New Orleans Payroll at Risk; Seeking Short-Term Debt

New Orleans officials warn the city may be unable to make payroll through the end of the year, potentially jeopardizing roughly 4,000 employees, after newly discovered cash‑flow shortfalls prompted an emergency City Council meeting. The gap compounds a preexisting $160 million structural deficit and is driven in part by delayed federal reimbursements, including FEMA — notably a roughly $120 million advance tied to a post‑Katrina Joint Infrastructure Recovery Request and a pending grant extension — and has been complicated by the federal government shutdown and disputes over federal policies toward “sanctuary cities.” Internal fiscal problems, including tens of millions in overtime and hundreds of millions in uncollected receivables (about $87 million owed by the Sewerage & Water Board), are also straining cash. The administration is asking the council to pursue short‑term revenue bonds or a $100–150 million line of credit (described internally as “payday loan”‑style financing) to bridge payroll needs, though bond proceeds could take months and would increase debt. Budget Chair Joe Giarrusso and Mayor‑elect Helena Moreno have demanded public explanations as councilmembers weigh emergency measures while uncertainty remains over how long current cash can cover payroll.