(The Center Square) − The New Orleans City Council on Monday unanimously adopted a $1.6 billion operating budget for 2026, closing a projected $222.4 million deficit and aiming to stabilize city finances after a year marked by a payroll scare and warnings of possible state intervention.
The spending plan, built around recommendations from Mayor-elect Helena Moreno and Budget Chair Joe Giarrusso, pairs roughly $150 million in departmental reductions with $74.5 million in new and previously untapped revenue. The Louisiana Legislative Auditor reviewed the revenue package at the council’s request. City officials say the estimates are intentionally conservative.
Moreno, who takes office Jan. 12 and currently serves as council vice president, said the new framework is meant to end years of ad-hoc budget fixes and to put a priority on core services. “Our budget must reflect what matters most to New Orleanians. We will fully fund those priorities, especially public safety, and direct resources where they deliver the greatest impact for our residents,” she said.
The deficit emerged after an October report from the Legislative Auditor pegged this year’s shortfall at about $160 million – far higher than earlier estimates – and council members learned the city could not meet payroll through the end of 2025 without borrowing. The city secured a $125 million short-term loan from the state that must be repaid by mid-2026, putting added pressure on next year’s budget.
To help fill the gap, Moreno’s transition team and council staff identified several new revenue streams and accounting corrections. The package includes about $15 million in unspent federal pandemic aid, $29.5 million in reimbursements from the Sewerage & Water Board, roughly $14.5 million tied to stepped-up parking enforcement and $16 million from the Wisner Trust, along with smaller adjustments elsewhere in the budget.
On the spending side, the plan trims mayoral staffing and other executive-branch costs, consolidates some functions and relies on once-per-pay-period furloughs for a slice of workforce officials classified as non-essential – about 14% of city employees, or roughly 700 workers. City leaders say the measures are designed to be temporary while longer-term efficiencies and revenue options are developed.
At the same time, the council emphasized that several departments will be “fully funded” at or near current-year levels.
The 2026 amended budget allots $162 million to the New Orleans Police Department, up from about $149.4 million in 2025, and $132.5 million for the fire department, roughly matching this year’s adopted figure. Emergency Medical Services is set at $18.75 million, slightly above the current year, while the Juvenile Justice Intervention Center will receive about $7.8 million.
The plan also maintains support for the city’s 911 system and basic infrastructure.
The Orleans Parish Communication District is budgeted at $17.6 million, the Department of Public Works at $19.9 million and the Sanitation Department at $70.4 million – an amount that keeps trash collection and related services whole after earlier proposals to cut them.
Safety and Permits will receive about $6.5 million, while the New Orleans Recreation Development Commission is funded at $19.4 million and the Council on Aging grant at $1.2 million.
Although the general-fund line for Code Enforcement shows zero dollars in the amended budget, council documents note the agency’s total 2026 spending authority is $10.5 million, financed primarily through self-generated revenue such as fines and fees rather than the general fund.
In anticipation of ongoing staffing shortages, the council set aside $38.9 million for public-safety overtime pay in the Chief Administrative Office budget: $23.5 million for police, $5.9 million for fire, $3.5 million for EMS, $1 million for the communications district and $5 million for other agencies.
The budget vote capped weeks of friction between the council and outgoing Mayor LaToya Cantrell over how to close the gap.
Cantrell has said her office was largely excluded from the final stages of the process and that her revenue ideas were ignored. Council leaders counter that they repeatedly invited the administration to engage on the new revenue findings and to sign off through the city’s Revenue Estimating Conference, which recommends the official income forecast that must undergird the budget.
Council President JP Morrell said the council stepped in after Cantrell declined to approve the new projections at a Revenue Estimating Conference meeting on Monday.
“I am extremely grateful for the work of Budget Chair Joe Giarrusso, Mayor-elect Helena Moreno, and the members of the Cantrell administration who put together a budget that avoids future furloughs, as well as avoids the 30% cuts across the board that the Mayor proposed,” Morrell said, adding that he expects future budgets to be “transparent and forward-facing.”
Giarrusso called the final document “a product of continuous, difficult, and ongoing work” among council members, Moreno’s transition and the administration, and said more changes are likely as the city continues to address its structural deficit.
Incoming Budget Chair Lesli Harris said she is “optimistic about our city’s future, while fully acknowledging the difficult work ahead as we navigate a significant financial crisis.”
Moreno plans to convene another Revenue Estimating Conference on Jan. 12 to update the city’s forecast and begin what she has described as more frequent, hands-on management of the city’s finances.
