Mayor Mitch Landrieu has unveiled plans to raise discretionary funding cuts for most departments from 2 to 3.8 percent as it tries to balance the 2012 budget.
The Mayor's Office issued the following news release Friday afternoon:
Today, the Landrieu administration announced its plans to manage and balance the 2012 budget for the remainder of the year. Due to an anticipated revenue shortfall of $13.1 million, the administration will both utilize savings from a previously approved debt refinancing while also increasing from 2 percent to 3.8 percent the previously announced cuts in discretionary funding for most departments, excluding the New Orleans Police Department.
Deputy Mayor and Chief Administrative Officer Andy Kopplin said, "We are constantly reviewing revenues and expenditures so we keep the city's budget balanced. Earlier this year we pro-actively held back 2 percent of most departments' discretionary funding in order to mitigate budget risks. We will now increase these hold-backs to 3.8 percent of discretionary spending and make them permanent reductions to the budget, while continuing to exempt the NOPD."
In March 2012, the Revenue Estimating Conference reduced projected 2012 revenues by nearly $14.5 million due to lower than expected sales tax growth, declines in traffic camera revenues due to policy changes, and reductions in utility and franchise taxes paid by Entergy New Orleans and its customers. By the Revenue Estimating Conference's late June meeting, City revenues had improved modestly leading the Conference to revise upward its forecast and lower the projected deficit to $13.1 million.
The City will address the projected shortfall through a two-prong approach. As a result of a debt refinancing in late 2011, which was approved by both the City Council and State Bond Commission, the City will save approximately $7.9 million that was budgeted in 2012. Another $5.2 million will be saved by the 3.8 percent cuts of most departments' discretionary funding. Earlier this year, the City announced a "hold back" plan to manage the 2012 budget in way that mitigates future risks. Those hold backs have been increased from 2 percent to 3.8 percent and are now permanent cuts. Non-discretionary spending will be protected, including all NOPD appropriations since fighting crime is the administration's top priority.
Deputy Mayor and CAO Andy Kopplin closed, "These cuts are part of our ongoing efforts to manage the budget. We believe these cuts will minimize impact on our residents and will allow us to still deliver basic services in these tough economic times when many other cities are laying off employees or even filing for bankruptcy. This is not to say that the cuts will not be felt. But we are working day and night to provide better, more efficient service and we will live within the revenues we have available. We will continue to hold regular Revenue Estimating Conference and BottomLineStat meetings to help us ensure spending and revenues remain balanced in 2012, just as we did in 2011."
After taking office in May 2010, the administration learned it had inherited a budget gap between projected revenues and expenditures which grew to more than $97 million. In 2010, Mayor Landrieu oversaw a plan that closed that spending gap by nearly $70 million by significantly reducing overtime, cutting and renegotiating contracts including MWH recovery management and sanitation collection contracts, reducing take-home cars in half, and furloughing all city employees 11 days. In its first full budget year, the Landrieu administration balanced the 2011 budget without relying on a fund balance for the first time since Hurricane Katrina. Since taking office, Mayor Landrieu has reduced annual general fund spending by nearly 10 percent from 2009, the year before he took office.