LA Governor: Katrina victims 'nearly forgotten'

(CNN) -- Nearly three months after Hurricane Katrina forced tens of thousands from their homes, bureaucracy is creating a new tide of trouble for victims of the storm.

"We feel like we are citizens of the United States who are nearly forgotten," said Democratic Louisiana Gov. Kathleen Blanco.

"It is a very frustrating thing. People are weary. They want to move on ... It's going to take us a while. And we still need help from Washington."

The Federal Emergency Management Agency has said it will stop paying hotel bills December 1 for most of about 53,000 displaced families, prompting fears that they won't have enough time to find new places to live. (Watch Katrina victims sue FEMA -- 2:49)

After December 1, most evacuees from Hurricanes Katrina and Rita who aren't ready to leave hotels and motels will have to pay their costs out of pocket -- either with FEMA rental housing aid they receive or with their own money. (Read that FEMA set deadline for evacuees in hotel rooms)

The goal is to move evacuees into more permanent housing before the December holidays, according to a written statement by acting FEMA Director David Paulison.

In addition, FEMA said Thursday it has no more money to pay flood insurance claims -- forcing a delay while Congress rushes to replenish accounts. (Read that FEMA's flood money has dried up)

FEMA said insurance claims for Katrina total $23 billion, well beyond its limit, and Congress will need to authorize additional lending in a "piecemeal fashion" to cover all of the agency's obligations.

"That's not acceptable," said Rep. Bobby Jindal, R-Louisiana. "You have families that want to rebuild, they've filed their insurance claims they've been told they're going to get paid. Now all of a sudden they're being told: 'Well, wait a minute we might not be able to process your claims.'" The House took up the matter Wednesday night and the Senate is expected to do the same Thursday.

"You've got people worried about whether checks are going to bounce, whether they can pay contractors, whether they can move on with their lives," Jindal said. "It is extremely frustrating."

New Orleans Mayor Ray Nagin testified on Capitol Hill Thursday, telling a House committee that his city cannot fully recover until evacuees feel they can return.

"A lot of our citizens are still spread out among 44 different states," Nagin said. "And we are running out of time as it relates to individuals trying to make decisions on whether to move back, how to move back, whether they feel comfortable enough about the levee systems, whether they feel comfortable that they have the resources necessary to move back and what this Congress and what the state government and what the local government [are] doing to facilitate and accelerate them coming back."

In San Antonio, Texas, Russell and Tammy Hayward are one of 12 families suing FEMA after the agency cut off their aid. The couple, who fled their damaged home in Longbeach, Mississippi, received a $2,000 check from FEMA and a letter explaining that the money should be spent on "assistance for housing or other essential needs."

Three weeks later, after the money had been spent on what the Haywards say are household goods, another FEMA letter arrived specifying that the check could only be used to pay for housing.

Russell Hayward said he doesn't understand why FEMA has cut them off. "We are not asking them to pay our rent for the rest of our life, just a little start, you know?"

In addition to difficulties helping storm survivors, officials continue to struggle with the dead. Coroners have not been able to identify hundreds of bodies found after the hurricanes and hundreds more bodies remain unclaimed. (Read a deal reached on paying for DNA tests)

Of 300-plus unidentified bodies, 140 pose an unprecedented challenge for Dr. Louis Cataldie, the Associated Press reported. Many of them were found in fields or streets with no link to a house or address. In some cases animals had damaged the bodies. In every case there was severe decomposition.(Read about the nameless Katrina victims)

"It is very challenging, because it's been a long time. And the remains are -- are very fragile now. And it's just more challenging. And each day that goes by, everybody is working hard to try to meet those challenges," Gov. Blanco said.