The New Orleans City Council on Thursday (May 25) approved a city spending plan for more than $120 million — almost all of which comes from federal COVID pandemic relief funds.
The money is going to a wide range of projects, including new vehicles, building maintenance and a refurbished facility for police dogs and horses. In a win for housing advocates, the council created a new fund called the Affordable Housing and Workforce Housing Affordable Housing Gap Financing Fund, and injected $32 million million into it, including $8 million in pandemic relief dollars.
The allocation includes more than $50 million in federal pandemic relief money — technically the last of the city’s unappropriated funds from the American Rescue Plan Act — as well as more than $70 million from a city surplus fund. But the surplus fund dollars were largely accumulated as a result of nearly $400 million in ARPA money provided to the city.
Following Thursday’s votes, Mayor LaToya Cantrell’s administration estimates there is only less than $50 million left to allocate of the roughly $400 million surplus the city had just six months ago.
Several advocates and residents at Thursday’s meeting complained about a lack of transparency and responsiveness to public demands in the city’s use of pandemic aid. And several meeting attendees complained that despite assurances that they would have a seat at the table, the Cantrell administration has spent almost all of the excess funds before they had a chance.
Those complaints began long before Thursday’s council meeting.
When the federal money began flowing two years ago, the city used hard-to-track accounting to route about half of its COVID dollars to departments for the 2021 and 2022 budget years — expecting drastic cuts in revenues and increases in expenditures because of the pandemic. But due to drastic underspending, the Cantrell administration built up a massive general fund balance.
Since the money began to accumulate, the Cantrell administration has asked for patience and assured the public that at some point, there would be an open process to determine where all the money went. But advocates say that hasn’t happened yet. And in the meantime, the Cantrell administration has now allocated almost the entire windfall of pandemic relief cash.
“We’re tired of being told to wait for a transparent process when the administration keeps taking more and more money out of these funds,” Maxwell Ciardullo, policy director at the Louisiana Fair Housing Action Center, said. “By the time we get a transparent process, there won’t be any more money to discuss. The piecemeal approach is undemocratic and unfair.”
Earlier this week, good-government watchdog group the Bureau of Government Research sent a letter to the council raising concerns that Thursday’s allocations were being done “without adequate public information, planning and accountability.” The group had previously published a report harshly criticizing the city’s accountability for spending the funds.
Residents also complained on Thursday that even now that the money is allocated, it’s still hard to figure out how it’s being used. Frequent council meeting attendee Michael Burnside noted that in Thursday’s ordinances, the $1.5 million allocated to police animal facilities is referenced in a council ordinance as a transfer of funds from the City Council to the Chief Administrative Office.
“For someone who likes to keep track of how much money is spent on the police, it’s somewhat difficult if the police K9 and mounted units aren’t funded through the police department, but rather included in the CAO’s office,” Burnside said.
He pointed out that another $5 million intended for homeless reduction programming is simply marked as a transfer to the Mayor’s Office.
“The word ‘homeless’ isn’t in there,” Burnside said. “It’s hard enough to keep track of stuff as it is … and this sheet of paper does not make things easier.”
‘I’m confused why everyone else has to wait’
Residents and advocates have made similar complaints for nearly two years over how the city is using the $388 million it received through the federal American Rescue Plan Act. When ARPA was first approved in March 2021, the Cantrell administration said it would use the bulk of the money to maintain the city’s normal budget and make up for the loss of revenue and lagging economy that accompanied the pandemic.
But that didn’t happen. By the end of 2022, almost none of the money had been spent, largely due to the city’s staffing shortages and other failures to spend money that they planned to use. To make things more confusing, most of the federal dollars were folded into the city’s general fund surplus over the last two years, making it increasingly difficult to know how the remaining money is being used.
The result is that the city was sitting on a big pile of unexpected cash. According to estimates from the Cantrell administration this week, the city’s surplus topped $400 million by the end of 2022.
When the magnitude of the surplus became clear, advocates, politicians and residents all lined up to get their priorities funded. Good government groups urged the government to set up a public process to weigh all those varying priorities and a transparent public accounting of how the money was used.
But advocates say that never happened. Community groups — including some that asked the city use more than $100 million into affordable housing and tens of millions into transit, youth programs and food banks — said they’ve been told repeatedly that they have to wait for their priorities to be funded, even while the Cantrell administration continues to allocate the funds over time.
“I think this is part of a pattern of the administration making piece-meal requests to drain the ARPA and fund balance funds and avoid a full and transparent process where all ideas get a fair hearing together,” Ciardullo said.
Ciardullo said that when he and other advocates approached the council in 2022 to try and get their priorities funded through the surplus, they were told they would have to wait until after the council finished its normal 2023 budgeting process. The council and Cantrell administration had publicly stated that they wouldn’t allocate any of the ARPA funds until early 2023.
But on Dec. 1, in an unexpected move, the council added a series of last minute amendments to the 2023 budget that allocated $262 million in surplus money to fund a wide variety of Cantrell priorities, including a multi-million recruitment and retention package for the NOPD.
“The council and the mayor together appropriated two-thirds of what was left in a last minute amendment with little notice,” Ciardullo said. “After that we were told not to worry because there was still $70 million in ARPA left and over $100 million in fund balance and to just wait, there would be a process to allocate this and our voices would be heard.”
But the council appropriated the last of the ARPA dollars on Thursday. That, along with Thursday’s fund balance appropriations, means the city has much less to spend on those priorities.
The administration told Ciardullo and other advocates that they would have to wait until the city had finalized its 2022 audit before the city would know for sure what is left available to spend from the fund balance, which will likely be in July.
But earlier this week, Chief Administrative Office Gilbert Montaño estimated that there would likely be only $26 million to $46 million available to spend from the fund balance after Thursday’s allocations.
Ciardullo questioned why the groups’ priorities had to wait for the audit, but the administration’s could be allocated this week.
“The CAO has stated that nothing should be moved from the fund balance until after the audit, because as you said here, there’s no way to know exactly how much is in it,” Ciardullo said at a Tuesday council meeting. “So I’m confused why everyone else has to wait but in the meantime, the CAO can pull $70 million out of this pot and dramatically reduce what’s available.”
Councilman JP Morrell was the only councilman present on Thursday who didn’t vote yes on all the allocations. He abstained from a vote to allocate $70 million to vehicles, maintenance and other smaller department priorities. And he voted against the ordinance to create and put money in the new affordable housing fund.
He said he wasn’t against the housing fund, but that with the uncertainty of the fund balance, he wasn’t sure whether there would be enough money left to fund everything the coalition of housing advocates was asking for.
“If you look at what the asks are from those advocacy groups in terms of housing and the like, it is certainly much larger than $26 to $46 million,” Morrell said on Tuesday.
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