DALLAS — New Orleans Mayor Mitch Landrieu rolled out a $483 million operating budget for 2011 on Thursday that he said would pay for essential city services while setting strict spending limits.

“The city needs to get back to basics and to fix the broken budget process once and for all,” Landrieu said. “We will stop the overspending and, for the first time in over 30 years, we will create a city budget that all city government will live by.”

Landrieu said the budget he would officially present to the City Council Friday is unlike budgets presented by earlier administrations because the current proposal is realistic and balanced. For too long, he said, the city has been living beyond its means.

New Orleans had $72 million in reserves in 2007, Landrieu said, and now has none. “We must face the hard truth that the city in the past has not been on a sound fiscal footing,” he said.

“Throughout the first half of this year, the city was on pace to spend $80 million more than it had. And in each of the previous two years, it spent $50 million more than it took in.”

The proposed 2011 budget is different, he said.

“This budget does not rely on savings, bailouts, or other one-time funds,” he said.

“There is no free lunch. Now, we have to pay for it.”

Landrieu took office May 3 after being elected with 66% of the vote in a field of 11 candidates.

New Orleans operates on a calendar fiscal year. The City Council must approve the budget for 2011 by Dec. 1.

Balancing the budget will require higher sanitation fees, Landrieu said, and the first increase in the city’s property tax rate since the rate was lowered after Hurricane Katrina devastated the Big Easy in 2005.

“The hole in the budget that was created when this millage rate was lowered was filled by pillaging our savings, using one-time revenues, and relying on federal dollars,” he said.

“But since then, the nation’s economy has fallen apart, our reserves have been tapped out, and one-time federal recovery dollars are gone.”

The rate increase of 8.74 mills would generate $23.1 million in 2011, the city said. It would result in an additional $250 tax per year on a $350,000 home and $874 per year for $1 million of commercial property.

Without the new revenue, Landrieu said, the city would have to lay off hundreds of police and firefighters or cut the budget of other departments by 25%.

The additional sanitation fees would bring in $11.6 million a year.

Landrieu vowed to streamline New Orleans government by overhauling and reorganizing every city department by the end of the first quarter of 2011.

Citing priorities raised at community meetings on the budget, Landrieu said the 2011 spending plan calls for the repair of 30,000 pot holes and the cleaning of 8,000 drainage basins.

The police academy will graduate only one class in 2011, compared to two in 2010, but Landrieu said the number of police on the street will be increased by shifting officers out of desk jobs.

In his first major speech as mayor in July, Landrieu said the city was facing a $67 million revenue shortfall in 2010. However, he said last week, the city’s budget hole was deeper than it seemed.

“Due to an audit of past-year expenditures and a decrease in revenue, the budget gap grew from an already staggering $67 million to nearly $80 million,” Landrieu said. “If left unaddressed, this gap would have ballooned, damaging the city’s bond rating and putting our entire recovery at risk.”

The shortfall will be resolved by the end of the year, he said, but it won’t be easy.

“Let me be clear,” he said. “When you are $80 million in the red through just half a year, there are no good options.”

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