New Orleans voters approve ‘rainy day’ emergency fund
By Greg LaRose
Source: NOLA.com | The Times-Picayune
November 18, 2017
New Orleans voters have agreed to create a safety net for the city’s finances, establishing a “rainy day” fund with a charter change that gained citywide approval Saturday (Nov. 18).
The city will be required to set aside for emergencies an amount equal to at least 5 percent of its average general fund spending going back five years. A two-thirds vote of the City Council will be required to tap the emergency fund, which it could do so in response to a natural disaster, a slumping economy or a federal mandate.
Any excess money from prior city budgets currently sits in what’s called the fund balance, and the mayor and council have broad authority over how that money can be used. The fund balance typically equals about 10 percent of the general fund.
The charter amendment approved Saturday effectively drains off about half that pool and limits what the mayor or council can use as one-time revenue to fill a budget gap. If the emergency fund is used, the mayor and council would have to ensure the fund is returned to the 5 percent minimum the following year.
The charter change received the approval of the Bureau of Government Research, although the watchdog group did list some concerns with the proposal. Specifically, it said the provision involving a federal mandate is overly broad, and the possibility of abuse exists because there are no specifics on the duration of disaster declarations or economic downturns.
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