17 November 2025
By Aliana Mediratta
Contributing Writer
(Veritenews.org) — New Orleans City Council on Thursday (Nov. 13) discussed an emergency loan that aims to meet payroll expenses in the midst of a severe budget shortfall.
Councilmembers discussed a plan to issue $125 million in revenue notes, with repayment due in 12 months. The money will be used to pay thousands of city workers whose livelihoods were at stake due to a $160 million projected deficit for this year.
The size of that shortfall and the payroll emergency, largely caused by increased personnel and overtime costs and overly optimistic revenue projections for the year, only became clear over the past month, after an October review of city finances by the Louisiana Legislative Auditor’s Office.
Until the past few days, it was not clear whether the city would be allowed to take out the loan. Last month, when the seriousness of the city’s cash flow problem became clear, the council applied to the State Bond Commission – which must approve new bonds and loans to local governments – for the $125 million infusion. State leaders, including Gov. Jeff Landry and Attorney General Liz Murrill – reacted harshly, criticizing the city’s management of its budget and threatening to appoint a fiscal administrator as a condition of the loan.
The appointment of a fiscal administrator, which recently happened in Bogalusa, is essentially a state-led takeover of a local government. The administrator has power to set city budgets, approve or reject contracts and hire and fire personnel, all without the consent of local elected officials.
That was a nonstarter for the council, particularly Mayor-elect Helena Moreno, who will assume her new office in January, and the city pulled the request. Then last week, Moreno, Councilmember JP Morrell and Councilmember Joe Giarrusso, met with state leaders in Baton Rouge to work out a deal wherein the city would be able to take out the loan and maintain self-governance.
The sides worked out an agreement. Under the terms of the deal, the city has to place the $125 million in a special fund and send regular reports to Legislative Auditor Mike Waguespack detailing how the city is using the money, which is earmarked only for personnel expenses and closing costs on the loan. Waguespack will be given veto authority on expenditures from the fund. And on Wednesday, the Bond Commission approved the loan.
While the proposal that went before the Bond Commission called for an interest rate of up to six percent – a higher rate than typical municipal bonds – the city secured a 3.5 percent interest rate for the loan, Councilmember Joe Giarrusso told Verite News.
The state agreed to play ball on Thursday because the city demonstrated a number of good faith efforts to signify that it would be using the money to properly address the deficit, according to Councilmember JP Morrell.
City Chief Administrative Officer Joe Threat addressed the council to answer questions and present a new plan for overtime, which was a major factor in landing the city in its current financial situation.
In the future, Threat said, departments will receive a pre-approved overtime cap that covers a ninety-day period from the CAO’s Office. If departments run up close to that cap, Threat said his office would return to the council to discuss increased funding.
Overtime spending has long been a major problem for the city. Last year, the city budgeted less than $10 million for overtime. Actual expenditures totalled more than $47 million. But it was far worse this year. The 2025 city budget only included $57,500 for overtime. Actual overtime spending — in a year that included a number of overtime-heavy events, along with a terrorist attack and a major snowstorm — reached $40 million by the end of September.
Threat added that it’s important to maintain a strong level of public safety despite a stricter fund allocation system for a number of major upcoming events, including the Bayou Classic and New Year’s.
Councilmember Joe Giarrusso, who represents District A and serves as the chair of the council Budget Committee, said that it’s key to make sure departments are spending in line with what higher-ups are telling them to when it comes to overtime.
“We cannot afford, as collaborative partners, to have anyone going off and doing exactly what they want to do,” Giarrusso said.
He also noted that, if the city gets close to not being able to allocate payroll to city employees in the following week, the Council is prepared to address that through an ordinance where they are allocating additional funds.
“I think we can all agree that we don’t want to get to the cost of payroll and then be three to $4 million short, and then that’s a scramble to find the money,” Giarrusso said.
A majority of the overtime incurred that led to the deficit came from paying police officers, which were also a subject of debate as the council talked about the federal consent decree. On Nov. 11, the New Orleans Police Department and the Department of Justice filed a joint motion requesting to end the court-ordered agreement that began in 2013. The judge overseeing the consent decree has said she will allow it to come to an end.
Morrell explained that the council hopes to maintain certain policies from the consent decree by codifying them into law. That would prevent future police chiefs or mayors from making alterations to the policies, which multiple Councilmember Oliver Thomas noted have improved public trust of NOPD.
“It is evident that the NOPD consent decree will end regardless of what this council or the public want to happen in the future,” Morrell said. “We are seeking to codify as many parts of the consent decree as possible in an ordinance to ensure that the department does not backslide.”
The policies the council aims to codify include defining the use of force, operating a crisis and intervention team, and requiring officers to undergo domestic violence training.
Threat said his office is meeting with a number of different departments to find the best path forward until the fiscal year ends.
“If we can slow, pause, or stop, manage the cash flow throughout the end of the year, that’s what we’re going to do.”
This article originally published in the November 17, 2025 print edition of The Louisiana Weekly newspaper.