In The News › New Orleans Mayoral Victor to Face Budget Gap Amid Rebuilding

Feb 5, 2010

Source: Business Week

Filed under: Government Finance, Orleans Parish

New Orleans Mayoral Victor to Face Budget Gap Amid Rebuilding

Friday, February 05, 2010
By Darrell Preston
Business Week

Feb. 5 (Bloomberg) — Voters in New Orleans, which lost more than half its population after Hurricane Katrina in 2005, will choose a new mayor tomorrow as budget deficits crimp the city’s ability to offer services and lure back residents.

The election comes amid Mardi Gras parades and preparations for the first Super Bowl appearance by the city’s professional football team, the New Orleans Saints. Rebuilding from Katrina, the worst natural disaster in U.S. history, has stalled as the severest recession since World War II drove up unemployment the most since the storm.

“One of the first things the new mayor is going to have to do is figure out how to attract new jobs,” said Peter Burns, who teaches politics at Loyola University New Orleans and studies the city’s government. “The city hasn’t had any leadership. We haven’t had a clear agenda.”

Nine candidates are vying to succeed Mayor Ray Nagin. Leading in the polls is Mitch Landrieu, 49, the state’s Democratic lieutenant governor, who is the son of former Mayor Moon Landrieu and the brother of U.S. Senator Mary Landrieu of Louisiana.

The winner will be challenged by the need to boost tax revenue after the city’s emergency reserves fell to $5 million, or 1 percent of annual spending, Fitch Ratings analyst Steve Murray said in an interview. The city’s target for such reserves is 8 percent, said Murray, who’s based in Austin, Texas.

“They’ve used a lot of their reserves,” Murray said. “They’re under a lot of pressure.”

‘Relatively Weak’

New Orleans, with about $500 million in general obligation debt, has a “relatively weak financial profile,” Fitch said in a Dec. 8 report that affirmed the city’s BBB rating, the second- lowest of 10 investment grades. A slowdown in the city’s economic recovery has led to “larger than expected” budget deficits, Fitch said. Sales tax revenue fell 2.5 percent in 2009.

James Ross, a spokesman for the mayor, didn’t respond to a request for comment.

The fiscal year that began Jan. 1 is the first since Katrina when the city hasn’t had state and federal money for rebuilding to help balance its budget, said Sarah Smaardyk, a Dallas-based analyst for Standard & Poor’s. The city had to cut employee health care and other costs to close a $68 million deficit in its fiscal 2010 budget.

The new mayor will need to bring residents back, lower crime and improve public education, said Janet Howard, chief executive officer of the Bureau of Governmental Research, a non- partisan public policy research group in New Orleans.

Fastest Growing

New Orleans’ pre-storm population was estimated at 455,000, according to S&P. After Katrina, it fell to 210,768, according to U.S. Census data. New Orleans was the fastest-growing U.S. city in 2008 as its population swelled to 336,644. Growth slowed last year as unemployment rose to 7.7 percent on the national economic decline and lower post-hurricane federal aid.

“It’s a question of getting businesses to want to be here by finding the resources to address our huge backlog of infrastructure needs,” Howard said.

Landrieu, who has run twice for the city’s top job, was leading with support of 45 percent of New Orleans voters in a telephone poll of 500 voters conducted by Clarus Research Group for New Orleans television station WWL Jan. 13-17.

“He’s running against people who don’t have a lot of experience in public office,” said Loyola’s Burns. “He’s been the front runner since the day he entered.”

Other Candidates

Landrieu’s opponents include Troy Henry, a business owner endorsed by the Orleans Parish Democratic Executive Committee, with 14 percent in the WWL poll. John Georges, a businessman and former member of the state’s Board of Regents, and Rob Couhig, a lawyer, each had 8 percent. Others got 3 percent or less.

Landrieu said he’d work to get more capital and start-up investors for small businesses, offer tax credits and incentives to draw digital media firms and encourage biotechnology and health care growth, according to his campaign Web site.

Henry’s Web site said he wants to bring as many as 50,000 jobs to New Orleans by inviting large public companies and federal government units to relocate. Monica Pierre, a spokeswoman for Landrieu, didn’t respond to a request for comment and an e-mail to an address on Henry’s Web site wasn’t answered.

To win the election outright and avoid a runoff, a candidate must get more than 50 percent of the votes. With 19 percent of voters undecided in the WWL poll, “it’s not a given that Landrieu will win,” said Burns. While Landrieu led Nagin in some polls four years ago, Nagin won re-election anyway, he said.

The timing of the election may also have an effect, coming in the first week of Mardi Gras festivities and the day before the Saints make their first Super Bowl appearance in the team’s 43-year history, Burns said.

“With all the parties for the Saints, the question is whether people will get out to vote,” Burns said. “People are more interested in the Saints than the election. Saints fever is very strong down here.”

Feb 5, 2010

Source: Business Week

Filed under: Government Finance, Orleans Parish

Fair Use Notice

This site occasionally reprints copyrighted material, the use of which has not always been specifically authorized by the copyright owner. We make such material available in our efforts to advance understanding of issues and to highlight the accomplishments of our affiliates. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is available without profit. For more information go to: US CODE: Title 17,107. Limitations on exclusive rights: Fair use. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.