The Moreno administration had planned to use another loan to help straighten out its fiscal trouble, but that is now off the table.
New Orleans Mayor Helena Moreno withdrew the city's request to the state bond commission to borrow money from a private lender, saying the bond commission was likely to say "no." Attorney General Liz Murrill, who sits on the bond commission, later confirmed Moreno's suspicion.
That means continued austerity on the city's part, but city leaders say they can make it work.
While the city had planned on a longer-term financing package to stabilize its budget, Chief Administrative Officer Joe Giarrusso said months of belt-tightening has helped the Moreno administration put New Orleans on a better financial path. He cited reductions in the city's payroll as one example.
"We are down almost 200 employees now than where we were before Mayor Moreno started. And that' still getting high operational services," Giarrusso said, like making sure that potholes get filled, street lights get changed, and other municipal responsibilities are met.
Giarrusso told WWL's Newell Normand that compared to this time last year, they have cut overtime spending in half.
"We were at roughly $31 million in overtime spending last year, and as someone who was the budget committee chair, and I remember you and I had these conversations, 'how are we spending so much in overtime? Why are we in this place? Are we going to reduce the overtime?' We're close to $16 million right now," he said.
Louisiana Governor Jeff Landry responded to the news by writing a letter to Moreno and posting it on social media. The letter accused Moreno and the city council of "robbing the City roughly of $50 million in future lease payments" by selling off Caesars Casino proceeds in exchange for a lump sum. Landry called that decision one "that is tantamount to the largest 'pay day loan' by a municipality in recent times."
"The city's ongoing inability to meet basic cash-flow requirements is unacceptable and raises serious concerns about management and transparency," Landry wrote. "My concern is that these approaches risk harming budgets and may lead to higher taxes, fewer services, or greater dependence on State support for New Orleans."
Landry demanded that Moreno and city leaders outline their fiscal plans and, on social media, demanded "transparency."
Two hours after Landry published his letter, Moreno responded with a letter of her own.
"You asked how the City could withdraw its financing request after stating additional cash flow was needed," Moreno wrote. "The answer is straightforward: after it became clear that approval at the Bond Commission was unlikely, we developed an alternative plan to make it through the remainder of 2026 without Bond Commission approval.
"That does not mean the underlying cash-flow challenge disappeared. It means the City must now absorb the financial impact in other ways. The long-term financing request was never intended to avoid difficult decisions—it was intended to spread those decisions over time. It would have allowed us to continue reducing expenditures in a deliberate and responsible manner while minimizing disruptions to essential services and our workforce.
"In fact, this was not unforeseen. When the City sought approval for its Revenue Anticipation Note last year, we publicly explained at the Bond Commission meeting that additional financing would likely be necessary as part of the City’s multi-year financial recovery. During those discussions, the Louisiana Legislative Auditor acknowledged that, based on the City’s financial condition and recovery plan, it was anticipated we would likely return this year with another financing request. Our request this year was therefore consistent with the recovery path that had been discussed from the outset, not the result of a new or unexpected financial development"
Moreno then obliged Landry's demand by outlining her plan.
"Without that financing, we are compiling a plan that defers tens of millions of dollars in projects, implements an additional $20 million in mid-year reductions affecting City operations, public safety and essential services, aggressively pursing collections owed to the City, and continue utilizing furloughs and other temporary cost-saving measures while we stabilize our finances. This path is achievable, but it is unquestionably more painful," Moreno wrote. "Looking ahead to 2027, our recovery plan remains focused on structural improvements rather than one-time measures. That includes continuing to right-size City government, implementing recurring efficiencies, and phasing in sustainable recurring revenues, including a sanitation fee. The Louisiana Legislative Auditor is currently completing the calculation of the number of households receiving sanitation service so implementation can proceed based on accurate data."
Moreno also defended the Caesars lease sale, noting that the funds the city acquired in that sale are accruing interest. That interest, Moreno said, will offset the initial discount the city incurred.
"The casino lease transaction should not be viewed in isolation," Moreno said. "It converted a long-term revenue stream into immediate financial stability at a time when the City needed it most. It restored reserves after years of financial deterioration, ensured New Orleans entered hurricane season with meaningful emergency reserves, and provided the flexibility necessary to continue delivering essential services during this recovery."
Moreno closed her letter by saying she and the state government have the same goal: stabilizing New Orleans's budget. However, she said this battle of political wills between the city and the state needs to end.
"Rather than continuing to exchange public letters, I have respectfully requested that we meet," Moreno said. "I would welcome the opportunity to walk through the City’s finances line by line, including our cash flow projections, our recovery plan, and the difficult decisions we have made over the past six months. I also welcome the participation of the Louisiana Legislative Auditor so we can review the numbers together and ensure our discussion is grounded in the facts."
