When Mayor Mitch Landrieu and a new City Council took office in May 2010, New Orleans was broke. The mayor and council took drastic measures to put the city's fiscal house in order, and those tough choices have, for the most part, paid off.
It's one reason Landrieu continues to have a pretty high approval rating, despite a tough rainy day last August that flooded parts of New Orleans and raised big questions about the management of the local drainage system.
The fiscal legacy Landrieu will leave his successor is surprisingly positive, given the disaster left by disgraced Mayor Ray Nagin in 2010. Landrieu’s commitment to sound finance underlies the positive assessment of the mayor as a manager by voters.
As of October, the city projected it will end 2017 with a $49.7 million fund balance and Landrieu, backed by the current council, wants to protect that going forward with a change to the city's governing charter.
There will be other rainy days for New Orleans — not only of the meteorological sort but the fiscal kind as well. That's why the proposal on the Nov. 18 ballot to create a rainy-day fund for city government is a good idea. We urge voters to approve it.
A season of hurricanes that have ravaged other parts of the country reminds us of the problems that can cost a city millions in extra costs and lost revenue — a sobering lesson all of us learned after Hurricane Katrina. That's why setting aside a modest portion of the city's budget for emergencies is something that shouldn't depend on the good judgment of any single mayor or council. It should be a part of the city's charter.
The proposed amendment to the charter protects a portion of the city's fund balance as a “rainy day” fund. The council would be required to maintain the balance equal to 5 percent of the average fund balance over the preceding five years.
That would be about $27 million today. As with all rainy day funds, the money can be tapped in a genuine emergency — flooding or hurricanes or both, for example — by a two-thirds majority of the council. Other events might be a financial emergency, such as the national financial crash in 2008, or unexpected costs required of the city by the U.S. government.
The Bureau of Governmental Research backs the amendment, saying that while it is not an ironclad savings account, it is in line with best-practices in other city governments. "The requirement of a supermajority council vote for appropriations from the Savings Fund offers a check on misuse," BGR said. "Still, it is imperative that the council adhere to the amendment's clear intent and limit appropriations to times when the city faces a critical financial need."
We agree and urge voters to approve the charter amendment.