After a month of budget hearings, the New Orleans City Council on Thursday gave final approval to the city’s roughly $1.5 billion 2023 operating budget.
The council insisted on modest changes to the $736 million general fund budget — which is made up of local recurring revenues like property and sales taxes — laid out in the draft budget Mayor LaToya Cantrell released in late October.
The bigger surprise on Thursday came when the council, with the blessing of the Cantrell administration, approved amendments to include $262 million in spending of one-time funds. That includes $124 million in federal coronavirus aid that congress approved in 2021 through the American Rescue Plan Act, or ARPA, and roughly $138 million in unspent funds from prior year budgets, known as the city’s fund balance.
When the Cantrell administration first presented its 2023 budget to the council, the city’s Chief Administrative Officer Gilbert Montaño said that the 2023 budget and its plans for spending $444 million in one-time funds were deeply entwined. He told The Lens at the time, however, that the spending plan for ARPA would come as a separate process that would happen only after the council approved the operating budget.
Instead, the administration submitted and the council approved a last minute amendment on Thursday to include a huge chunk of the remaining ARPA dollars and the fund balance in the 2023 operating budget.
After Thursday’s allocation, the city still has $70 million in remaining ARPA dollars that the council will have to appropriate down the line, likely in early 2023, according to Montaño.
Cantrell has been selling the public on plans for ARPA spending for months. But many of the ARPA and fund balance spending items didn’t see much public discussion during City Council budget hearings. City Councilman and budget committee chair Joe Giarrusso explained in an interview that the long list of items included a mix of council and administration priorities, some of which were discussed during the prior month of public budget hearings, and others that were negotiated between the administration and council behind the scenes.
“Some of it is in those hearings, some of those are around the hearings,” Giarrusso said. “There’s what happens publicly and then there’s also the private.”
Perhaps the most high profile expenditure included in the amendment is a $32.5 million incentive package aimed at recruiting and retaining New Orleans Police Department officers. The department has been swiftly losing officers over the last two years, and Cantrell’s administration has been pushing a wary council to pass the package for months.
The package will offer $20,000 bonuses for new officers, along with a $10,000 retention payment for officers completing their third year on the force. It will also fund an existing retention bonus that provides $5,000 for officers every five years for up to 20 years of service.
Councilmembers said that $7 million of that money, however, will be kept in an escrow account until the council has a chance to evaluate the effectiveness of the package.
The one-time spending package also includes a $30 million criminal justice IT overhaul, $10 million for catch basin cleaning, and millions for public safety equipment and criminal justice diversion programs.
Montaño told The Lens that the administration and council decided to include ARPA spending in the 2023 budget at some point after the initial budget presentation in late October.
“We saw the need for some of the money, specifically the police packages, to be able to be approved as quickly as possible so that we could start getting it out as soon as possible,” he said. “So I guess it started turning into more of a timing, as opposed to a laid out process.”
He said that this round of ARPA funding included less controversial items, and that the more delicate items would be included in the remaining ARPA dollars and debated at greater length in the coming months.
“That’s why we split it up. So there’ll be another round of it. These issues, we felt, were less controversial. And others would need more debate. Like you’re not seeing a lot in there for economic development that you will see in the next batch, or social programs for the next batch.”
The council did refuse some budget requests. The council refused to fund the administration’s plans to use ARPA funds to cover healthcare premiums for NOPD officers, citing concerns over using one-time funding for a recurring expense. The council also refused requests from several criminal justice agencies, including the Orleans Parish Sheriff’s Office and District Attorney’s Office, for higher funding — noting that they could come back to the council throughout the year to request funding as needed.
Millions in budget amendments
The council’s amendments to the 2023 general fund budget were relatively modest, but included a number of high priorities that council members wanted added to Cantrell’s draft budget.
That included $1.3 million to expand a trauma recovery center that will allow it to go from serving 500 patients a year to 5,000, $3 million for maternal and childhood health programs, $600,000 for youth mentoring and outreach in New Orleans East, $1.4 million to expand a domestic violence response program and $150,000 to install walking trails and lights on city-owned property on the West Bank.
The more significant budget amendments, however, appropriated one-time funds from ARPA dollars and the fund balance.
According to a Wednesday memo from Montaño laying out the amendments, the council approved roughly $138 million in fund balance spending through the amendments. The city has built up a significant fund balance in recent years — $330 million as of August — in part due to the city’s difficulties hiring people to fill all of its budgeted positions.
By far the single largest piece of fund balance spending is $100 million that the city will put away in the city’s reserve fund in case of emergencies and to shore up the city’s credit agency rating. Other items funded through the fund balance include funding for STEM NOLA, blight abatement, grass cutting, funding to support the creation of a music museum, illegal dumping remediation, bike lane removal in Algiers and right-of-way maintenance.
The other part of the one-time spending package was funded through $124 million in ARPA funds. Some of the other major items included in the ARPA funding include:
- $32.5 million NOPD recruitment and retention package
- $30 million for a criminal justice technology overhaul
- $10 million to clean catch basins
- $900,000 to expand existing youth programs to serve an additional “200 system-involved youth per year”
- $4.9 million to “to support programs working with youth around probation, parole, diversion, and conflict resolution”
- $2 million to “fund proactive foot and vehicle patrols” in the French Quarter of security officers from the Grounds Patrol Division within the city’s Office of Homeland Security and Emergency Preparedness to “prevent violent crime and, through coordination with sanitation and health departments, reduce the unhoused population and improve public sanitation to minimize the further spread of COVID-19”
- $5.8 million for ARPA administrative costs to “allow the City to ensure ARPA projects are being executed and reported on timely”
- $2.5 million to replace the current fire station alerting system
- $3.2 million for NOPD equipment including kevlar vests and equipment for the crime lab, training academy and evidence and property facility.
- $4 million to fund the city’s sobering center for the next 3 years
- $5 million for a full-time staff member and consulting team to develop a comprehensive program for the unhoused population
- $1.8 million for EMS equipment
- $3.4 million to clear a tree trimming backlog
- $1.3 million to help eliminate medical debt held by New Orleans residents
A full list of items funded by the amendments can be found in Montano’s Wednesday memo.
An “agile” budget with quarterly check-ins
A constant theme during Thursday’s meeting was that the budget will be subject to change, and that agencies and departments are going to have to come before the council on a quarterly basis to justify and explain their spending.
“That’s been the model for everything,” Montaño said. “We’re staying agile in everything.”
Montaño said that this year’s budget was unlike previous years, in that it was expected to change over the next year. The biggest variable is staffing. Departments across the city have had trouble in recent years hiring enough people to fill all their funded positions. This year, Montaño said, departments were funded based on how much they’ve actually spent in recent years, rather than how much they’ve been historically budgeted.
At the same time, the administration is giving the green light to those departments to try and hire more people, even if those positions aren’t funded in the initial 2023 budget.
“We’re telling all other departments to hire,” Montaño said. “They have the green light to hire these individuals. By the time we come for our quarterly reviews, we may have to adjust or amend whatever budgets that are needed to be able to fulfill those needs that each of those agencies need to deliver the services they provide.”
Giarrusso told The Lens he was already planning quarterly budget hearings where departments will come to the council to discuss their budgets, similar to the annual budget process the council just concluded. This new budgeting process means that some council and administration priorities that weren’t included in the 2023 budget could get funded later down the road.
Last week, for example, Moreno’s office suggested that she would introduce an amendment to provide upfront funding for DA Jason Williams to hire an “elite” team of prosecutors to handle homicides and manslaughter cases, which he has promised would have a significant impact on violent crime in the city.
While that amendment was not ultimately introduced on Thursday, Montaño suggested the DA could move forward with hiring the homicide unit attorneys.
“In the instance of the DA, I had a conversation with him as well, and told him to hire the individuals we need to prosecute criminals to address our crime issues,” Montaño said. “Unequivocally.”
Sheriff Susan Hutson had also told the council during budget hearings that she needed more funding to provide pay raises for deputies in order to compete with other sheriff’s offices throughout the state. But Montaño said that given the office’s current surplus, they could move forward with those raises immediately.
And on Thursday morning, before the budget was passed, she announced a pay raise for “most” deputies at OPSO. Any deputies earning an hourly wage who are not new administrative hires and who had not already received a raise since Hutson took over in May of 2022 will get a $2.43 per hour bump in their paychecks, bringing the baseline pay for deputies from $15.57 to $18 an hour.
But no additional funding beyond Cantrell’s proposed budget for OPSO was allocated by the council on Thursday. Hutson’s office was given around $55 million, including the private healthcare contract with the jail’s medical provider, Wellpath.
The council also passed another mid-year accountability measure on Thursday aimed at measuring the effectiveness of the NOPD recruitment and retention package it approved.
Even though the council approved the incentive package, several council members continued to question whether or not it will produce the results that the administration hopes — 1,075 police on the force by 2025, up from where it currently stands at around 965 officers.
In light of their concerns, they passed a motion on Thursday that directs Montaño, the NOPD and the Civil Service Commission to create a mid-year report evaluating the effectiveness of the retention package and present it to the City Council in June of 2023. Council President Helena Moreno said that the measure was necessary to evaluate the effectiveness of the package.
“I think it’s important that we have a really robust check in phase to see if these measures are working,” Moreno said.
Councilman JP Morrell was even more skeptical of the incentive package, saying that he had “grave misgivings” about the retention package. He said that he believed the package should focus more on lateral hires and rehiring officers who have left the department rather than new recruits, and also noted the importance of annual pay raises rather than bonuses.
But both Moreno and Morrell also said that they believed the issues that the department is having with recruitment and retention go beyond money.
Moreno said that her office, along with the Fraternal Order of Police, put together a survey of officers regarding issues they had with the department and what incentives they would like to see, and that initial results from roughly 260 officers showed that 86 percent of them said they were “dissatisfied with the NOPD, mentioning issues like cronyism, favoritism, and only getting promoted based on who you know, and not on ability and experience.”
Moreno said a full report on the survey will be released next week.
“In six months, I promise you — money will not fix this problem,” Morrell said. He renewed his call to replace NOPD Chief Shaun Ferguson. “We need a new chief. Period. You can repair the hull of a Titanic over and over. But if the captain keeps driving it into an iceberg, nothing is going to change.”
Many public comments, however, said that the city shouldn’t be considering any additional funding on police before it addresses the economic and social needs of the community.
“Spending city funds on policing does not prevent violence, because it misplaces the root cause of violence — which is wealth, income, food, health care, and a host of other resources that are denied to community members” one online public comment read at the meeting said. “We can’t use violence to get to a safe society. We must invest in pro-social policy.”