New Orleans Mayor LaToya Cantrell presented her $1.5 billion 2023 draft operating budget to the City Council on Thursday, as well as broad plans for how to spend roughly $444 million in one-time funds derived from federal covid aid and unspent funds from previous years.
The introduction of the budget sets off the weeks-long process to finalize the city’s spending plans. Although the mayor writes the annual draft budget, it’s up to the City Council to actually approve it.
Council members kept their comments limited on Thursday, saving their questions for the department by department hearings that will commence next week to allow the council to analyze the draft budget at a more granular level. The hearings start on Nov. 1 in the council chamber. The preliminary schedule for the hearings can be found here.
The council is legally required to approve the operating budget by Dec. 1, and can make whatever amendments it wants to Cantrell’s draft budget.
“This is largely a suggestion. This is the Mayor’s idea of what the budget should be,” Councilman JP Morrell said. “And there has to be a dialogue between the mayor and council as far as what the final budget ordinance will look like. And I want the public to be aware that your comments are important … whether you submit those comments virtually, to our email addresses or to come here and physically speak.”
The council’s budget authority also gives them final say over the administration’s plans for the $444 million in one-time funds. The administration wants that money to go to a number of city priorities including a larger emergency and disaster fund, housing programs, blight remediation, youth services, attracting and retaining public safety personnel and various infrastructure investments. Chief Administrative Officer Gilbert Montaño said he hopes to get council approval in December.
At the Tuesday council meeting, Montaño said that the 2023 draft operating budget represented an overhaul in how the city planned its spending.
“The normal budgeting process is no longer applicable for the city of New Orleans,” he said.
Many of the changes in the 2023 budget are related to the city’s recent difficulties hiring enough people to fill all of its budgeted positions. As an example, Montaño pointed to the NOPD, which has spent $70.4 million less than it was budgeted over the last four years, in large part due to staffing shortages.
Cantrell said the mismatch between budgeted dollars and actual spending can “lock up precious resources” and that the 2023 budget was written to reflect what they’ve actually spent in recent years.
“This budget is one that demonstrates that gone are the days when we lock up funds,” Cantrell said. “And what I mean by that is locking up positions that go unfilled year after year after year.”
Montaño cautioned that because of those changes, some departments like the NOPD appear to be getting budget cuts compared to their 2022 budget allocation. But, he said, that’s only to reduce how much money they’re budgeted, not how much they will actually spend. He said that despite the appearance of a 12 percent budget decrease for the NOPD, they are actually getting more than they spent last year.
“In no form, fashion, iota is this defunding the police,” Montaño said. “What it’s doing is actualizing the spend they’re actually going to need.”
He also added that at this point, the administration wasn’t formally cutting any jobs, just leaving them unfunded. That gives the opportunity to departments like the NOPD to go out and try to hire for those unfilled, unbudgeted positions. Montaño told The Lens that to pay for these unbudgeted hires, the city would use its sizable fund balance as well as any higher-than-expected “enhanced revenues.”
“We’re not in any way limiting our leadership or departments from hiring at all,” Cantrell said.
Montaño said that the budget draft was only “a snapshot of quarter one” of 2023, and that he expected the budget to get re-examined and amended every quarter throughout the year.
“We will see these changing and shifting throughout the year,” Montaño said. “It’s a fluid budget, it needs to be fluid. It’s a very agile budget, it needs to stay agile.”
This new method of budgeting makes it difficult to immediately know if a department budget cut from 2022 to 2023 actually reflects a plan to decrease spending in that department.
But there are some departments receiving clear budget increases.
One of the biggest budget increases is a 20% bump for the Department of Sanitation. That appears to be mostly because of the new, much more expensive garbage collection contracts the city awarded this year.
Several criminal justice agencies are also seeing significant budget jumps in the draft budget, including the District Attorney’s Office, Public Defender’s Office, the Office of the Independent Police Monitor and juvenile court. The Health Department is getting a 20 percent budget increase to fund the alternate dispatch program to send mental health professionals to respond to certain 911 calls.
Another big increase spread throughout the budget is a five percent raise for all city employees starting next year. Employees will get another two 2.5 percent pay raises in 2024 and 2025.
$444 million in one-time spending
Although it isn’t officially part of the 2023 operating budget, the mayor’s plans for the $444 million in one time funds reflects many of the administration’s biggest ambitions and priorities.
The funds come from two sources. The first is federal covid relief dollars from the American Rescue Plan Act, or ARPA. The city received $194 million in ARPA funds in 2021, which was largely used to balance the city’s budget and replace revenue loss caused by the coronavirus pandemic. The city received a second “tranche” of $194 million from ARPA this summer. In total, the city has roughly $199 million in ARPA funds left.
The other source of one-time funds is the city’s fund balance — money that was budgeted but unused in prior year budgets. The city’s fund balance was up to $330 million as of Aug. 29, according to a presentation Montaño gave to the council earlier this month.
The biggest single spending priority for that money, according to Montaño’s presentation, is putting $100 million into the city’s emergency and disaster fund, which currently sits at $36 million. He said that even when the city can rely on federal funding to recover from disasters, that often comes as a reimbursement, meaning the city needs to have cash on hand. He also said the move would help the city’s standing with bond rating agencies, which help determine the city’s interest rate when borrowing money.
The next largest priority is $71 million for vehicles, equipment and technology. That includes a $30 million “criminal justice IT system overhaul,” an $8.5 million “city IT system overhaul” and $7.5 million for new public safety equipment including EMS medical supplies and tools, fire station alert systems and investments in the NOPD training academy and crime lab. It would also include $25 million for police cars, ambulances, fire trucks and other public safety equipment.
The plan then calls for $52.5 million for “public safety and public health.” The biggest chunk of that is $37.5 million for “public safety recruitment and retention.” The plan sets aside $5 million for unhoused populations programs and $10 million for various public health programs and an expansion of the Ground Patrol division — a patrol and security unit housed under the city’s Department of Homeland Security and Emergency Preparedness.
As for infrastructure investments, the Cantrell administration wants to spend $10 million for catch basin cleaning and $15 million to help fund a long-sought after Sewerage and Water Board substation aimed at providing more reliable power to the city’s vital drainage pumps. Another $20 million would go to various road and sidewalk improvements like filling potholes, replacing street light outages and fixing traffic signals.
The spending plan also includes $40 million for housing programs, $30 million for blight remediation, $25 million for business and workforce development and $25 million for youth services. The city would use another $50 million to pay back emergency debt taken out during the coronavirus pandemic. Lastly, $5 million would be used to help pay some of the long backlog of unpaid court judgements and settlements against the city.