City Council - Regular Meeting

present, CAO Jeruso is present, Director of Finance Alyssa Rambo is present, and Mara Bumgardner-Forrest with Tulane University is present as well. So we have a quorum. All right, with that we will go through the adoption of the minutes. If I can get a motion please. Moved by Councilmember Harris. Second?

Second.

Seconded by Ms. Baumgartner-Force. All in favor? Seeing no opposition, the minutes are adopted. All right, with that, I will turn it over to CAO Jeruso for today's presentation.

Thank you, Madam Mayor. A couple of things to note before we get directly into the presentation. I want to welcome to the table Toni Weiss, who is a city economist now, and really want to thank her publicly for all of her work. Toni has been fantastic and dove in with both feet and asked a lot of really great questions. It's been a wonderful resource. I want to thank her on behalf of the city for all of her work. The other piece of housekeeping I do want to say out loud, too, is sometimes it is typical for us to adopt the 2027 revenue number at this meeting. We will not be doing that at this time because we expect the likelihood of additional revenue before the budget is finally passed on November 19th. So we'll have an REC meeting on the morning of November 19th before the council meeting to add that additional revenue, whatever it may be. So with that, we'll dive into the meeting. And we're going to start with where we were. And I know this is extraordinarily important to the city and to the mayor, and commend, again, Finance Director Rambo for all of her work in making sure that the city's bills got paid, but in particular for making sure that the revenue anticipation note, also known as the RAN, was paid. So as you can see, the operating budget for the city was projected ultimately to be $850 million, not what we started with. We repaid the $125 million, ran back, so it was close to having $975 million of things to deal with. Now, how we were able to do that is explained on this next slide, and I want to thank Abby for putting this together. The revised 2026 revenue forecast today of $885 million is greater than the anticipated full-year operating costs because the excess revenues, so in other words, that roughly $35 million over, were redirected to the RAND repayment. So that is how we made that work. In addition, reimbursements from grants recognized as revenue in prior years are not reflected again as revenue, but those cash infusions supported the RAND repayment. So in other words, as we got repaid for grants, we didn't recognize that as revenue, but we used that cash to offset what the RAND was. And then finally, as is noted here, the RAND drawdowns in January and February supported payroll expenditures. So with that, we move into the revenue forecast. Here is the previously forecasted revenue. I'm not going to go through it line by line because it's been discussed many times, other than to note two things that are going to change as a result of this. One, the GO Mesa will be deducted, and as a result of moving of the parking enforcement and less robust collection, that number will be deducted. So for Go Mesa, the 2.9 recognized, 2.9 million recognized in April will be removed. That really should be used for capital funding. It's really what supports our ability to bond out against the funding. So it was inappropriate to, maybe inaccurate is a better word, to include into the revenue mix. So we're taking that out of our calculation. In addition, as parking has moved over to NOPD and as we're also in the process of getting ready to do a new RFP, parking revenue is far less than what we anticipated. And so we have the obligation to make sure that that is reduced as well based on what the math is showing us.

So that gets reduced too.

Also here, the state transit appropriation is reduced by $1.2 million, also improperly included in the 2026 REC. This was meant for RTA as opposed to us. I'm going to let Alyssa explain the bond interest.

Yeah, sure. So for the bond interest, we had originally planned or projected bond interest at a rate that was equal to what we had earned last year for 2025, not realizing or not considering the actual spend down of those bond proceeds. So we did have to reduce for that amount. And we do expect that there will be an uptick again for 2027. as we know that we did get a new bond sale this year, and so we have replenished that bank account.

Thank you. Next, this one is important for us just to keep in mind. As a result of the renegotiation of the Caesars lease for the city, receiving a little over $100 million in order to make sure its fund balance is more robust, and as it will continue to grow as a result of being an investment account, we can no longer recognize the Caesars lease revenue for this year. And as a result of the fact that this is for half of the year because the transaction didn't close until May, we're subtracting $7.12 million from the revenue forecast. So that's all the news of subtractions. Now let's get to the additions. This one is actually something born from the mayor's time in the legislature, and I know also the mayor and Councilmember McCarran and others worked on this, is a state appropriation of $8.6 million for short-term rental fees. So we are expected to get half this year, and we will get more in the future. And so we are going to recognize that $8.6 million in increase. It was 4.3 the past year, so it is double now for this year. The second one is an interagency transfer from the assessor's office. I want to thank Assessor Williams. As a former CAO, he understood the importance of the city's financial situation, and because of his healthy fund balance, he transferred $16 million to the city funds, and those have already been received. In addition, we're recognizing the $20 million from Sujan Water Board reimbursements. The city is working with Sujan Water Board on this. As the slide notes, roughly $10 million that has been received already of the $20 million and my understanding from finance is that there's another about 3.4 million being processed so we're almost three quarters of the way there and want to thank sewage and water board for honoring that commitment and the additional funds that will ultimately be owed to the city This is the next biggest one. This is how we reclassified the bond money earlier. What we did was we took eligible projects that were ARPA funds and we moved them to bonds that freed up roughly $36.5 million. This is in order to make sure that we are meeting our cash obligations for the end of the year, but it's also part of the revenue for this year. And then as a result of the city and the mayor and the council passing the sanitation fee, for now we are advocating for a $2 million increase. The math on this would be closer to a little bit over $3.3 million if full collections were in place in October, November, and December. But we wanted to be conservative in our estimation and only include $2 million for these purposes. so with that as you can see the original adopted revenue forecast was 828 million and then after you take away the subtractions but then add in the additions the net gain is 56.18 million dollars and so the total revised 2026 forecast is $884,980,000. So almost $885 million. So that is where we are in terms of the budget right now. I will make some more comments at the end about how we're trying to shape the budget for this year in relationship to the one-time And I just want to thank the mayor and the council and everybody who's worked on finding these funds. As I've tried to say repeatedly, this has looked far easier than it has been. This has been quite difficult to generate almost 160 to 170 million extra dollars in a budget that started at $725 million. And so I think kudos to everybody for keeping their eye on the ball. and both willing to make hard decisions, but also be extraordinarily strategic in those as well.

So with that, I'm going to turn it over to Dr. Weiss and the academic chair. Thank you all for letting me present today.

Dr. Weiss, get the mic a little closer to you so we can hear you.

Thank you. Sure. I am a faculty member in the economics department at Tulane, but it's important for me to say that I am here as an independent contractor and not as an employee of Tulane. And I will be going through my methodology and some context for my numbers, and then to the forecast. I will try not to get too far into the weeds, but it is sometimes hard for me to take off my professor hat. I did start the end of June, and so in a relatively limited amount of time, I dove into the numbers. Once the Q2 numbers were finalized, I was able to meet with a number of city government, local economic and industry stakeholders to get a sense of where the economy is headed. I made projections on the end of 2026 numbers looking at historical patterns and seasonality, year-to-date collections, and again what I heard from the relevant stakeholders around the city. Once I had 2026 projections, looking at local and global economic trends, then I was able to make the 2027 forecast. So to put some of this into context, we can look at the unemployment rate. The August national number came out last week at 4.1%, so holding steady. We can see that our unemployment rate is essentially unchanged, a little bit higher than the national average, but holding fairly steady. From the Bureau of Labor Statistics, we can see what industries have shown increases and decreases within our local unemployment, and I do want to call your attention to one of the bigger numbers in construction. Construction is important because it is particularly sensitive to interest rates. The CPI will be coming out tomorrow, and the Federal Open Market Committee is meeting next week. And should interest rates get raised at that time, the construction numbers will likely see changes in there. That just sets us up for what we're looking at for the local economy. And here we can see the CPI. And again, obviously, energy is running much higher than other numbers. But still, all items we're looking at are much higher than the Fed would like to see numbers. My next few slides is really looking at GDP numbers. Not seeing much growth, a little bit of softening. One bright spot is the personal consumption expenditures of 3.4%. Given our economy and what we rely on in New Orleans, that is actually one piece of bright news that consumers do tend to be spending. But when we dig down into what their plans are, we can see across top five major numbers that those are going down. And what's important on this slide and my next few slides is that these are national trends. And because we do rely so much on tourism, we have to look at what people are doing across the country and how that will impact our local economy. Consumer Confidence Index is one of the biggest components, and we can see that that is trending downwards. These next few slides are essentially telling the exact same story, how people are feeling now, what they expect to see, and yes, there is a slight uptick we can see in those numbers, but looking at the trend, obviously since 2024, 2025, they're down pretty significantly. People were asked what their current financial situation is and what they expect their financial situation to be. Those people who answered better, it's going down. And those people who answered worse, it's kind of staying the same. But again, this is the context in which we are now trying to forecast our 2027 revenue numbers, inflation, what we expect, that is so tied to energy prices, and that is tied, of course, to what's happening in the Middle East. So that's the context in which we are operating, and now what I assume you really want to know are the numbers. taking these kind of one-by-one property taxes, assuming no change in millage at this point, and no reassessment, I'm not forecasting an increase in those property tax numbers. I guess the good news is I'm also not forecasting a decrease either. Sales taxes are obviously a really crucial element, the biggest component out of our total budget. General use sales taxes, I am projecting that to be flat with a plus or minus 1.5% kind of leeway. I've kept those flat. But I did create some softening in those numbers that are more tourist-related, so hotel-motel tax, tour guide, taxi numbers, those numbers I softened a little bit. The good news is sports wagering is really strong. So that helped us there. For licenses and permits, that is a nice increase that is associated some with building permits. So the Omni project, the Tulane Charity project will inject some new funds in there, but that is primarily as as Mr. Jeruso said earlier, that 8.6 state appropriations for the short-term rentals. That number is also slightly offset by a decrease in the break-tag revenues. Intergovernmental is down. That is almost entirely the loss of Harrah's rent. Service charges are up. That is the new sanitation fee. That is the expanded EMS collections. And the, yeah, that's what that is.

Oh, no, no, you're right.

Fines and forfeits are continuing to decrease because of the red light and speed camera enforcement is going down. It's not a significant decrease, but that is there. And miscellaneous is down slightly. Some of that is interest decreasing from bonds. So taking all of that together, I am forecasting recurring revenues of approximately $756.7 million. And that is a 3% increase over our projected 2026 ending revenues.

All right, thank you, Tony, for going through those slides. I wanted, I will have on, do you mind going to the next slide? I'm sorry, if you don't mind going, I'll do the next two. Also, as a point of order, the lawyers have pointed out to us that, notwithstanding the fact that thank you very much then notwithstanding the fact that uh we will adjust it the forecast for 2027 again that we should adopt the 2027 forecast so i'll suspend the rules to do that but before we get to that i want to point this out as well and the reason i'm doing this is is for two purposes One is to show the mayor's commitment to grant reimbursements and making sure that those are being right-sized in the way that they're supposed to. But then secondly, one of the things the rating agencies have criticized the city about is that nearly 20% of the budget in 2026 is relying on one-time revenue. And if you have, you know, a fund of our size that is at 20%, that is not an insignificant amount of money. In 2027, only 1.5% of that comes from one-time revenue. And so that is a significant shift in making sure that we are structurally balanced and restoring the city to the way it ought to be and not having to scramble to find one-time funding. And then, as I alluded to at the top of the meeting, these are the type of matters that could be added to the budget ultimately. We are going to continue to scrub but talk about the millage roll forward. We feel comfortable that the amount of money roughly for the direct general fund revenues, which is sometimes internally called general alimony, will total about $10.16 million. The police and fire millage pay is roughly 4.36. And then other revenue is around 28. That includes, as I understand it, other police and fire, early childhood education, the library, NORD, park and parkways, Audubon, and city park. So what is not included in this number is sewage and water board or any of the other outside agencies. and then again um the council has been has been thoughtful and a great partner with the other two items the permit fee increase has already been introduced it has to lie over for 21 days so it's not ripe to be voted on yet but we estimate a little under $2 million at 1.8 in addition to the general fund if that gets done. And then the short-term nightly fee is still being worked on, and that number may be a little light as of right now in light of some potential recent changes. but that could be an additional $3 to $5 million. So taking the midpoint of that, a potential $6 million in additional new revenue aside from the millage roll forward and the millage roll forward obviously constituting the other part. So assuming some or all of those get passed, that will dictate what the final number is. So that concludes the presentation. I guess what I would like to do is two things. Take up item number four, which is adoption of the amended official budget, and then suspend the rules to adopt the forecasted number of $768,249,094 on substantive slide 35. But let's take up item number four first. Is there a motion for the adoption of the amended official 2026 revenue forecast? Moved by Mayor Moreno, seconded by Alyssa Rambo. All in favor? Aye. Aye. um let the record reflect five verbal eyes to that and then i will move to spend the rules to add the 2027 forecast to the agenda um may have a second seconded by mayor moreno all in favor aye please let the record reflect all voting yes then i'll make a motion to add this to the agenda um may have a second seconded by council sorry by mayor moreno All in favor? Aye. Aye. Old habits die hard. And then finally, in light of the report from our economist, Tony Weiss, to preliminarily adopt the 2027 forecast, as I said earlier, of $768,249,094 as the projected revenue, which is roughly $40 million higher than the projected revenue from last year. You want to move on that, Mayor? Moved by Mayor Marino. Second. Seconded by Councilmember Harris. All in favor? Aye. Please let the record reflect. Five affirmative votes on that as well. Mayor?

Thank you, Councilmember Druso, for your presentation. I did it again. God. And I almost didn't catch myself. Thank you, CAO Druso, for your presentation. But more than anything, I want to thank you and your entire team, finance, the New Orleans City Council, really everyone who's worked so diligently this year trying to find every single dollar so that we make it toward the end of the year. many sleepless nights, many 3 a.m. wake-ups, texting the CAO about, like, how are we going to get through the next month and the next month? And, you know, I just really appreciate how everyone has worked together to find solutions. I say this over and over again. It wasn't about thinking outside the box. It was about throwing the box out completely. and just figuring it out and one thing I'll say about this administration is that we are all very positive and we all know that if we put our heads together we're gonna find a way because this administration constantly says that we have the will which means that we will find a way and so that's what happened this year during this budget and I just am so grateful for everyone who works so diligently around the clock for the people of New Orleans to get this done and found the dollars to make this year work it was a really very brutal year for us, but we made it work, and we still were able to enhance city services, and I think that says a lot about the team that we have running this city right now, always putting the people of New Orleans first. So thank you, Joe, for all your hard work and your entire team, and to the New Orleans City Council as well.

Thank you. All right. Unless anybody has any other comments, I will move to adjourn. Seconded by Councilmember Harris. All in favor? Aye. Thank you all very much. Thank you again, Professor Weiss.

My pleasure.