The New Orleans City Council opened its 2026 budget hearings Oct. 14 with the administration laying out steps to address a structural shortfall, including a hiring freeze, restrictions on overtime and proposed cuts to department operating and personnel budgets.

Council members and administration officials said the executive budget package includes a proposed 30% reduction to “other operating” budgets and a 15% reduction to personnel budgets for unclassified employees. The administration also described continuing a hiring freeze and extending restrictions on overtime that were used in 2025.

Why it matters: council members and department leaders said those measures would reduce near‑term spending but could slow service delivery, delay capital projects and lengthen vendor payment times. Administration officials stressed that the proposed revenue measures — draft ordinances the administration has moved to the council that would raise sales and sanitation fees and add other penalties and fines — would likely not produce measurable cash until early 2026 and therefore will not solve the immediate cash shortfall.

Officials asked the council to weigh spending cuts against the operational impacts. The CAO’s office and budget staff said they built the proposed budget to avoid furloughs and layoffs where possible, but warned that continued revenue weakness, rising costs and depleted one‑time federal funds leave fewer options to maintain current service levels.

Members of the council pressed the administration about monitoring and transparency. Budget staff described work on a citywide cash‑flow model developed with Plant Moran and CAO staff to forecast timing of receipts and disbursements and to better match cash availability to spending decisions. Staff cautioned that forecasting remains difficult because of uncertain federal reimbursements (for example FEMA and infrastructure reimbursements) and timing of state appropriations.

Council members asked for earlier and clearer flags when overtime or other lines are running over budget, and administration staff said monthly financial reports now break out overtime by department. The CAO’s office said it will require overtime projections and will work with high‑overtime departments on plans and, where necessary, request budget amendments earlier in the fiscal year.

The hearing will continue through a series of departmental briefings this week; members of the public were allotted two minutes each for comments at the end of major presentations.