New Orleans Mayor LaToya Cantrell released a draft budget for 2021 on Monday featuring deep, across the board cuts as the city faces a drastically reduced budget due to the coronavirus pandemic. The cuts for 2021 are far deeper than what the city has had to shave off this year in response to the virus, indicating that many of the impacts of the city governments’ fiscal crisis are still ahead of us.
The total proposed budget for 2021 is $1.13 billion, representing a cut of only $16 million from what the city budgeted for 2020. However, the city’s general fund — locally generated taxes and fees that account for the largest part of the personnel and operating dollars for most departments — is facing cuts of $92 million from this year’s adopted budget (or nearly $50 million from the revised coronavirus projection). Cantrell’s budget also anticipates cutting budgeted personnel by 297, from 4,972 “full-time equivalent” positions to 4,675 positions.
Some departments and agencies fared better than others. On the lower end, the New Orleans Police Department is facing a 8.2 percent budget cut. The Fire Department is facing a 10.2 percent cut.
Other departments, like the City Planning Commission, are seeing their budgets slashed by more than 40 percent. But while the cuts vary, they are being applied to almost every single department and agency.
As the city’s Chief Administrative Officer, Gilbert Montaño, presented the budget to the City Council, he warned that it was subject to change due to a number of unknown factors, including the upcoming presidential election and the future progression of the coronavirus.
“This is still an unpredictable year,” he said. “We’ve done our best to assume and forecast to the best of our ability using every advanced analytics we know. However, it can go right or left at any time and we’re going to have to be ready to adjust accordingly. So what we’re presenting today is today, but it may change tomorrow.”
The budget reductions include an extension of the partial furloughs that Cantrell instituted earlier this month, she told the council on Monday. Nearly every city employee is currently losing one work day every two weeks through the end of the year as a cost saving measure. But Cantrell said on Monday that she will be asking the Civil Service Commission to continue those furloughs through 2021 except for employees that make less than $30,000 a year. She noted that the furloughs were intended to avoid layoffs and that there was still hope that those employees could be retroactively reimbursed, however.
“We’re facing budget shortfalls of over $100 million, but we’re gonna get through it,” Cantrell told the City Council on Monday. “In developing this budget, difficult decisions just had to be made.”
As Cantrell was presenting the budget to the City Council, she also mentioned that the city would likely not be moving onto phase 3.3 of the city’s economic reopening plan in time for Halloween as was originally planned. The city is currently in phase 3.2.
“We will probably push back the 3.3 start until after this weekend,” Cantrell said, noting that the delay wasn’t confirmed yet.
The budget proposal that Cantrell presented to the council on Monday includes much less information than city budget proposals in years past. While it includes broad operating and personnel budgets for each department and agency, it doesn’t break down the operating budgets for their specific use within those departments. And while the proposal breaks down personnel costs for specific uses, it only includes the total number of employees, not the cost of employing them.
That means it can be tough to see how money is being dedicated, and it can leave the public completely in the dark about some programs. As an example, the Orleans Public Defenders office appropriation — which appears in older budgets as a yearly grant from the city’s so-called Department of Miscellaneous — is nowhere to be found in the proposed 2021 budget.
The 2020 proposed budget had three times as many pages as what was presented on Monday. The title of the document — 2021 Proposed Annual Operating Budget in Brief — suggests that a more detailed, less brief budget proposal is on its way. In the past, the city has presented a budget briefing document as well as a full proposed budget. But that’s not the case this year, according to Montaño.
“This is the final proposed document,” he said. “We used a different system, Questica, to try and move us to more of an online perspective. Instead of printing all these 500 page papers, we’re only going to do that once with the final document.”
Also unaddressed in the “brief” is $200 million in intergovernmental revenues, a $100 million increase from the same category this year. The document slots that money to be used for “debt service,” but it doesn’t appear to be related to the retirement of city bonds or other debt.
In an interview, Montaño couldn’t immediately explain what those numbers represented. He said he would follow up with The Lens with a written explanation, but did not send one at the time of publication.
The next step is for the City Council to hold budget hearings with each individual department or agency, make any changes they see fit and then approve a final budget by Dec. 1.
‘We got about a quarter of what the federal government designed for us to have’
While missing some specifics, the proposed budget still gives a clear image of the city’s dire financial position. Next year, the city is facing a steep drop in general fund revenues from $680 million in 2020 to $634 million in 2021. The decline is even steeper when compared to how much the city had expected to bring in this year — $722 million.
The steep drop from 2020 to 2021 is due to a loss in one-time revenues. Recurring revenues, such as property and sales tax collections, are actually estimated to increase by roughly $8 million from 2020 to 2021 (although that still leaves the city with $54 million less in recurring revenues than it had in 2019).
But while the city is expecting an increase in recurring funds from 2020 to 2021, it’s expecting overall general fund revenue to fall by $47 million from current projections (or $92 million below the pre-pandemic 2020 budget adopted last year). That drop is due to two large, unexpected revenue injections the city got in 2020, one from a legal judgement against Harrah’s Casino and another from the federal Coronavirus Aid, Relief, and Economic Security Act.
The Cantrell administration has repeatedly and loudly complained that the State of Louisiana didn’t give New Orleans enough CARES Act dollars. The state received a total of $1.8 billion in relief funds from the Act. Initially, Governor John Bel Edwards planned to use $800 million of that for relief for municipal governments.
But a bill pushed by Republicans in the legislature, and signed by Edwards, ended up diverting hundreds of millions of dollars of that money to a program that gives grants to some small businesses in the state. The result was that municipalities were trying to get a piece of a much smaller pie.
“We submitted well over $200 million of qualified expenditures, and we received just under $60 million,” Montaño said. “We got about a quarter of what the federal government designed for us to have.”
Montaño said that the city is expecting another $10 to $15 million in CARES Act money from the state at most, but that wasn’t factored into the budget.