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New Orleans to lay off 3,000 workers

Former President Clinton meets Katrina victims, promises help



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Bill Clinton
New Orleans (Louisiana)

NEW ORLEANS, Louisiana (CNN) -- New Orleans will lay off 3,000 city workers -- about half the workforce -- because of financial constraints caused by Hurricane Katrina, Mayor Ray Nagin said Tuesday.

Citing a loss of city revenue after the storm, Nagin said the city for weeks had "searched high and low" for the necessary payroll funds, requesting help from the state and federal governments.

"We've talked to local banks and other financial institutions, and we are just not able to put together the financing necessary to continue to maintain our city hall staffing at its current levels," he said. (See video on cleaning up the city -- 1:54)

Nagin said it was "with great sadness" that New Orleans was "unable to hold on to some of our dedicated city workers."

He said the city hopes to save from $5 million to $8 million on a current monthly payroll of $20 million after the layoffs, which begin taking effect Saturday.

Most of those being placed on emergency leave without pay are in "nonessential" administrative positions, the mayor said. Among those exempt from the layoffs are public safety and sanitation employees.

Nagin said Louisiana has asked the federal government to waive the restrictions of the Stafford Act, which allows the Federal Emergency Management Agency pay overtime for public employees, but not regular salaries.

On Monday, Louisiana Gov. Kathleen Blanco warned Congress and the White House that many of the state's local governments "are on the verge of financial collapse."

"We need to allow federal aid money to cover more than merely overtime for public employees," she said.

On a national level, analysts predict Friday's monthly employment report from the Department of Labor will show that September saw the first decline in U.S. payrolls since May 2003.

The number will be affected not only by Katrina's impact on the labor market, but by the Labor Department's ability to collect data through surveys in the affected Gulf Coast region. (Full story)

The Congressional Budget Office estimated last month that the August 29 storm cost 400,000 jobs, at least temporarily.

Nagin also said Tuesday the city is "moving to a much more aggressive position as it relates to temporary housing."

He said city staff met earlier in the day with FEMA representatives and on their first assessment identified locations to house "about 711 families that would want to live in trailers."

The city's re-entry plan "continues to exceed our expectations as far as how fluid and how smooth that process is going," he said.

Residents and business owners can return Wednesday to view the damage throughout New Orleans, with the exception of the Lower 9th Ward, which Nagin said was "still draining."

The city remains under a curfew from 8 p.m. to 6 a.m.

At one point after the storm, 80 percent of the city was flooded because of levee breaks.

The safety of drinking water still is being evaluated and the tests may be completed by the weekend, except for the Lower 9th Ward, Nagin said. Much of the supply system sprang leaks from the storm.

On Friday, Nagin introduced a panel of 17 civic leaders given the task of developing a plan for the city to recover by the end of the year.

Nagin outlined his vision for the help he wants from the federal government, including significant income tax breaks. (Full story)

The mayor once feared thousands of people might have died. On Tuesday, officials called off door-to-door searches for bodies and said the death toll was 972. (Full story)

Between 140,000 and 160,000 homes need to be leveled, and the storm ruined more than 350,000 vehicles, Mike McDaniel, head of the Louisiana Department of Environmental Quality, said last week.

The Army Corps of Engineers has said it expects to declare New Orleans dry this week.

Nagin's plan is one of several recovery initiatives in the works. Blanco, the state's congressional delegation and President Bush are also planning a response. (Rebuilding New Orleans)

Clinton: Pledges total $100 million

On Tuesday, former President Bill Clinton met with Katrina victims in Baton Rouge and reassured them his fund will try to help fill in the gaps where government aid is falling short.

"We set up a system that will help people solve problems in the short run that the government can't fund or won't fund, to get people's lives going as quickly as possible," Clinton said.

He was referring to the money that he and former President George H.W. Bush were asked to raise to help those affected in Louisiana, Mississippi and Alabama.

Clinton estimated they had collected pledges totaling about $100 million, and said that after Bush visits the region next week, the two will begin to decide how to distribute the money.

Blanco was also at the meeting, where several victims related their stories of evacuation, survival and the ensuing hardships they were facing after losing all of their possessions and documents.

In his first solo press conference since May, Bush on Tuesday pressed for policies to attract private investment to the Gulf Coast region.

"As the federal government meets its responsibilities to the people of the Gulf Coast, it must also recognize its limitations," he said.

"The engine that drives growth and job creation in America is the private sector, and the private sector will be the engine that drives the recovery of the Gulf Coast." (Transcript)

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