New Orleans council passes balanced budget

The New Orleans City Council unanimously approved what members said was a balanced budget that eliminates a projected 23% deficit the city faced in 2026. 

City Council President Jean-Paul Morrell at a Revenue Estimating Conference hearing had denounced Mayor Latoya Cantrell for a “breathtaking abdication” of her job for preventing the presentation of Mayor-elect Helena Moreno’s revenue proposals. 

“To not care how her action or lack of action is going to affect city employees and services next year shows you this petulant child has taken the ball and gone home,” Morrell said. 

The conference was supposed to recommend revenue levels for the city’s 2026 budget. Cantrell, who chaired the conference, said she would neither allow a vote nor a presentation of Mayor-elect Helena Moreno’s revenue proposals, since neither her team nor economists had been given a chance to vet Moreno’s proposals.

Moreno had asked Cantrell to allow a presentation, but Cantrell refused, saying the conference only considers facts, not opinions. 

At the council meeting, Morrell said Cantrell told staff not to work on the budget this week.

Cantrell wasn’t present at the city council meeting. A city spokesperson pointed to Cantrell’s remarks at the conference when given an opportunity to respond to Morrell’s criticism.

The city government is grappling with cuts to services and layoffs next year, which make Cantrell’s actions all the more reprehensible, Morrell said.

To address the city government’s potential $222 million deficit, it is cutting general fund spending by $77 million (or 8.7%), identifying and recovering $76 million in revenue owed the city and using $4.6 million of various fund balances. 

The general fund savings will partly be gained through $27.7 million in personnel savings from cutting 36 positions under mayoral control, laying off 62 probationary employees, a hiring freeze on 134 vacant positions, and furloughing 724 non-essential workers one day each pay period.

The revenue enhancements include assuming the Sewerage and Water Board of New Orleans will return $32 million of $80 million that is due to the city, $17 million from a dispute over revenues from land the council says it gained ownership of in 2014, $14.7 million repurposed from the American Rescue Plan Act, $7 million from increased parking enforcement, and $5 million from other collections. 

Morrell said the budget is currently a “giant suggestion” to the mayor. If and when the city changes its charter next year, the city council’s approved budget will lock the mayor to certain spending levels, he said.

Moody’s downgraded the city’s issuer and general obligation ratings to A3 from A2 in October and revised the outlook to negative from stable, citing “significant, unbudgeted use of reserves in support of operations and one-time events in recent years that has materially narrowed the city’s financial position.” 

The city has since borrowed $125 million from J.P. Morgan that is due in June. The Louisiana Bond Commission approved the borrowing subject to conditions, including that Louisiana Legislative Auditor Michael Waguespack approve any disbursements of the borrowed funds.

New Orleans’ budget year runs from Jan. 1 to Dec. 31.