New Orleans’ $160 million budget deficit is forcing city leaders to make difficult financial choices, and now some councilmembers say the state needs to be part of the solution.
During Monday’s budget hearings, every department was asked to present how it would operate under a 30 percent reduction, a planning exercise designed to show how deep potential cuts could go. Officials clarified that those reductions are not final and will depend on the final 2026 budget adopted later this year.
The Office of Economic Development’s presentation highlighted the city’s challenge. Its proposed 2026 budget totals about $24 million, a sharp increase from just under one million this year. Director Jeffrey Schwartz told councilmembers that the larger number doesn’t represent new spending. Instead, it reflects one-time project funds that were delayed in 2025 and pushed into next year’s budget.
Those funds are tied to major redevelopment projects across New Orleans, including the former Charity Hospital, the Municipal Auditorium, the Six Flags site in New Orleans East, Armstrong Park, and the Naval Support Activity redevelopment along the Industrial Canal. Schwartz said even as his office faces potential pay cuts for unclassified staff, the department remains focused on keeping these projects alive through partnerships and federal grants.
He told the council the goal is to continue advancing neighborhood-based economic development, small-business support, and workforce programs, even if new initiatives have to wait. The department’s priorities include workforce partnerships with GNO Inc. and the Port of New Orleans, entrepreneurship initiatives like a food-business incubator, and grants to help small businesses install solar and battery-backup systems to stay open during outages.
Councilmembers also used the hearing to raise larger questions about how the state contributes to the city’s economy. Councilmember Eugene Green said Baton Rouge needs to play a bigger role in helping New Orleans manage its financial crisis.
Green noted that the state owns some of the city’s most valuable assets, the Convention Center, City Park, and land along the Industrial Canal, yet leaves the city to maintain infrastructure and provide services that keep those areas functioning.
“Convention Center, all of the land along the Industrial Waterway, City Park, major areas in the city, and there are regulations on the state level that limit sometimes what we can do as a city,” Green said. “I’m not saying that’s all bad, but it emphasizes the need for greater partnership supporting us financially and maybe adjusting certain regulations or laws so they can be more specific to New Orleans’ needs.”
Green said he hopes the incoming Moreno administration will push the legislature next year to provide both financial support and flexibility to address local needs.
Councilmember Oliver Thomas echoed that call, reminding colleagues that decades ago, the city gave up one percent of its local sales-tax revenue known as the “lost penny” to the state, a decision he says still costs New Orleans millions of dollars each year.
As those discussions continue, the city is also preparing to ask the State Bond Commission for a $125 million loan to cover employee pay and outstanding contracts heading into next year.
If approved, the loan will have to be paid back, meaning it would only serve as a temporary fix rather than a long-term solution to the city’s financial problems.
Councilmembers say that’s exactly why the state needs to be at the table. They argue that New Orleans generates much of Louisiana’s tourism and economic activity, but the revenue that flows to the state rarely finds its way back to city services.
Budget hearings will continue this week as councilmembers review departmental spending and weigh which programs and projects could face reductions before the final 2026 budget is approved later this year.
READ MORE:City departments warn budget cuts could stall redevelopment as leaders push state to help
