New Orleans leaders spar over budget

Eric Shelton

The New Orleans city council president hopes the needed panel members will vote to override the outgoing mayor's veto of the 2026 budget that would close a projected 23% deficit.

Mayor LaToya Cantrell said she vetoed the council's budget because it "relies on revenue that is uncertain, unverified, or based on one-time sources." Her proposed $725 million budget, she said, was based on revenues recognized by the city's Revenue Estimating Committee.

Cantrell said she remains committed to working with the council to create a "responsible and sustainable path for the city." 

New Orleans City Council President Jean-Paul Morrell responded Friday, "It's disappointing, but not surprising, that the mayor is having a temper tantrum and vetoed the budget."

The mayor's budget would have slashed every department by 30%, Morrell said. "She additionally demanded that we raise nine different taxes on residents to plug the holes she created."

The council and Mayor-elect Helena Moreno "created a working budget that identified sustainable revenue streams without taxing citizens into oblivion," Morrell said. 

Cantrell didn't participate in "solving the crisis she helped to create," he said.

To override the veto will take five votes from the seven members. The council approved the budget unanimously in early December. 

The next regular meeting of the council is scheduled for Thursday morning.

Moody's downgraded the city's issuer and general obligation ratings to A3 from A2 in October and revised the outlook to negative from stable, citing "significant, unbudgeted use of reserves in support of operations and one-time events in recent years that has materially narrowed the city's financial position."

The government discovered in early November it wouldn't have enough in its accounts to cover payroll for the remainder of the year. After some struggles with the leadership of Louisiana government, the city gained approval to borrow $125 million from J.P. Morgan. 

The Louisiana Bond Commission approved the borrowing subject to conditions, including that Louisiana Legislative Auditor Michael Waguespack approve any disbursements of the borrowed funds.