2025 Budget Season Recap
The 2025 Budget season kept us on the edge of our seats with one crisis after another. The story had its twists and turns, but the bottom line was this – the City spent more money than it brought in. This meant they had to borrow $100M from the State to break even in 2025, and they’re going to need to close an additional $222M hole in 2026.
How did we get into this mess?
It was a perfect storm, of sorts, with many problems contributing to the overall outcome.
Bad Budgeting - The City used to budget for un-filled positions, meaning there was a cushion of extra funding that wasn’t spent in a given department. Departments would spend that extra funding to cover overtime expenses. In 2024 they stopped budgeting for vacant positions, but failed to add funding to cover overtime. This meant they overspent by about $70M in overtime salaries in 2025. Additionally, the revenue projections the City made before the Superbowl and Mardi Gras were too high, so a lot of the event-related costs they incurred weren’t covered by the revenue that came in.
The terrorist attack - The attack on January 1st not only took a lot of City resources to respond to, but it also created a need for increased security at the major events the City hosted in February. The City implemented stricter security for the Sugar Bowl, Superbowl, and Mardi Gras, which ran up overtime spending.
Unprecendented snowfall - The January blizzard was not on anyone’s bingo card — and responding to the blizzard cost the City more in emergency preparedness, street and infrastructure maintenance and repair, and emergency response. Because the Governor didn’t declare a State of Emergency, the City wasn’t able to get those funds reimbursed by the Federal Government.
Federal Government shutdown - Last fall marked the longest Federal Government shutdown in history, which meant the City wasn’t getting reimbursed for federally-funded programs. We also learned that the City had made a deal with the feds to get grant funding upfront (usually they’re reimbursed after they spend the money), and were using that funding to cover payroll expenses. When that funding paused they were thrown into a cash crisis.
Bad Financial Management - Inside and outside City Hall, there has been a general lack of good information about the budget and spending. This meant that City Council, the administration, and watchdogs all were unprepared to see this crisis unfolding until it was too late.
So now what?
To solve the problem, the Moreno Administration is looking at both sides of the equation – finding additional revenues and cutting expenses.
The Cuts: The biggest cut ($36M) comes from personnel, with over 90 staff being laid off, and entire offices (Youth & Families, Criminal Justice Coordination, Resilience & Sustainability) slashed. Additionally, there will be a one-day-per-pay-period furlough for City employees making more than $30k/year. This means that one day out of every 2 weeks, affected City staff will not be paid.
Over $14M of unspent ARPA money will also be reallocated to fill the hole, meaning social programs are being halted or canceled. Over 1/3 of the cut impacted youth-serving programs. Learn more about the cuts here.
The revenues: The City is focusing on collections to increase revenues, including overdue parking fines, property tax collections, and overdue payments from the Sewerage and Water Board. (learn more here)
How did they let this happen?
This is the 322-million-dollar question. The council blames the Cantrell Administration. The Administration blames the Council. The truth is, they both let it happen. This crisis has (again) proven that we need better transparency on the budget and spending.
