The Mayor of New Orleans, Ray Nagin, has announced that some 3,000 public sector workers will lose their jobs this month as the city's budget is hit by the catastrophic fallout from Hurricane Katrina.
Mr Nagin told reporters the move had been forced on the authorities because of the decrease in the amount of business taxes collected.
He said the employees to be let go, amounting to some half of the city workforce, would receive their last pay cheque by the end of the month.
Mr Nagin added that police, firefighters and other emergency workers would probably not be affected.
Separately, the mayor said the plan to have citizens who fled the city ahead of hurricanes Katrina and Rita return to New Orleans continues to exceed expectations.
Louisiana Governor Kathleen Blanco has urged US President George W Bush to give Louisiana businesses priority in hiring and contracting for the reconstruction effort.
At least 1,209 people were killed by Katrina when it ripped through the southern United States on 29 August, including 972 in Louisiana.
