The City of New Orleans has described its financial crisis as “dire” amid its ongoing work to create revenue and cut costs.
The city of New Orleans has a more than $200 million budget deficit.
New Orleans Mayor Helena Moreno has tasked her administration to cut costs, and has increased focus on generating revenue through parking tickets, selling city-owned vehicles, and collecting property taxes.
Louisiana State Treasurer John Fleming said that, despite the bleak outcome, the state is doing everything it can to help make sure New Orleans doesn’t go insolvent.
Fleming said he serves on the Administrative Review Committee when Mayor Moreno reported that the city didn’t have enough money to meet payroll last year.
Fleming said he and the board reviewed the request for a loan and approved it. However, safeguards were put in place to make sure the money was used for what it was intended.
“We embedded the legislative auditor into the administration so that money does not go anywhere except where it’s supposed to go, and it must have his approval. That got us through the first crisis,” said Fleming.
The city is now paying off that loan, and is in need of another after Chief Administrative Officer Joe Giarrusso reported Wednesday that the city has less than a month’s expenses in cash on hand, which is roughly $27 million.
Fleming said the city has tough decisions to make, and there are things in the budget New Orleans simply can’t afford.
“Now we have tremendous bills coming in. If we don’t manage this properly, the city could become insolvent and be turned over to the state, meaning state taxpayers would have to bail it out,” said Fleming. “We’re doing everything we can to prevent that. Let me be clear: we have not done any bailouts. The money borrowed so far was only for payroll. It came from a bank and was secured by future tax revenue. So we’re fine there.”
Fleming supports Moreno’s choice in keeping the legislative auditor involved with the city’s finances for as long as necessary until the financial crisis is resolved.
“I stand by, as do the legislative auditor and the attorney general, to help wherever we can. We need this city to be fully solvent. We need it to be fully safe,” said Fleming. “We want this to be cooperative. It’s not confrontational. We just want to be there to help.”
Despite that promise for cooperation, Fleming said if the state has to step in, it will.
“If they can’t get it together and we have to step in, we would have to take back some power and control,” said Fleming. “We already have two cities under fiscal administration, Homer and Bogalusa, where we appoint someone to administer in place of the mayor and council, using state taxpayer money,” said Fleming.
Fleming stressed that fiscal administrators are temporary and only in place until those areas can get back on their feet.
“We don’t want to do that with New Orleans. Trust me, I do not want to run New Orleans. I want the mayor and the city council to run New Orleans,” said Fleming.
READ MORE:Louisiana State Treasurer says New Orleans has ‘tough decisions’ to make regarding financial crisis
