Bond-related conflicts between Louisiana's state government, its bond commission, and New Orleans and partisan changes to the North Carolina Local Government Commission, come in the context of wider Republican efforts to use state governments' fiscal powers to limit local government authority.
Among the developments have been Louisiana Republican leaders trying to appoint a state fiscal administrator to New Orleans, Republicans refusing to approve the city's request for a revenue anticipation note and North Carolina Republican legislators changing long-standing Local Government Commission membership rules to greatly increase Republican representation.
Asked if state-level Republicans in the two states are trying to use power over the bonding process to gain control over localities, Muni Credit News Publisher Joseph Krist said, "absolutely."
However, Louisiana State Treasurer John Fleming, who chairs the State Bond Commission, said his July suggestion to New Orleans Mayor Helena Moreno to withdraw the RAN had nothing to do with politics or antipathy to the city. He said the RANs' long duration and expected high interest rates, over 7%, would have made it bad for the city.
All 14 members of the bond commission are Republican while Moreno and all members of the city council are Democrats.
Fleming said if the city comes to the bond commission with a short-duration, smaller RAN, the commission might approve it.
The commission only wants to treat New Orleans fairly, Fleming said. Gov. Jeff Landry and Attorney General Liz Murrill, who sit on the bond commission, are hostile to the city government, he said, but, "Whatever you are seeing that may be going on between the governor and the mayor, does not apply to us."
Bond Commission Director Lela Folse said the commission this year has approved several elections to raise taxes to support bonds for New Orleans and its Sewerage & Water Board.
Others are skeptical of the developments in the two states. The Republican "strategy is part of larger pattern and is in line with the political narrative that Democratic-led cities suffer from reckless, profligate spending (though they are often the economic drivers of their states)," said Lisa Parshall, fellow at the Rockefeller Institute of Government and distinguished professor of political science at Daemen University.
"President Trump, as party leader, has taken a strong position of using fiscal leverage to bring states/localities into alignment with preferred policies," Parshall said. "That is being echoed where state governments are trying to bring cities into alignment through similar strategies, including their funding and fiscal dependency."
In Texas, Republican state leaders have frequently used state
"The push has filtered down to control of school boards, local zoning boards, redistricting commissions — municipal bonding commissions is far under the radar of most coverage, but it fits the broader strategy," Parshall said.
"The targeting of interest of select localities and the effort to control local financing, budgets and even put localities into state receivership raises the question of the partisan motivation to overcome the general tendency of Republicans to favor local control," Parshall said.
In the Southeast, there are two state commissions with power to oversee local government bonding: Louisiana's State Bond Commission and North Carolina's Local Government Commission.
In Louisiana, "I think the governor and the governor's office are trying to make a best-efforts case to help New Orleans with its finances," said John Mousseau, chief investment officer and executive vice president of Cumberland Advisors.
However, in North Carolina, the legislature's actions with the LGC are "gerrymandering posing as a legislative process — in North Carolina, effectively removing the Secretary of State (a Democrat) from the commission as an ex-officio member and replac[ing] with a member of the general assembly – a Republican," Mousseau said.
The replacement of the Secretary of State is part of a wider set of changes that will, assuming the current political complexion of the governorship and legislature, ultimately shift the commission composition from five Democrats and four Republicans to two Democrats and seven Republicans.
"This is a Republican legislature trying to shift appointment powers away from Democratic governors and has been going on for a while and includes things like legislative approval of cabinet members – effectively making the ability to govern much more tortuous," said Mousseau.
Democrats have held the North Carolina governor's office since 2017. But GOP lawmakers have drawn district lines to have about 60% of the state legislature's seats Republican-held in a state where the top GOP vote-getter in a 2024 statewide race received less than 53% of the vote and Democrats won five of 10 state offices.
"The important point in this discussion is that maintaining fiscal integrity on occasion may require intervention or oversight from an outside party with authority to do so," said John Hallacy, president of John Hallacy Consulting.
"The North Carolina Local Government Commission and the Louisiana Bond Commission have long and successful histories of fulfilling this role. Deficits are agnostic when it comes to political parties," he said.
"The effort to use bond commissions to achieve partisan goals is new," Krist said. "More typical is the use of other control measures to intervene in local finances."
Krist said while the bond commissions are particular to the two states, GOP-run states are using other approaches to limit local authority.
"The whole effort behind the
"Trying to win partisan control over financing and bond commissions is much more targeted and newer than the trends of state preemption of policy choices (immigration) or local financing (debt and tax limitations, restrictions on borrowing authority, or underwriter restrictions)," said Parshall. "There is more of a no-holds-barred attitude in intergovernmental relations."
Observers had several suggestions as to how to deal with overreaching state governments. "The bond community can raise the cost of borrowing for the state," Krist said.
"Municipal bonding is not an issue that you'd expect average voters to be savvy about so there needs to be education of why this matters on a practical level," Parshall said.
"I think there needs to be some reaching out to the legislatures to get some working committees to reduce the tension," Mousseau said. "There are clearly some issues of separation of powers here which need to be addressed."
In October, when the New Orleans city council and mayor-elect turned to the Louisiana State Bond Commission for approval of a desperately needed revenue anticipation note,
After a week or so, Landry and Murrill softened their stance but said Louisiana Legislative Auditor Mike Waguespack would have to be given the power to approve all uses of the borrowed funds and would have to advise the city.
While the city made clear to state officials last October that it would have to return to the bond commission for a smaller RAN this year, Landry complained in July that the city's return to do this was a sign of city mismanagement. This is despite Waguespack saying in late June the city had done an extraordinary job of rapidly turning its ship around.
New Orleans chose in July not to bring the proposed new RAN
In early July, Mayor Moreno said she had heard "some state leaders" would take efforts to "target" the city's finances.
The New Orleans Exhibition Hall Authority, a state agency aimed at benefiting New Orleans' economy, withdrew a proposal for $120 million in bonds before the July meeting of the bond commission and then again before the August meeting, despite being on the initial agendas.
Fleming said he urged the authority to withdraw the bond from the July meeting after one of the commission's members, Senate President J. Cameron Henry, a Republican, indicated his opposition to the bonds in the press. Fleming said the bonds are complicated and are backed by complicated financing and he told the authority to gather all necessary information to make a strong application before returning to the commission.
Neither the authority nor Henry responded to a request for a comment.
In the case of North Carolina, about two weeks ago Democratic Gov. Josh Stein signed a larger budget bill that, against his wishes,
This assumes the Democrats continue to hold the governorship and Republicans continue to hold majorities in the state House and Senate.
These changes are the first to the process for assigning membership of the commission since the 1970s. The commission can veto local bonds, monitor local government fiscal health and
Moreno and Landry didn't respond to requests for comment. The spokesman for Murrill said she would not comment. North Carolina Treasurer Brad Briner, Gov. Josh Stein and North Carolina Republican legislative leaders didn't respond to requests for comment.
