You would lose more than a week of work if your entire team is no longer doing this week's work to make up for last week's.
Let's say they instead of doing this week's work, they do last week's, next week they're still a week behind and you have to start paying 100+ government employees overtime in order to regain the catch up on the remaining week. This could take a while to catch up and be incredibly expensive.
The $400,000 wasn't taxpayer money it was their insurance companies offer to make this go away.
Local government work is mostly cyclical and the "customer" is captive. It's not the end of the world if they bill someone a day late or have to re-add the new librarian to the payroll system. It's not like people can up and switch to a new government because they don't like the quality of service.
Based on having grown up in the region and having, um, "connections" to state and local government I think it is highly likely that their desire to not throw out work was based around reasoning around how their public image would be affected if a batch of fines/taxes/fees/bills had to be waived. Cutting people (collectively, waiving something on a case by case basis is fine) a break because the government screwed up is kind of a non-starter because of the possibility of setting a precedent.
Let's say they instead of doing this week's work, they do last week's, next week they're still a week behind and you have to start paying 100+ government employees overtime in order to regain the catch up on the remaining week. This could take a while to catch up and be incredibly expensive.
The $400,000 wasn't taxpayer money it was their insurance companies offer to make this go away.