The US city of New Orleans is sacking 3,000 workers, about half of its workforce, after the devastation caused by Hurricane Katrina.
Some New Orleans businesses are trying to hire workers
Mayor Ray Nagin said he wished he could keep the employees on the payroll, but added that the city was not earning enough revenue.
The sacked employees would be laid off in the next two weeks, Mr Nagin said.
Meanwhile, officials have ended the door-to-door search for victims of the hurricane in the state of Louisiana.
The death toll in the state stood at 972 - substantially smaller than the 10,000 victims some feared.
The number of dead in Mississippi remained at 221, according to the authorities in the state.
Louisiana officials said more searches would be conducted by a private company hired by the state, if someone reported seeing a body.
Mr Nagin said it was "with great sadness" that New Orleans was "unable to hold on to some of our dedicated city workers".
The city had "searched high and low" for the funds and had asked for help from the state and federal governments, he said.
"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.
The mayor described the dismissals as "pretty permanent".
Those workers not contacted to return to work should consider themselves part of the layoff, an official statement said.
Only non-essential employees would leave and no firefighters or police would be among those let go, Mr Nagin added.
Thousands of people have returned to the city in recent days, after the parts least affected by flooding from Katrina re-opened.
Schoolchildren went back to classes on Monday.
Some businesses have also re-opened and power supplies are partially working - but only a few parts of the city have drinking water.
The mayor has established a commission to draft a rebuilding plan for New Orleans and has asked for tax breaks to help to revive the city.