded after the storm surge from Hurricane Katrina broke through levees and flood walls at the end of August. Hurricane Rita, which struck the Louisiana-Texas border on Sept. 24, caused new flooding that still persists in some areas.

Many smaller communities were also devastated as the storms struck Mississippi, Louisiana, and Texas. Katrina, which caused more than $34 billion in insured property damage alone, killed nearly 1,200 people and was the most expensive hurricane ever to hit the United States.

''We've been mired in the bureaucratic red tape since the beginning. The more you talk about what needs to be done, the blinder and deafer people become," said Robert Warner, 51, who was first evacuated to Lake Charles, La., after Katrina and then to Baton Rouge after Rita.

New Orleans was home to nearly half a million people before Katrina, but only a few thousand now live here, and state and local officials also have said that Federal Emergency Management Agency aid has been arriving too slowly.

Former president Bill Clinton yesterday urged the US government to move relief specialists out of Washington, D.C., and into the storm-ravaged states to clear the red tape for the hundreds of thousands of displaced people.

''The volume of need is greater, and you need to move money through more quickly," he said, during a fact-finding visit to Baton Rouge to decide how to spend the $100 million raised by the private Bush-Clinton Katrina Fund.

New Orleans has been slowly coming back from the double hurricane blow.

Nagin said nearly every neighborhood would be open tomorrow for residents to return and view their homes. Only parts of the Ninth Ward, which suffered the worst damage, will stay closed.

''You can come in, look, and leave as long as you abide by the curfew," he said at a news conference. The city is keeping everyone off the streets from 8 p.m. until 6 a.m. daily.

The insurance industry said yesterday that insured losses from Katrina property damage had reached $34.4 billion, far outstripping the $20.8 billion in inflation-adjusted losses from Hurricane Andrew in 1992.

Hurricane Rita's costs will be calculated separately.

The report from ISO, an insurance risk and data firm based in Jersey City, N.J., doesn't cover losses to utilities, agriculture, or oil drilling. Flood damage is also excluded. Losses in Louisiana totaled $22.6 billion in damage and 900,000 claims filed. ''New Orleans bore the brunt of the hurricane's fury," the ISO said.

Mississippi was second, with $9.8 billion and 490,000 claims, Alabama third, with $1.3 billion and 123,000 claims, and Florida fourth, with $468 million and 110,000 claims. Tennessee and Georgia sustained less damage.

Nagin had warned that many of New Orleans's nonessential jobs were at risk. He said the city had appealed to federal and state sources and local banks, but was ''just not able to put together the financing necessary to maintain the City Hall staff at its current levels."

Governor Kathleen Blanco of Louisiana urged President Bush to exempt the state from an executive order he issued after Katrina that allows federal contractors to pay workers lower-than-usual wages during the hurricane cleanup.

''Our state and our economy have already been devastated. I don't think Louisiana's workers should be given less consideration in wages than other Americans just because we have suffered a disaster," she wrote in a letter to Bush.

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