Mayor LaToya Cantrell’s administration, City Council lack sound fiscal policies, report says

By Ben Myers

Source: The Times-Picayune | Nola.com

April 7, 2025

New Orleans officials don’t have a long-term plan for the city’s finances or safeguards for the city’s reserves, leaving municipal budgets vulnerable at an “inflection point” in the city’s history, according to a new report from the Bureau of Governmental Research.

The nonpartisan public policy group also said city officials do little to tell the public about how they will spend reserve funding. The report also questions spending forecasts that failed to identify a $42 million deficit in the New Orleans Police Department’s personnel budget, a gap that BGR said appears likely to persist this year, although Mayor LaToya Cantrell’s administration said that won’t be clear until the end of June.

A windfall of federal pandemic aid totaling nearly $400 million is nearly spent, leaving precious little for the city’s rainy-day fund, BGR said. The report projected reserves could dip to $117 million this year, about a third of what they were after federal pandemic aid poured in and not enough to cover two months of expenses, as recommended by municipal finance experts.

“The city can choose to let this downward trend continue and revert to the tenuous position of having little or no financial cushion,” the report stated. “Or the City administration and City Council can seize this opportunity to improve the City’s long-term financial health.”

The report finds fault with Cantrell’s administration and the City Council, which work together to decide how the city will spend its budget — topping $1.8 billion this year — after a series of public hearings each fall. Later budget amendments are often voted on at public meetings.

Administration officials told BGR that a reserve spending policy is being developed, and said Monday that the city could stand to increase its financial reserves.

But “the reality is that fund balance policy and multi-year financial planning must be balanced with the real necessity of meeting the needs of the community without overburdening taxpayers,” the Cantrell administration said in a statement.

District A Councilmember Joe Giarrusso, who chairs the budget committee, disputed some of the report’s conclusions. Officials have publicly discussed how to spend pandemic cash, and audits of city spending — filled with detail about spending decisions — are public records, he said.

“I take issue with the idea that this is so hard to see and nobody knew about it because it’s been discussed publicly numerous times,” Giarrusso said.

Budget problems
In the 30-page report, BGR highlighted various concerns over the city’s fiscal long-term management.

Although the Cantrell administration created a new emergency fund with $100 million from the federal pandemic windfall, there are no formal policies for spending or replenishing those funds, the nonprofit said. As the city has spent down reserves over the last three years, it has begun using some of that money for costs that occur every year, creating what BGR said is a structurally imbalanced budget. The administration should develop five-year spending plans that can be reviewed and adjusted with City Council input, the report said.

The nonprofit also said that City Hall’s policy of restricting 5% of its general fund revenue for emergencies — a threshold that can be exceeded only by a two-thirds vote of the council — is far below the minimum 17%, or two months of expenses, that is recommended by the Government Finance Officers Association. And that 17% threshold should probably be higher for a disaster-prone city like New Orleans that relies heavily on volatile tourism revenue, the report said.

The Cantrell administration noted a range of priorities it has dedicated pandemic aid toward, including employee raises, modernized technology for criminal justice agencies and infrastructure upgrades ahead of this year’s Super Bowl.

“These investments bring real and essential benefits to New Orleans by reducing crime, creating economic opportunity and enhancing quality of life,” the administration said.

Giarrusso also said the council, the administration and community advocates have had healthy debates about how much of the pandemic windfall should be spent and how much should be kept in reserve. He also said the city should keep enough cash on hand to maintain strong credit ratings.

“There’s balance between making sure the city is in a healthy financial place while at the same time not hoarding cash unnecessarily,” he said.

Giarrusso said the lack of set-in-stone policies for the rainy day fund affords officials needed flexibility to act fast in case of a sudden disaster, such as a hurricane.

Conflicting information
The report also said that the council in recent years has amended budget proposals to add reserve spending with little notice, and the administration’s budget document has excluded clear information about the availability of reserve funds.

BGR also knocked the Cantrell administration for making contradictory recent statements about the state of the city’s finances after Cantrell abandoned a now-dead $90 million settlement payout to the Orleans Parish School Board.

Earlier this year, Cantrell’s Chief Financial Officer Romy Samuel said Cantrell could not honor the deal because “financial instability is imminent” at City Hall, citing Trump administration budget cuts and a host of other factors. But in March, Chief Administrative Officer Gilbert Montaño said Samuel’s statements were regrettable and misleading.

“Having these conflicting internal assessments of whether the City has a major financial problem is itself a major problem,” BGR CEO Rebecca Mowbray said in a statement. “How can the City make effective budget decisions if policymakers cannot agree on what the underlying data are telling them?”

In its statement, that administration said it “would like to assure the public that the City is on a solid financial footing.”

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