State officials warn New Orleans faces fiscal instability; incoming leaders pledge weekly oversight of fund

An official identified in the meeting as the state attorney general told a legislative oversight committee that New Orleans appears to be “financially unstable,” prompting promises from incoming city leaders to tighten oversight, revise the charter and create new transparency around a $125,000,000 fund.

“The only thing that happens is that we vote, and we have to unanimously vote to put a municipality into a fiscal administration,” the attorney general said, describing the legal process (committee vote to authorize a petition, a court decision and court-appointed supervision) and stressing that fiscal administration is a last resort. The attorney general said the committee’s information shows three years of deficit spending and flagged what they called an egregious underbudgeting of overtime: “I think $57,000 was budgeted for overtime,” they said, and later described annual police overtime in the tens of millions (discussion referenced roughly $55,000,000).

Incoming city leadership, described in the meeting as the mayor-elect’s transition team, told the committee they will support a new ordinance and a charter amendment to increase accountability. An unidentified city representative said the ordinance creating the fund includes extensive drawdown language and requires weekly Wednesday meetings at 9 a.m. with the auditor to authorize distributions, a step the speaker described as a high level of transparency.

“We will get it right,” an incoming leader said, announcing that staff are building a $50,000,000 set-aside for overtime into the 2026 budget and promising weekly reporting to the legislative auditor. City and transition team members said two paid consulting firms — PFM and HRNA — were retained with private donations to provide technical and financial expertise; volunteers number about 300, they said.

Committee members and the Treasurer (name not specified in the record) emphasized the city’s revenue potential from tourism and conventions but urged the council and administration to avoid relying on one-time federal money for recurring expenses. A committee speaker recalled the post-ARPA budget lesson: when one-time federal funds disappear, recurring expenditures must be reduced rather than sustained.

Speakers said they will work with the inspector general (named in the record as Ed Michelle) to review spending back to 2022 to identify where deficit spending began, and bond counsel present reviewed proposed bond terms, which were discussed as part of a transparent condition to any bond approval. The discussion referred to an approximately 3.5% bond rate seen by participants.

No formal committee vote on fiscal administration or other policy actions was recorded at the meeting. The only formal motion on the record was a procedural motion to adjourn, carried by voice vote; the committee did not take other formal actions during the session.

Next steps recorded in the meeting: the city and incoming transition team will provide weekly reports to the legislative auditor, the inspector general will begin a retrospective review of 2022–25 spending patterns, and the incoming team will continue to consult with the council on bond conditions and the proposed charter amendment.

(Reporting note: several figures discussed in the meeting were presented conversationally and with some uncertainty; the transcript records the $57,000 overtime budget figure and a later reference to police overtime in the tens of millions. Where exact roll-call votes, sponsor names for motions or ordinance numbers were not provided in the record, this article states those items as not specified.)