DALLAS — New Orleans’ municipal finances are “on the right track” after years of fiscal mismanagement, Mayor Mitch Landrieu said Monday as he presented a proposed $495 million operating budget to the City Council.
“For too long the city of New Orleans lived beyond its means, spending too much and getting few results to show for it,” he said. The 2012 operating budget of $494.9 million, financed with general fund revenues, is more than 2011’s $488.6 million. However, most departments except for public safety agencies will see a decrease from this year’s spending.
“In times like these, it is so important to invest in what really matters,” Landrieu said. “We must invest in public safety because without safety there is no freedom.” The City Council must adopt a 2012 budget by Dec. 1. New Orleans operates on a calendar fiscal year.
“What added to our budget pressure in New Orleans is that since Katrina, the city has habitually spent more than it took in,” Landrieu said, referring to the devastating 2005 hurricane. When he took office in May 2010, he said the city faced a $67.5 million revenue shortfall that ballooned to $100 million, forcing him to order unpaid furloughs and renegotiate contracts.
In August, top Landrieu aide Andy Kopplin told the council’s budget committee that New Orleans spent $90 million more than it collected in 2008 and 2009 and ended 2010 with a $28.6 million gap.
Landrieu also submitted a proposed $286 million capital improvement budget for 2012, paid for in part with $40 million of general obligation bonds. “This critical funding will be used for vital road repairs,” he said.
The plan calls for GO sales of $55 million in 2013 and $50 million in 2014, which would exhaust the remaining $145 million of authorized but unissued street improvement debt that has underlying ratings of triple-B minus from Standard & Poor’s and Moody’s Investors Service.
Landrieu asked the council to “roll forward” the 2012 property tax rate to the current level. Louisiana law requires the council to reduce the tax rate when property valuations go up so that revenues don’t increase, but the council can then return property taxes to the previous rate.
Landrieu said returning the property tax rate to the current level would generate an additional $4.1 million in 2012. Anticipated 2012 general fund revenues include $162.9 million from the sales tax and $106.2 million from the property tax.
All revenues are expected to total $844.2 million, up from $739.9 million. The 2012 budgeted costs includes $38.6 million of debt service.
