When I took office in 2010, New Orleans was hurtling toward financial disaster. The city was spending $5 for every $4 we took in, and one-time loans and savings accounts had been drained. Even with all that spending, government was not working. City Hall was only open four days a week.
In the past four years, we avoided financial disaster, balanced our budget and got our city moving in the right direction. We closed a nearly $100 million budget hole, about 20 percent of our budget, by cutting smart and reorganizing City Hall. We furloughed employees, renegotiated contracts, cut take-home cars and credit cards, reduced overtime, eliminated and streamlined whole departments, boards and commissions.
We shifted retirees from city-funded health care to Medicare, worked with FEMA to forgive loans, refinanced pension obligation bonds and made changes to the city employees’ pension fund. Through tough management, we significantly improved the collections of taxes, fines, and fees. We sold city property no longer in use.
At the same time, we got City Hall working again. We improved recreation, economic development, customer service, reduced blight, continued fixing streetlights and more. Most importantly, the number of murders is at a historic low. New Orleans is now the fastest growing major city in America. There’s no doubt that we are on a roll.
Still, looming liabilities threaten our progress. These liabilities are no longer on the horizon — they are literally at our doorstep.
First, the firefighters pension fund has been making poor investment and management decisions for a generation. In recent weeks, a judgment came down that the city must pay the pension fund $17.5 million this year and perhaps more each year for decades to come.
Second, the Orleans Parish Prison has been found unconstitutional after decades of neglect. The court will soon determine the annual cost of the sheriff’s consent decree, which could range from $10 million to $22 million in additional funding per year.
Together, the fire pension fund and the sheriff’s consent decree could result in a $40 million annual hit on the city’s budget. This figure does not include the cost of the 5-year, $55 million police consent decree (which we have budgeted for). And that’s $40 million BEFORE we pay for 1600 police officers, interior street repairs, drainage improvements, streetlights, recreation, parks and libraries.
These mandates require new and significant multimillion-dollar costs for a city that balances its budget along already paper thin margins. Simply cutting $40 million from our city’s budget would require the elimination of 345 positions, furloughing remaining employees 11 days in 2015 and beyond, and cutting 20 percent from other operating funds for each department. These cuts would in effect shut city government down one day per week and slash already-underfunded efforts to fill potholes and cut grass.
In the coming months, we will have a robust discussion about how to best face these challenges. We continue to aggressively seek cost savings. For example, the Legislature will consider bills to right size Juvenile Court and Traffic and Municipal Court. To give us flexibility and options, I requested that members of our legislative delegation file bills that will give the New Orleans City Council the authority to call for a vote of the people on revenue measures, including a tobacco tax, a hotel/ motel tax, and a police and fire millage. We are also considering the creation of economic development districts to capture a larger percentage of new sales and hotel taxes generated from new developments.
I look forward to working with the state legislators, City Council members, business leaders and citizens as we develop a comprehensive package to address these issues. The real question for our community is what are our priorities, what are we willing to pay, and how?
In the past four years, we’ve made tough decisions. But we need to continue to keep New Orleans moving forward.
Mitch Landrieu is mayor of New Orleans.