New Orleans City Council approves $125M bond to address budget deficit

NEW ORLEANS (WGNO) — In the face of a $160 million deficit, the New Orleans City Council unanimously approved a request for a $125 million state bond to cover payroll.

Though it’s only a temporary solution, council members agreed to do it on behalf of the city’s workers.

“To ensure that our people who work for the city government are getting paid on a regular basis and our vendors so that we can keep the business of government moving forward,” Councilwoman Lesli Harris said.

“Make sure that businesses of the city continues and that there are no lags because we know if something can’t get done, then it draws out and it becomes the issue for next year,” Councilman Freddie King said.

Both the council and New Orleans Chief Administrative Officer Joe Threat said that overtime spending is the main contributor to the crisis.

Over $40 million was spent on overtime pay, despite the city budgeting just $45,000 to cover it.

Council President JP Morrell emphasized that the city can never be in this position again.

“We have to change the budgeting process so that when a budget is finalized by council and by a mayor on December 1st of any given year, that is the money to be spent that year,” Morrell said.

With the resolution now passed, Mayor-elect Helena Moreno wants to quickly schedule an emergency meeting with the state bond commission to get the bond approved.

She said managing this upcoming year’s budget will be a challenge.

“The level of cuts that are coming are going to be very difficult, but we have to get it done. Meet the challenge, and we do have to rightsized government, and still meet the critical city services,” Moreno said.

Attorney General Liz Murrill said she is considering taking over the city’s finances under a newly amended law, which allows it in instances where a municipality is unable to manage its own budget.

State Senator Jay Morris, who is on the bond commission board, said he is not ruling out that option.

But Morris believes it is not appropriate for the state to just fill in the gap without much consideration.

“Very skeptical of the state just stepping in the last minute before we fully understand all the errors that were made that led to this. If they want to raise that kind of money, why can’t they go and pass the tax? Like most everybody has to do,” Morris said.

Mayor-elect Moreno said it’s a big risk trying to get the bond this late. She is hoping to meet with the bond commission next week, as they currently have a meeting to approve bonds scheduled for Nov. 20.

Harris responded to the emergency budget hearing and calls for long-term fiscal planning:

“We as a city must start to prepare for the unexpected. These past few weeks have demonstrated the desperate need for a more robust rainy day fund and council oversight to prevent unbudgeted expenditures,” Harris said. “Our city faces unique challenges, from hurricanes and infrastructure emergencies to unexpected national events, and we must have a financial cushion in place to protect our workers and residents when those crises hit.”

She continued, “City employees and residents shouldn’t have to wonder whether payroll will be met or services will continue. This isn’t just about balancing a budget; it’s about rebuilding public trust and showing that New Orleans can plan responsibly for its future.”

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