State-city standoff leaves New Orleans without payroll fix

The big picture: City Council President JP Morrell and Mayor-elect Helena Moreno said Wednesday they withdrew the city's request for funding through the State Bond Commission.

• The money was needed as a stopgap to make payroll until the federal government reopens, said chief administrative officer Joe Threat.
• The council's decision came after state Attorney General Liz Murrill, who sits on the commission, wouldn't approve the request without the state taking over the city's finances.
• Axios New Orleans first reported that Murrill was investigating the option last week.

The friction point: Murrill in a statement Wednesday said she wouldn't entrust the city with millions "without meaningful budgetary reform."

• Her full statement was critical of Moreno and the $160 million deficit, saying she and the council failed to "ensure fiscal responsibility."
• Moreno at a press conference compared the fiscal administrator to a federal consent decree, saying it would give the state power over financial decisions indefinitely.
• "That is essentially the state coming in and taking over the city," she said, a move she would "not stand for."

Zoom in: Threat is sending notices to employees Wednesday and Thursday about the new cost-cutting measures, Morrell said.

• Overtime is suspended, including for NOPD. Vendor payments will be delayed and there may be layoffs.
• "Everything is on the table," Morrell says, with the priority given to funding essential services and salaries.
• Added Moreno, "The impact on this is going to be detrimental."

Between the lines: A full day of furloughs for everyone in the city would save about $1 million in payroll, Morrell says.

• But even if they did that for the rest of the year, it wouldn't be enough to fix the deficit, he says.
• Officials say they are limited on the types of stopgap funding they can get while they wait for FEMA to reopen.
• After being told the city didn't qualify for a line of credit, council members pursued the bond request, which Councilmember Lesli Harris dubbed a payday loan. Now, with neither available, furloughs are becoming more of a possibility.

Zoom out: City officials are hustling to find money elsewhere.

• They say the Sewerage & Water Board, which is a state agency, owes the city millions. The payment should be here in November, council members say.
• They are also seeking millions in outstanding grants and judgments.
• Plus, they have $37 million in the rainy day fund they can unlock.

What's next: Moreno says she and other leaders will meet with state officials next week about potential solutions.