As the City of New Orleans begins to write its third annual budget since the coronavirus pandemic began, key indicators show the city is getting close to pre-pandemic revenue collections. 

The city is just starting the public process to establish the 2022 budget. On Wednesday, Mayor LaToya Cantrell is expected to release her initial budget proposal. And next week, the City Council will begin its department-by-department budget hearings to determine whether it wants to make any changes to Cantrell’s proposal.

But before deciding how to spend its budget, the city needs to establish how much money it will have. And on Monday, that forecast was officially established by the Revenue Estimating Conference — a special body led by the mayor.

“Our future is bright,” Cantrell said. “But again, it’s uncertain.”

The baseline year for measuring the pandemic financial recovery is 2019. And the key metric the Cantrell administration has relied on is recurring general fund dollars — money that the city collects every year, like sales taxes, property taxes, permit fees and fines. 

From 2019 to 2020, the city’s recurring general fund revenue took a dive from $659 million to $583 million. In 2021, that figure rose to $612 million. 

City Economist Randall McElroy said that 2021 was looking even better than expected until Hurricane Ida hit, causing a city-wide outage that lasted nearly two weeks for many residents. The city estimated it lost $8.6 million in revenue as a result of the storm.

“2021 was a little stronger than we thought up until the hurricane, and that basically bounced us back to where we originally planned,” McElroy said. “However, trends in, for example, sales taxes are encouraging.”

In 2022, recurring general fund revenue is expected to jump to $640 million, less than three percent lower than in 2019.

Cantrell said that a big reason for the anticipated general fund revenue increase in 2022 is the expected resumption of events and festivals. 

“One of the things that we’re very excited about is engaging and starting and utilizing and activating events and festivities that we know are important not only to our culture, but absolutely speak to our bottom line, our revenue, and our ability to generate revenue,” Cantrell said.

She highlighted the recent Krewe of Boo parade, the first float parade in New Orleans since the pandemic began. The Cantrell administration has said that the parade will act as a test run to determine whether the city can safely host large events, especially during Mardi Gras. 

“​​I think it went off great,” Cantrell said. “But we will see as time will continue to tell us. Follow that data.”

Cantrell said that the city’s ability to resume big events was not only contingent on managing the pandemic, but also on having enough public safety personnel to work all of those events. She indicated that a personnel shortage at the NOPD could limit the number of events the city allows. She said that problem already manifested when the city had to shorten the proposed route of Krewe of Boo. 

“We had to pull back on the route of Krewe of Boo, simply because there was not adequate capacity and staffing to manage such an event,” Cantrell said. “But this will speak to how we approve events moving forward in our city.”

The 2022 revenue estimates would have looked even better, the administration noted, if not for an across the board residential property tax cut recently announced by Orleans Parish Assessor Errol Williams that the administration expects to cause a $7 million drop in property tax collections. 

“I just wanted to highlight the almost $7 million in property tax decrease that we’re budgeting for,” Chief Administrative Officer Gilbert Montaño said. “I think that’s kind of an important point.”

The property tax cuts are a result of Hurricane Ida. Williams, who is up for reelection this year, is using a state law passed after Hurricane Katrina that allows for disaster-related tax cuts. The law authorizes cuts when a disaster makes a property uninhabitable. Williams said that applies to the prolonged power outages that followed Ida, when many residents were forced to temporarily evacuate. 

Williams is granting an across-the-board, five percent tax cut for every residential property in the city, plus additional cuts for homes that were hit with physical damage during the storm.

The city’s total budget for next year, including non-general fund revenue like federal grants, is significantly higher than even the 2019 budget. Total revenues in 2022 are expected to be $1.4 billion, compared to $1.1 billion in 2019.

The jump is mainly due to federal funding from the American Rescue Plan Act, a COVID relief bill passed by Congress in March, according to Cantrell spokesman Beau Tidwell.

The city expects to receive $380 million in ARPA funds, and plans to spread those dollars out to bolster annual budgets through 2024. The city plans to use the first $77 million of that money in 2021 and another $85 million in 2022.

The $300 million jump in the revenue forecast is accounting for all the ARPA funds the city still expects to have by the beginning of 2022. That doesn’t mean it will all be spent. The city still plans on saving the bulk of that to spread out over the subsequent two to three years.

This article was updated with additional information from Mayor LaToya Cantrell’s office about American Rescue Plan Act funding.