City of New Orleans Budget Procedures

Each year the City adopts two types of budgets, the Operating Budget and the Capital Budget. Each budget has a revenue and expenditure component that is adopted separately. The Capital Budget must be adopted by November 1, and the Operating Budget by December 1.

• The CAO, as budget officer, is responsible for preparing the proposed budgets for the Mayor.

• The Mayor separately presents the Executive Capital Budget and the Executive Operating Budget to the Council with a budget message. The City Charter requires a balanced annual operating budget.

• The City Council holds public hearings on the budgets.

• As stated in the City Charter, the Council may increase, decrease or delete any item in the budget proposed by the Mayor. The Council may add new items of appropriations or subdivide items of appropriation with a 2/3 vote. (All appropriations for personal services must be in lump sum amounts and not by specific positions or rates of pay.)

• After the Council passes the operating and capital budgets as ordinances, they are sent back to the Mayor for approval.

• The budgets become a law when signed by the Mayor or after ten days.

The City’s finances are overseen by the Chief Administrative Officer and the Director of Finance. After the operating budget is adopted by the City Council, the Chief Administrative Officer provides a schedule for the timing of expenditures within each department. The City uses a three item "cost object" classification to control operating budget expenditures: personal services, other operating expenses, and debt service. Expenditures are organized into one of these three categories for reporting purposes. The City Charter prohibits the Department of Finance from approving expenditures in the operating budget unless the full amount of revenues has been appropriated by the Council to fund the expenditure.

Adjustments are made from time to time to prevent deficits occurring in certain expenditure accounts and to recognize differences in anticipated revenues. The Charter provides that the Mayor shall direct appropriate revisions in allotments to keep expenditures within the revenues received or anticipated. Changes in the budget can occur at two different levels.

1. The amount of money allocated to a department can be changed at the cost object level (personal services and other operating services) by a City Council amendment. This means the Council has the authority to increase or decrease the amount of money allocated to a department’s personal services, operating services, or debt service. Amendments have primarily affected appropriations for grants, which are adjusted as grant awards are confirmed.
   
2. The Mayor/CAO may make changes within a department's cost object, as long as the net change does not affect a department’s appropriation for that cost object. (For example, the Mayor may make appropriation changes to items within the personal services classification of the Police Department.)

An annual independent audit (due by June 30^th) must be performed in accordance with the City Charter and the Single Audit Act of 1984 and U.S. Office Management and Budget Circular A-128, "Audits of State and Local Governments."

Sources:
Home Rule Charter of the City of New Orleans, as amended through January 1, 1996
City of New Orleans Comprehensive Annual Financial Report, for the year ended December 1, 1999

Last Revised by BGR August 2000