Mayor Cantrell and CAO Present Proposed 2026 Budget, Urge Revenue Increases and Cuts to Close Shortfall

Mayor LaToya Cantrell presented the City of New Orleans— proposed 2026 capital and operating budgets on Oct. 1, saying the administration will seek both spending reductions and new revenues to close a fiscal gap while avoiding furloughs.

"The city of New Orleans is a world class city," Cantrell said as she opened the presentation, while urging the council to back measures to increase local revenue. The administration is proposing several fees and tax changes, including a 0.5 percentage-point local sales tax increase, higher parking rates and fines, revised sanitation fees and updates to permit and licensing fees.

The city—s chief administrative officer, Joseph Threatt, told council members the municipality faces a structural shortfall. "The city's last financial audit for 2024 showed a fund balance at the end of the year of 205,000,000, but only 40,000,000 of that balance was cash on hand," Threatt said. He said personnel and event-related overtime were major drivers of the current deficit and that the administration has included $24,000,000 for expected overtime in the executive budget.

Why it matters: City leaders said the shortfall is the product of one-time federal funding that has been spent down, higher personnel costs and event-driven operating expenses that exceeded prior revenue projections. The administration framed the proposal as a course correction to rebuild cash reserves and avoid layoffs or furloughs.

Key details

- Size and cash: The 2024 audited fund-balance figure cited by the administration is $205 million with about $40 million in cash on hand.

- Personnel shortfall: Council and administration officials identified roughly $70 million in additional personnel-related spending that contributed to the current deficit; overtime is a significant component.

- Spending controls: The administration has issued hiring, travel and expenditure freezes and plans to extend those controls into the transition to the next administration. The executive budget aims to avoid furloughs and layoffs for classified staff.

- Budget cuts and reprioritization: The proposal includes an across-the-board 30% reduction in operating budgets, a roughly 2.5% reduction in departmental personnel budgets, and a 15% reduction in unclassified personnel budgets to limit hiring growth during the transition.

- Revenue proposals and estimates included in the briefing: a 0.5 percentage-point sales tax increase (administration estimate shown in presentation: roughly $30 million), a property-tax roll-forward option (up to $30 million), a sanitation fee adjustment (about $19 million), parking-fee and fine increases (about $5 million), and other permit and licensing fee changes. The administration also flagged short-term rental, hospitality and targeted tourism-related approaches as potential revenue sources.

- Enforcement and collections: Staff said the city will increase revenue enforcement, including expanded auditing of sales taxes, sending delinquent parking debt to the state Office of Debt Recovery, ticket amnesty and more aggressive collection measures (booting, hearings). The presentation noted about $40 million in delinquent parking debt accumulated over the past decade.

- ARPA and one-time funds: The administration reported roughly $46 million in American Rescue Plan Act funds still unspent (obligated but not yet disbursed) and said some one-time funds previously supported recurring programs that are now stressing the general fund.

- Bond measure: The administration is placing a voter bond package on the November ballot totaling $510 million, described in the presentation as $415 million for public infrastructure, $50 million for drainage/stormwater and $45 million for affordable housing.

Process, timing and collaboration

Council President JP Morell and Budget Chair Councilmember Brett Jeruso (referred to in the meeting as budget chair) said budget hearings will begin Oct. 14 and continue through Nov. 6, with final adoption likely on Dec. 1. Jeruso told the chamber that although several budget-related ordinances were on the agenda for the meeting, they would be taken up as part of the full budget package later this year.

Threatt said the administration will redeploy personnel from its Project Delivery Unit (PDU) to revenue-generating and permitting work (permits, inspections, revenue, code enforcement) to help increase collections without expanding head count in the short term.

Public safety and events

The administration reiterated that public safety remains a top priority and that some operating costs will remain elevated because the city hosts major events (Mardi Gras, Jazz Fest, Super Bowl-related costs) that require significant security and public safety spending. The briefing noted that some event-related expenses and storm responses (including a major winter storm earlier in the year) created one-time pressures and reimbursements that have not fully materialized.

Council discussion and state-level constraints

Council members raised the role of state-collected assets (convention center, Superdome, arena, Lakefront airport) in New Orleans— revenue picture and urged a coordinated push for greater "fair share" treatment at the state level. Several council members urged pursuing state legislation to authorize additional local revenue options (short-term-rental tax adjustments, online gaming revenue sharing, permit-fee changes) but noted statutory limits on some fees.

Votes and ordinance actions at this meeting

- Adjourn previous meeting: Motion by Council President JP Morell, seconded by Vice President Moreno. Vote: 7 yeas, 0 nays (quorum was present). This motion adjourned the prior meeting.

- Dozens of budget-related motions and operating-budget ordinances were read on first reading and several administratively requested motions (M-25-5-14 through M-25-5-21 and related items) and the listed budget ordinances were deferred to Dec. 1 for final consideration as part of the full budget process. Many of those matters were described on the record as "deferred to December 1" or placed on first reading without immediate votes.

What—s next

Budget hearings start Oct. 14, with department-by-department briefings scheduled through early November and a likely adoption vote on Dec. 1. The administration asked for council collaboration to pass proposed revenue ordinances during the transition so funds are available to the next administration. The briefing packet and ordinance titles read at the meeting will be available with the council clerk and on the council—s docket ahead of the hearings.

Ending note

Mayor Cantrell and CAO Threatt framed the package as a mix of spending discipline and revenue generation aimed at rebuilding cash reserves while protecting city employees. Threatt said the administration—s immediate priorities are "curtail overtime, control spending with generating additional revenue, continue to provide public safety and operational services to the city at an acceptable level."