New Orleans Mayor LaToya Cantrell on Wednesday released her draft city budget for next year, framing it in a presentation to the City Council as a budget that restores city services and personnel that were cut as a result of COVID-19 revenue shortfalls, but that doesn’t include major departmental increases above the pre-pandemic baseline.
The general fund budget, proposed at $652 million, is $18.5 million higher than the 2021 budget as passed by the City Council late last year.
The city’s general fund revenues — made up of locally generated funds from things like property and sales taxes — are expected to be the strongest they’ve been since the coronavirus pandemic began. And the Cantrell administration plans to bolster next year’s budget with $85 million in federal COVID-19 relief funds, out of a total $380 million it expects to receive through the American Rescue Plan Act, which Congress passed in March.
The council, which has until Dec. 1 to pass a 2022 budget, will begin holding hearings next week to determine whether it wants to make any changes to Cantrell’s proposal.
The increase in tax and fee revenues, combined with the federal funds, will allow the city to treat next year like a normal budget year, without having to make deep cuts to contend with the revenue loss caused by the pandemic. The city plans to use the ARPA funds similarly in 2023 and 2024.
Most of the year over year budget increases are related to restoring positions that were cut or left unfilled in 2021 as a cost-saving measure. As Chief Administrative Officer Gilbert Montaño told the council, even with the rise in spending, the 2022 budget doesn’t include many new city initiatives.
“There’s not a significant number of new items in the 2022 budget,” he said.
The biggest portion of the increase in personnel costs are related to ending employee furloughs that were implemented in late 2020 as a COVID-related cost saving measure and ended in March 2021 after Congress passed the ARPA. The original 2021 budget was reduced to account for those furloughs. The 2022 budget restores those costs, causing a big jump in planned personnel spending.
The increased personnel costs also account for two recent City Council measures related to creating a livable wage. This year, the council changed the city’s Living Wage Ordinance to mandate a minimum $15 an hour minimum wage for employees of city contractors. Shortly after that, it worked with the Cantrell administration to set the same minimum wage for city workers.
The new minimum wage for city employees is expected to increase personnel costs by $10 million. The city hasn’t released an estimate for how much the wage requirements for city contractors will cost.
The city’s budget presentation shows large increases in several departments and agencies. But those increases appear bigger than they actually are. That’s because the comparison of the 2021 and 2022 budget provided by the administration was based on the original 2021 budget.
But the 2021 budget was finalized before the ARPA was passed. The Cantrell administration plans to add $77 million in ARPA funds to the 2021 budget in a mid-year budget adjustment. Once those funds are included, the departmental budget increases would look a lot smaller.
The City Council approved part of the mayor’s mid-year budget adjustment on Wednesday but left part of it for a later date. Instead of the full $77 million, the council approved $54 million. Councilwoman Helena Moreno said that the council needed more information on the remaining $23 million to make sure the money was being appropriately used and to make sure the expenses fit within the federal guidelines for how ARPA money can be spent.
Moreno said the administration could come back to the council to provide more information, and that the council will then consider approving the final $23 million. That’s expected to happen next week on Nov. 4.
The numbers provided by the city compare the 2022 budget with the original 2021 budget, exclusive of the mid-year budget adjustment. Based on those numbers, public safety agencies, a category that includes the city’s largest departments, saw the biggest total funding increases. That isn’t unusual. Many of those departments and agencies already have the biggest budgets in the city, so even small percent increases translate into big spending increases.
For example, without taking the mid-year 2021 increases into account, the Police Department general fund budget will increase by $13.5 million. However, when you account for the $17 million in additional 2021 funding Cantrell is asking for, and the additional ARPA funding that she’s proposed for the department next year, the NOPD’s overall budget for regular operations will be nearly the same year over year.
The Orleans Public Defenders is getting a major budget increase, achieving a long-term budgeting goal — parity with the District Attorney’s office. The Orleans Public Defenders has long complained that although it represents 85 percent of Orleans Parish defendants, it only received a fraction of what the DA got in city funds. It has long called for the city to provide the public defenders with at least 85 percent of what it provides the DA.
Last year, the council passed an ordinance mandating that 85 percent parity goal. But as The Lens reported, the ordinance wasn’t binding, and that goal wasn’t achieved in the 2021 budget. The proposed 2022 budget, however, would exactly meet that 85 percent goal.