At the start of this week, Republican Treasurer John Fleming had no idea that his schedule would fill up so suddenly – only to watch it empty out quickly because New Orleans elected officials can’t face disempowerment caused by their past policy sins.
Fleming as treasurer sits on the somewhat-known State Bond Commission, as chairman. It meets regularly to approve of requests by state and local governments to authorize and sell bonds and to schedule ballot propositions. But it received an unusual request earlier this week.
New Orleans came to it asking to sell $125 million in short-term revenue bonds, in response to a “surprise” $160 million deficit. The SBC agreed to meet on the matter, but it became clear that its members weren’t at all jacked about the idea, pointing to lax fiscal administration by the city.
And with good reason. A deficit long had been baked into this year’s budget, with the city’s over $200 million in general fund reserves thought to pad that. However, the problem was the deficit was wildly underestimated given higher personnel costs – a combination of overtime to handle the January terror attack and special events that underperformed on the revenue side and until recently unrestrained expansion of the city workforce – and lower revenues than expected that Legislative Auditor Mike Waguespack said depended too much on the vagaries of tourism that if the reserve was allowed to cover in full would put the resulting amount barely above the minimum amount required by ordinance, and certainly would require a balanced 2026 budget both in plan and execution.
Yet the loan became necessary on top of this because the city engaged in a sketchy practice of using cash advances from the Federal Emergency Management Administration for qualified work that typically comes in the form of later reimbursement. Bureaucratic delays exacerbated by the government shutdown – ironically for the all-Democrat city government caused by Senate Democrats refusing to approve of a fiscal year 2026 budget – have left a cash crunch at present.
Of course, bonds don’t get issued at the snap of fingers and pledging revenues to cover would deprive that from paying off other items at least for a while, so the half-baked nature of the plan brought even more pause from SBC members. And then the ante got raised.
Fleming also sits on the little-known Fiscal Review Committee, which is empowered to appoint a fiscal administrator to oversee any local government’s finances if it qualifies under any of ten criteria, with the plan to use debt on recurring expenses certainly exposing New Orleans to having this happen to it. Along with Waguespack and GOP Atty. Gen Liz Murrill, they were exhorted by Republican Gov. Jeff Landry to meet and debate appointing an administrator, which Murrill already had endorsed.
They decided to meet Wednesday, the day before the SBC. At publicity of this, the city yanked the bond proposal which obviated the SBC meeting, and the Committee meeting was canceled as the condition for an administrator would not have gone into effect.
As a result, New Orleans has to figure out what to do in the short term. But that pales in comparison to the long run, a problem that has led to all sorts of finger-pointing. The City Council, including Democrat Mayor-elect Helena Moreno, blames the Democrat Mayor LaToya Cantrell Administration, claiming its members received insufficient information about city finances, while the administration says it put out public warnings that councilors waved off.
In reality, all including Moreno, who served as Council president in recent years, are equally to blame both in an administrative and in a policy sense. Councilors act like as if they were fiscal policy zombies, not taking any initiative to plumb deeper into finances even if they felt like they weren’t getting the whole story. And the idiotic Cantrell was too busy cavorting, travelling first class, and suing citizens to really care about what was going on.
But these different forms of inattention merely are sideshows to the real problem: as many SBC members expressed, years if not decades of fiscal mismanagement stemming from inferior policy choices. Certainly it doesn’t help to have a corrupt mayor, vapid sheriff, and deluded district attorney, because they can’t get it together, for example, to prevent New Orleans from being the most dangerous city in America.
Yet every elected official shares in policy-making (making the city one of the worst run in the country) that discourages economic development, such as tolerance of a criminal justice system that won’t seriously tackle crime, which reduces tax revenue generation, and making stupid spending choices such as on “affordable” housing and alleged sustainability. This isn’t a transient thing: year after year of leftist policy preferences have created a structural problem that won’t be solved, for example, by hitting up the equally busted Sewerage and Water Board – whose members are selected by city elected officials – for asserted payments owed worth $87.5 million.
Of course, the inmates would rather continue to run the asylum than let a more sensible party run things not only because it would clip their wings but as well it would admit an embarrassing mistake, if not series of them, so they acted to prevent any outside control. Unfortunately, with the track record they have, that’s probably going to make matters worse than they need to be, if not postpone the day of reckoning when they will lose fiscal control of the city to an outsider.
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