Chief Administrative Officer for the City of New Orleans, Gilbert Montaño, gives an update on the financial ramifications of the coronavirus crisis. (Michael Isaac Stein/The Lens)

The New Orleans City Council’s two-day, mid-year city budget hearings got off to a rocky start on Monday when Councilman Jared Brossett accused Mayor LaToya Cantrell’s administration of refusing to participate.

“Although they were given adequate notice, the administration has continued to refuse to participate in these hearings in good faith,” Brossett said. “This is not acceptable.”

The agenda for Monday’s meeting originally included 13 departmental presentations and was scheduled to last nine hours. Instead, the council heard just two presentations in under two hours — one relatively lengthy one from Chief Administrative Officer Gilbert Montaño and a brief one from the Civil Service Department. 

Councilman Brossett had requested that each city department and agency present a “comprehensive update of their 2021 budget,” as well as their planned expenditures using federal funding from the American Rescue Plan Act and a list of coronavirus-related expenses incurred so far this year.  

Montaño admitted that he didn’t have all that information ready on Monday, but said that his presentation was an attempt to fill the council in on the most important questions surrounding  the city’s budget.

“The administration’s presentation will not provide what you or your team has requested at this time,” he said. “The administration certainly does not agree with your characterization or sentiment. In fact we think that participating in good faith is ultimately what we’re doing.”

Although he didn’t bring all the information Brossett asked for, Montaño did outline key information related to a central request from Brossett — an explanation of how the city plans to use $388 million in federal aid provided through the federal American Rescue Plan Act, the $1.9 trillion COVID-19 stimulus package passed in March.

Montaño laid out the administration’s plans to use those funds to boost this year’s budget by $70 million — the first allocation of the federal dollars. The money would go to fill gaps in the 2021 budget, which was about $100 million lower than what the city had expected prior to pandemic-related revenue shortfalls. 

According to Montaño’s presentation, the $70 million would be used on a number of initiatives, including increased overtime pay for public safety agencies, license plate readers, restorative justice programs, early childhood education, short-term rental enforcement, illegal dumping alleviation and to “rebuild” the City Planning Commission staff.

The allocation would need City Council approval and Montaño said he expects to bring the issue back to the council with more comprehensive information in September. 

The kind of comprehensive mid-year budget hearings Brossett requested are not typical. The City Council often receives mid-year budget updates on certain public safety agencies. But the kind of citywide, department-by-department presentations Brossett was seeking usually occur in the fall as the city sets its annual budget for the upcoming year. 

But this is not a typical year, Brossett argued, and it calls for increased scrutiny as the city deals with deep financial losses on the one hand, and hundreds of millions in federal aid on the other. 

“We will all have to make difficult decisions both now and in the future based on the fiscal realities of the city,” Brossett said.

Montaño’s resistance to the mid-year budget presentations wasn’t a surprise. He told Brossett as much in a July 19 letter that was previously reported by The Times-Picayune/New Orleans Advocate

On Monday, Montaño repeated his objections to the hearings, including that fulfilling Brossett’s entire request would get in the way of the administration’s preparations for passing the 2022 budget. 

“The 2022 budget will be one of the most consequential budgets for the future of New Orleans,” he said. “Unfortunately the timing of the request for these hearings could jeopardize the natural budget cycle designed to accommodate this process. That is not something we’re willing to risk based on an artificial timeline created.”

American Rescue Plan spending

One of the points of contention between Brossett and the Cantrell administration is over a lack of a clear plan for how the city will spend the funds from the American Rescue Plan. The city has actually received $194 million so far, of the $388 million total it expects.

“The CAO and [chief financial officer] have provided little to no information regarding their proposed plans for American Rescue Plan funds,” Brossett said on Monday “We find this problematic.”

Brossett told Montaño he wanted to see a list of exactly how the money would be spent. But Montaño said that likely wouldn’t happen.

“There will never be a list that matches $194 million with $194 million of expenditures,” Montaño said. 

As he’s explained in the past, the city’s approach is to spread the Rescue Plan funds through 2025 to account for sustained, lingering financial impacts from the pandemic. The city has estimated that recurring revenue will only get back to pre-pandemic levels in 2025. 

The Cantrell administration measures the city’s fiscal health in terms of recurring revenue — revenue sources like property taxes that the city can rely on to come in every year, as opposed to one-time funds like federal stimulus money that likely won’t be available in future years. 

Montaño said that lingering uncertainties, including the highly infectious delta variant of the coronavirus — which has led to a new statewide mask mandate — make it nearly impossible to estimate exactly what needs the city will have to fill over the next four years. He did, however, present on how the administration plans to use the money to bolster the 2021 budget.

“We don’t see the ARP funding as an additional windfall for the city,” Montaño said. “Instead we view these funds as a way to close the gaps in the city’s continued projected revenue loss through 2025 when we expect the city to fully recover. There is debate on that 2025 recovery period, and there’s now a variable with the delta variant, but we’re maintaining conservative estimates and keeping it at 2025.”

The administration plans to ask the City Council in September to approve an ordinance to allocate the first $70 million. Montaño broke down the uses of the money into four categories — ”crime and public safety,” “new initiatives focused on public safety,” “restore government operations” and “improve quality of life.” 

The “crime and public safety” category largely revolves around increasing personnel at the New Orleans Police Department, fire department and EMS. That includes $11 million for increased overtime at those three agencies and $300,000 for NOPD patrol officer promotions. Another $8 million would go to the Orleans Parish Sheriff’s Office to pay for mental health services for inmates. The city would also use $1 million to buy an additional 150 to 160 new license plate readers for crime reduction, particularly in eastern New Orleans. The request will also include increased funding for the SPCA. 

The “new initiatives focused on public safety” category includes less traditional public safety initiatives. That includes creating a non-law enforcement behavioral health crisis response unit to answer some 911 calls. The initiative would include in-patient care, a crisis stabilization facility and ongoing outpatient care.

“This is, we feel, the future of many police departments as far as strategies,” Montaño said. “You see this happening throughout the country.”

Money would also be invested in a partnership between the District Attorney’s Office and the Center for Restorative Approaches to create a restorative justice program. The three-year pilot program would seek to divert 560 cases from criminal proceedings. The city also plans to spend money on the Municipal Court Mental Health Unit — a program operated by the Orleans Public Defenders that seeks to get mental health services to people who regularly cycle in and out of the court system due to mental illness.

The third category of the $70 million dedication is restoring governmental operations.  Montaño said this money would be used to reimburse city employees for furloughs that were put in place in late 2020 as a cost saving measure and ended in early 2021. The city would also buy new vehicles for public safety agencies and the Department of Public Works. 

Also in that third category is new personnel funding. The administration wants to hire five new short-term rental enforcement employees in the Department of Safety and Permits, as well as a dedicated short-term rental attorney. Code Enforcement would get another four employees for the lot abatement program. Montaño said the money would also go to “rebuild” the City Planning Commission staff, although he said a staffing plan is still in the works. 

Funding for the quality-of-life category includes $4 million for the administration’s anti-blight and litter initiative, CleanUp NOLA, as well as $1.5 million to fund another 112 seats in early childhood education programs. The money would also be used to pay down the long list of court judgements against the city. 

Michael Isaac Stein

Michael Isaac Stein covers New Orleans' cultural economy and local government for The Lens. Before joining the staff, he freelanced for The Lens as well as The Intercept, CityLab, The New Republic, and...