New Orleans Mayor LaToya Cantrell presented her proposed 2024 city budget to the City Council on Wednesday (Oct. 25).
The $1.57 billion budget is a $100 million increase from this year’s budget. Cantrell says this budget is focused on rebuilding the city after the effects of the COVID-19 pandemic, continuing the city’s fight against blight and bolstering the dwindled city employee workforce.
“We are a city and we are a people that always emerge, demonstrating resilience,” Cantrell said on Wednesday.
The city remains fiscally healthy following the COVID-19 pandemic, Cantrell noted, which did not result in the steep revenue drops or increased spending that local officials had originally anticipated. Still, some of the Cantrell administration’s biggest stated priorities — such as addressing the city’s affordable housing crisis, fixing crumbling infrastructure and replenishing the depleted ranks of city departments — remain a work in progress.
The proposed budget once again includes raises for city employees, whose ranks have diminished over the past several years.
The proposal also includes a major boost to the city’s emergency fund, now at $36 million, to $131 million. Many departments would be slated to see modest budget increases, in many cases as a result of the raises. The city’s largest and most expensive agency, the New Orleans Police Department, is slated to receive about $20 million less than 2023. However, that will not result from cuts to departmental operations. It is rather because the city pushed through a large, federally funded recruitment package in the 2023 budget.
The City Council is scheduled to hold departmental budget hearings for two weeks, beginning Tuesday, Oct. 31, to vet the proposal and consider changes. Under city law, the council must pass a budget by Dec. 1.
In an interview this week, Councilmember Joe Giarrusso, who chairs the budget committee, said he plans to use the upcoming budget sessions not only to discuss the upcoming budget but how past budgets have been utilized. Over 2021 and 2022, the city received nearly $400 million in federal pandemic aid as part of the American Rescue Plan Act, much of which has been allocated but remains unspent.
“One of the first orders of businesses is trying to figure out for those departments that have the federal or the leftover city bonds, where everything stands,” Giarrusso said.
The breakdown
The budget includes about $776 million from the city’s general fund, which is made up of locally generated money over which the city has direct control. That’s technically a decrease of more than $100 million from 2023. However, the 2023 budget included large allocations of one-time funds from the city’s reserve fund and federal pandemic recovery money, much of which will actually be spent next year.
Nearly every category of so-called “recurring revenue” — taxes, fines and fees — is projected to increase in 2024.
The one major exception is sales tax collections, which have been below projections in the second half of this year. Cantrell’s budget anticipates a slight decrease in sales tax collections, about $3 million, next year from what was budgeted this year. During her speech, Cantrell appeared to blame the shortfall, in part, on the council’s attempts to rein in short-term rentals, on which the city collects taxes. Cantrell has repeatedly expressed frustration with recent council-backed restrictions on the industry, saying in September that she felt the city’s original short-term rental law — passed in 2016 and criticized as being too lax — “got it right.”
Property tax revenues are expected to increase as well, by about $25 million. That is despite plans from the council to lower, or “roll back,” property tax rates to avoid hitting residents — already facing skyrocketing insurance and utility costs — with higher tax bills.
Most of that anticipated property tax revenue increase comes from new construction, Cantrell’s Chief Administrative Officer Gilbert Montaño told the council in remarks following Cantrell’s speech. Had the city chosen to keep tax rates at their current levels, collections would have increased by an additional $35 million or more, he added.
“We have foregone for the sake of our residents being able to manage their budgets, as we know that there are significant costs from everything from home insurance to the grocery store,” Montaño said.
Giarrusso noted that the roll back will save New Orleans residents $140 million over the next four years.
Staffing woes
Attention regarding the shortages in city employees has focused primarily on the New Orleans Police Department, where ranks are at historic lows. But the problem has affected city departments across the board.
“Our most precious resource are the city employees, the people who we can depend on every day to deliver on our behalf and to deliver for the residents and visitors of this city.” Cantrell said, calling the raises a “big win.”
The Cantrell administration and the council accounted for the employee shortfall in 2023 by passing a budget designed to be adjusted periodically. Rather than allocating personnel budgets to reflect departmental needs, and leaving budgeted positions unfilled, the 2023 budget reflected the number of people they actually had going into the year.
But Montaño nevertheless encouraged department heads to hire, meeting with the council on a quarterly basis to determine whether personnel budgets would need to be amended to reflect new hiring.
The council last year passed a $32.5 million package to boost retention and recruitment in the NOPD, including millions in raises and retention bonuses. But the department has yet to see a major boost in recruitment. It now has fewer than 900 commissioned officers, compared to about 1,100 at the beginning of Cantrell’s first term. Emergency response times have increased as a result to about 38 minutes, up from 18 minutes in 2018.
2024’s proposed budget includes a 2.5% raise for all city employees. In an effort to retain more NOPD officers, the mayor wants commissioned officers to receive a 5% raise.
The dilapidated force, which is the smallest the city has seen since World War II, has forced the city to pay large fines to the state police pension fund — fines that could increase to more than $160,000 per month next year — a situation that Giarrusso said the council was not briefed on until well after the administration was first made aware of it.
It was not immediately clear how those additional payments are accounted for in the proposed 2024 budget.
“That’s been a sore spot between the administration and the council because I think we felt flat-footed and not understanding what was happening,” Giarrusso said. “I’ll be the first to concede, if we owe them money, we have to pay it. But we also have to have a conversation about how we got here. And, more importantly, how we prevent it from continuing to happen.”
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