The city of New Orleans is in the midst of an unusual budget dilemma. It has more money than it can spend, and officials say that's a problem.
City revenues were more stable than predicted during the COVID-19 pandemic. On top of that, the city has taken in hundreds of millions of dollars in federal pandemic relief funds. Amid the rare surplus, however, departments remain woefully understaffed, struggling to provide basic services.
“We’ve reversed 180 degrees,” Councilman and budget chair Joe Giarrusso told Verite. “For too long we've said money is our problem, we can't do anything because we don't have the money. And now the money is there to do a lot of these things. So what is actually being done?”
A report from Mayor LaToya Cantrell’s administration in early March indicates the city is on track to spend just 65% of its already reduced personnel budget for 2023. Some departments are on pace to spend as little as 37% of their budgets for the year. The March report also shows the city’s fund balance — which comes from unspent surpluses — grew to $274 million in late February, up from $238 million in December.
Meanwhile, the city is sitting on a huge pile of federal funds. Mayor LaToya Cantrell’s administration still hasn’t spent the bulk of the $388 million the city received in federal COVID relief aid. The city has only used $600 million out of $1.6 billion in FEMA infrastructure funds from Hurricane Katrina, risking blowing a federal deadline and losing the unspent dollars, the city’s infrastructure czar Joe Threat said at a Monday council meeting. And he said the city has only spent $171 million of more than $500 million in voter-approved bonds intended for infrastructure projects.
Frustrated city officials and residents alike have questioned why a city with so many problems and a need for quality jobs is sitting on cash it could be using to hire desperately needed employees.
“Having money in the bank when you can't manage the city properly doesn't benefit anyone,” Councilman JP Morrell told Verite. “We all know how the money should be spent. The question is why isn't it being spent?"
The answer to that question goes back to the onset of the COVID pandemic in early 2020, when Cantrell instituted cost-saving measures to brace for the financial fallout. She avoided layoffs, but did institute a hiring freeze. As a result, the city largely stopped replacing departing employees, and the workforce declined.
The city’s financial outlook drastically changed in 2021, when New Orleans learned it would receive $388 million in federal pandemic relief aid. The Cantrell administration gave the green light for departments to start hiring and spending again. The city used the federal funds to raise 2021’s general fund budget from the $633 million originally approved by the City Council to $711 million — close to pre-pandemic spending levels.
It appeared that the Cantrell administration would avoid a serious budget crisis and services would return to normal. But the city never returned to pre-pandemic staffing levels. By the end of 2021, the city had spent just $610 million, even less than the original bare-bones budget.
The problem continued into 2022. And now it appears that 2023 could see more of the same.
Officials have offered various explanations for why the problem continues to confound the city, including ongoing pandemic impacts, a national labor shortage, lengthy hiring processes and poor working conditions.
But repeatedly, officials and employees have pointed to a central factor — low salaries that can’t compete with the private market.
“It’s everyone’s bottom line,” said New Orleans EMS paramedic Leslie Bean, who has been involved in city union organizing efforts. “As much as I like my job, love working for the city, love doing what I do, love being a paramedic, ultimately I have to pay my bills too.”
The Cantrell administration has recently taken steps to try to address the labor shortage with salary bumps. By far the biggest incentives went to the New Orleans Police Department, which received the vast bulk of a $37.5 million retention and recruitment package.
Police staffing is lower than it's been in decades. But it’s not the only department facing shortfalls. Practically every department has fewer employees than it is authorized to have, and some of the most vital departments are facing worker shortages even more severe than the NOPD.
But non-police employees didn’t get the same raises last year. The city approved a second, similarly sized incentive package of $38 million for all City Hall workers, but that money had to be split between a much larger group of employees, including the police employees who had already received dedicated pay bumps.
That second retention package gave City Hall employees a one-time bonus worth 5% of their salaries, a 5% raise this year and 2.5% raises in 2024 and 2025. That isn’t enough to really make a difference in hiring and retention, Morrell said.
“The positions have not fundamentally changed, except for those in law enforcement,” Morrell said. “The average position in City Hall, other than small bumps to employees, there's nothing that's definitively made the positions more attractive.”
Cantrell’s office didn’t respond to interview requests or questions related to staffing shortages.
Hiring issues continue in 2023
The City Council got a chance this week to probe the city’s inability to spend money as it kicked off its first quarterly budget hearings — a new process introduced this year in part to manage the staffing shortage and more than $2.5 billion in one-time funds.
On Monday (March 27), the first day of hearings, a clear theme emerged: Many departments don’t have enough staff to utilize their budgets and meet the public’s expectations.
In the first presentation, the Department of Code Enforcement revealed it’s on pace to spend only 37% of its personnel budget this year.
The department is responsible for several major council priorities, such as fighting blight and illegal dumping. Code Enforcement Director Thomas Mulligan told the City Council that in order to fully do its job, his department would need a major influx of employees.
“I would say [we need] roughly double, but I don't have high confidence in that,” Mulligan said.
On top of that, Mulligan estimated he needs 39 additional staff to fully implement the new Healthy Homes Ordinance, a law the council approved last year to create rental housing standards and renter protections.
“I think it's an important piece of legislation,” Mulligan said, referring to the Healthy Homes law. “But again it goes back to people. The best-intentioned notion, if it isn’t resourced with people, won't have the effect we desire.”
Mulligan said that the full enforcement of the ordinance would be phased in over time. In an interview, he couldn’t provide an estimate for when the office will hire all the necessary staff or when all rental properties will have to register with the city as required in the new law.
All in all, Code Enforcement needs to more than triple its current workforce of 33 people.
Several other departments reported similar problems to the council. The second presentation was from Parks and Parkways, which currently has 26 vacancies.
“It's a revolving door,” Director of Parks and Parkways Michael Karam told the council. “For every employee we hire, there seems to be employee terminations on par. I think this year we have six new hires and five terminations.”
The department after that, Emergency Medical Services, has a well-known staffing problem.
“Right now we are only operating with only 60% of our needed staff,” EMS Medical Director Meg Morino said.
Several officials and workers said that the city is stuck in an unfortunate cycle that began with the pandemic — the city became understaffed, the remaining workers were forced to take on a bigger workload. That caused higher rates of burnout and attrition and made it hard to hire more employees than the city is losing, perpetuating the staffing shortage.
“It's a feedback loop that has to be interrupted,” library employee and union organizer Lee Abbott told Verite.
Chief of EMS William Salmeron said the lack of staff is not only bad for overworked paramedics and the residents that rely on them, but also bad for the city’s bottom line. He said that billing for ambulance services brings in up to $25 million a year above what’s needed to run the department.
“We definitely are a revenue-generating department,” Salmeron said.
But low staffing has forced the city to supplement EMS through a contract with a private ambulance service, Acadian Ambulance. On top of the multimillion-dollar cost of the contract, Salmeron estimates that the city is losing out on an additional $6 million to $7 million because Acadian has taken over 23 percent of ambulance calls.
“We're paying them to take revenue away from us,” Bean told Verite.
‘People can get jobs elsewhere with better pay and benefits’
The lack of sufficient staff is, at this point, a widely recognized issue among the public, the Cantrell administration and the City Council. The question is how to fix it. One repeatedly suggested solution is raising wages.
“I can't compete with the $50 to $75 an hour that a hospital or contractor is paying somebody,” Salmeron said. “Those are just things we just chalk up to a loss. But we need to continue to make sure our hourly salaries are at least competitive.”
Some say the Cantrell administration’s recent wage hikes simply aren’t enough.
“Even though there have been attempts by the city to add little pay bumps here and there, we need a cost of living adjustment to really make working for the city a viable thing for people,” Abbott told Verite. “Because otherwise, people can get jobs elsewhere with better pay and benefits.”
Morrell said that if departments aren’t able to fill jobs at a certain price point, they should be “aggressively” trying to raise salaries through the Civil Service Commission, the agency that controls salary issues for most city employees.
Bean, the paramedic, told Verite that she believes her department leaders do all they can to advocate to the mayor and Civil Service. She believes there’s a need for another force to advocate for city employees — a union.
“One of my goals with unionizing would be to make a New Orleans EMS where employees are happier and able to have a long term career, because as it is right now the average retention for an EMS employee is about 18 months,” Bean told Verite. “If we have better benefits and salaries, it would ultimately benefit everyone because we would have more people available, more experienced people on the street, people who aren’t burnt out.”
Bean and Abbott are both part of the ongoing fight to revive a city workers union, which once represented City Hall employees before going dormant in 2018. They believe the effort is one piece of the puzzle to solving the city’s staffing problems. So do council members Morrell and Helena Moreno.
“A union for city workers would be tremendously helpful for the city to fill positions,” Morrell said. “If we had a group we could work to give us an idea of what we need to do to keep people with the city, it would give tremendous stability to our labor force, because right now it's completely unstable.”
Abbott said that along with big things like salaries and healthcare, a union can help pinpoint ways to improve city services, or smaller workplace issues that can impact employee retention.
“People want public services they can trust,” Abbott said. “The issue then is, how do these services become more efficient and high-quality. And that really begins from a bottom up perspective rather than a top down perspective. It has to have that piece of the workers' knowledge of their workplace.”
The union has made some recent progress toward real representation in recent months, and has won support from the City Council. But organizers still face roadblocks signing up members and getting the Cantrell administration to sit down to collective bargaining negotiations.
Bean said she believes that well over 50 percent of EMS field employees have now signed union cards. It appears to be a department with one most broad union buy-ins so far. But Bean said that ultimately, departments are interconnected and that for the city to work properly as a whole, all departments needed to be properly staffed.
She pointed out that the only 22 out of the city’s 45 ambulances were currently serviceable, in part due to understaffing at the city’s Equipment Maintenance Division.
“All the departments are interconnected,” Bean said. “The way to improve overall city services is to unionize all city workers.”
This article first appeared on Verite and is republished here under a Creative Commons license.