The City of New Orleans will apply for $125 million in short-term loans to cover its payroll through the end of the year, after council members approved the plan on Thursday.
Members of Mayor LaToya Cantrell’s administration said earlier this week that the city may not be able to make payroll through November due to delays in federal funding, unless it brings in more cash quickly.
The State Bond Commission, which needs to approve the move, isn’t scheduled to meet until Nov. 20, though it could decide to meet sooner.
The news comes amid hearings to finalize New Orleans’ 2026 budget and close this year’s estimated $160 million deficit, which officials plan to do by spending most of the city’s reserves.
Officials didn’t explain exactly how the federal money the city is waiting on for road projects would help cover its payroll, but it’s possible it would free up money elsewhere in the budget.
At an emergency meeting on Wednesday, council member J.P. Morrell criticized Cantrell’s administration for failing to bring overtime spending — a major source of the deficit — under control.
“What’s frustrating is that the commitment we got to the council was that things were going to change to prevent that deficit from happening,” Morrell said.
That commitment was made back in February. City finance officials said they didn’t take steps to cut down on the largely unbudgeted expense — now expected to surpass $45 million — until September, when the city’s deputy chief administrative officer Joseph Threat took over for then outgoing CAO Gilbert Montaño.
Threat said he’s also frozen hiring and promotions, and is trying to cut unnecessary expenses to avoid furloughs or layoffs.
City officials gave different reasons for the delay in federal funds through a joint infrastructure program that dates back to Hurricane Katrina.
Threat said the $120 million payment was stuck awaiting approval from the Federal Emergency Management Agency due to the now three-week-old government shutdown.
Meanwhile, Art Walton, the city’s intergovernmental relations director, pointed to New Orleans’ status as a “sanctuary city” for people who are in the U.S. without legal status as at least part of the reason. The Trump administration has directed FEMA not to send money to cities it believes are obstructing immigration enforcement. Walton said the city’s lobbyists are working to get New Orleans removed from the list.
City officials said they are also pursuing debts owed to the city, including $87.5 million from the Sewerage and Water Board.
