NEW ORLEANS — The baseball-size French glass Mardi Gras beads still dangle on live oak trees outside the New Orleans Museum of Art. Somehow, they defied Hurricane Katrina's fury.

The Degas, Monet and Gauguin paintings, the jeweled Faberge eggs, the Ansel Adams photographs, they're all safe inside. Even though storm winds uprooted 60-foot-tall trees nearby and 8-foot-deep floodwaters surrounded the museum like a lake with an island castle, the art treasures were spared.

But the museum wasn't and its scars are just beginning to show.

The New Orleans Museum of Art has been forced to lay off most of its 86 workers, it must raise millions of dollars to survive the next few years and it will not reopen its doors for months. And that's just for starters.

"It's going to take years to get back to where we were," says Jackie Sullivan, the museum's deputy director. "The toughest time is definitely now."

The museum's plight typifies the dilemma a cultural institution here — especially one dependent on city dollars — faces in this post-Katrina era. New Orleans has no money, no sizable number of tourists and no crystal ball to predict when all will change.

Then there's the matter of priorities.

In a city where hundreds of people died, thousands of homes were destroyed, jobs are gone and schools and businesses closed, the preservation of an art museum just doesn't rank at the top of the must-do list.

But E. John Bullard, the museum's director, argues that art must be a part of the city's revival.

"Obviously, the people have to have houses to live in," he says. "They have to have hospitals. They have to have schools. I think museums . . . are on the same level. You can't live in a cultural desert. Especially in New Orleans. You just can't."

The 94-year-old museum, a neoclassical white stone building set on a circle, is important, too, because it attracts out-of-town visitors — and that means money.

"I think the city has wakened up to the fact that tourism is its last great hope," says John Keefe, one of the laid-off museum workers.

The museum needs $15 million in the next three years and is now trying to raise money to make up for losing visitors (about 150,000 a year) and fees from its 10,000 members, many of whom have fled New Orleans.

"We're hanging out a little tin cup," says Bullard, who says his recent trip to New York to appeal to foundations for help brought in pledges of $900,000.

The museum's crisis came after the storm. Mayor Ray Nagin announced in October that New Orleans was broke and had to lay off as many as 3,000 people, about half the city's work force.