DALLAS — New Orleans Mayor Ray Nagin on Friday outlined a 2010 general fund budget that relies on more vigorous revenue collection and cuts to departmental budgets to plug a $67.7 million deficit.

Nagin said without the additional revenue and budget cuts, the city would spend $509.1 million but collect only $441.4 million in revenue.

His budget presentation to the City Council includes $17.5 million in additional revenue through increased enforcement of existing fees and charges, and $50.5 million in savings achieved by a 10% reduction in departmental allocations, employee furloughs, and other efforts.

The City Council must adopt a balanced budget for next year by Dec. 1. New Orleans operates on a calendar fiscal year.

The total budget for 2010 of $1.1 billion includes millions of dollars in federal and state funds that must be allocated to specific efforts.

The 2010 general fund budget is the first one to be financed entirely by local sources since two hurricanes hit New Orleans in 2005, Nagin said.

The city has received $290 million in loans from the state and federal governments to help its recovery, but the final $10 million of that money will be spent before the end of the year.

“This is the third major budget challenge we have faced since I was elected,” Nagin said.

“When I came into office, there were only two days of cash in the bank. Then after Hurricane Katrina, our entire economy was shut down, which left us with a shortfall of $205 million for 2010,” he said.

“Each time we have persevered. But it also is time that we put a structure into place to ensure that we can sustain our recovery.”

However, the mayor’s proposed budget would leave New Orleans with an undesignated fund balance of $5.2 million, or 1.1% of the annual budget rather than the 10% target in the city’s official financial policy.

The undesignated fund balance was 8% of the city’s budget at the end of 2007.

Councilor Shelley Midura said the depleted emergency reserve fund could be an issue with investors if the city takes a proposed $40 million general obligation bond issue for road projects to market this year as planned.

She asked the mayor if he was worried about the depleted emergency fund, and Nagin said he was less worried because the 2009 hurricane season is winding down.

The city’s GO bonds are rated BBB by Fitch and Standard & Poor’s, and Baa3 by Moody’s Investors Service.

Nagin said the city must refund $138.5 million of outstanding taxable variable-rate pension bonds issued in 2000 to shore up the firefighters’ pension fund.

Failure to refinance the bonds in 2010 would cost the city $28 million, he said.

The $50.5 million in savings includes $10.3 million achieved by keeping pension contributions at 2009 levels, $10 million in cuts to departmental budgets, and $4.7 million in reduced payrolls through 12 unpaid furlough days for all non-public safety city employees.

Additional revenues proposed by Nagin include $5 million of property sales due to non-payment of city taxes, $3.2 million of delinquent sanitation fee collections, and $1.7 million of additional parking meter revenues.

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