By the time the New Orleans City Council unanimously passed the city's $1.16 billion 2009 operating budget on Dec. 1, council members had less than three hours to spare. The City Charter requires the council to pass a balanced budget by the first of December, and council members met that deadline after a marathon 12-hour session. Our overriding concern isn't one of timing, however; it's whether the council got it right. In our view, the results are mixed.
Council members rejected Mayor Ray Nagin's proposed property tax increase — which would have raised not only $24 million, but also the ire of every property owner in New Orleans — and they did so without major cuts in services. In fact, even though the council had to work with less spending money than Nagin proposed in his budget, the city's 2009 plan should provide New Orleanians with more bang for their bucks.
Here are some of the improvements council members made to the mayor's proposed budget:
• They allocated an additional $1.45 million to District Attorney Leon Cannizzaro's office. As we noted last month ("Give the DA What He Needs," Commentary, 11/24/08), it makes little sense to bump up police protection while tightening the purse strings on those who put and keep hardened criminals behind bars. The additional funds will help our city's new DA keep 12 investigators and other key personnel as well as improve the DA's diversionary program, which allows first-time, nonviolent offenders to get drug rehabilitation and job counseling instead of incarceration.
• The council trimmed more than $1 million from the mayor's crime camera program. It was long past time to turn off the cash spigot to this leaky faucet of an idea.
• They gave $1.8 million more to the historically underfunded local public defenders' office. Increasing this office's budget is not popular with the tough-on-crime crowd, but legal representation is a right, not a privilege. Besides, properly funding this office will save money in the long run by reducing appeals based on ineffective assistance of counsel. The council displayed courage and wisdom in this decision.
• Council members put half of the Sanitation Department's $41 million budget into reserve, requiring regular performance audits on the three solid waste contractors until the council is satisfied the solid waste contracts are in compliance. After the overblown theatrics of Sanitation Director Veronica White (and her boss, the mayor) during budget hearings, this was a measured response. Like the council, we can't wait to see what those audits show.
Council members were under enormous strain to approve this budget on time. Allowing just one month to review a $1.16 billion budget, as is currently required by the City Charter, is unreasonable. In our view, future councils will need at least twice that time to review, discuss and revise operating budgets. So, while the Council made some improvements to Nagin's proposed budget, it also made some mistakes.
For example, the 2009 budget has an estimated $49 million revenue shortfall, which council members "covered" by tapping a one-time revenue source — a federal post-hurricane emergency loan — and slashing reserve funds. Nagin warned council members that doing so could mean "2010 will be a trainwreck."
Nagin's proposed budget already proposed using $25 million from the federally backed Community Disaster Loan (CDL), which would have left only $10 million in that till. The council opted to spend all $35 million that remains. While this meets the charter's balanced-budget requirement, it fails the notion of fiscal responsibility. New Orleans can't count on additional federal assistance for 2010. It would have been wiser, we think, to save the last $10 million of the emergency loan for future budgets. That figure represents slightly more than 2 percent of the $486 million general fund, the part of the budget under the city's direct control, but it would buy a lot of financial security.
Nagin probably won't veto the entire budget, but he could use his line-item veto to strike the use of another $10 million from the disaster loan. If that happens, the council may muster the necessary votes to override his veto — but we think the better plan would be for the council and Nagin to work together to keep the last $10 million in CDL money out of the 2009 budget. When Nagin chastised the Council for its budget proposal, Councilwoman Cynthia Hedge-Morrell replied, "You know and I know it's a living document. We deal with it every month."
Hedge-Morrell is correct. The budget is a living document open to debate and improvement during the budget year. At this point, we think the budgetary process has been a good one, but more work is needed. This may well require across-the-board belt tightening, but considering the alternative — a city unprepared for the future — we think it's a sound investment.