New Orleans Seeks More State Aid to Cover Expenses

City officials signal need for additional borrowing as financial woes continue

Feb. 5, 2026 at 1:55am

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New Orleans leaders have signaled the need to ask the state for more assistance to cover growing payroll expenses, as the city has nearly exhausted a $125 million loan secured in November to bridge a cash shortfall. The city finished 2025 with a $72 million deficit in personnel spending, driven primarily by the New Orleans Police Department, which accounts for more than half of the projected shortfall.

Why it matters

New Orleans' financial troubles highlight the ongoing challenges facing the city as it struggles to rein in spending and rebuild its reserves. The city's reliance on state aid raises questions about the long-term sustainability of its budget and the need for more structural reforms to address the root causes of its fiscal woes.

The details

New Orleans has used most of the $125 million loan it secured in November to cover payroll expenses. Officials say that after the latest $6.8 million draw, only about $6 million remains. The city finished 2025 with a $72 million deficit in personnel spending, driven primarily by the New Orleans Police Department, which was $37.9 million over its adopted general fund personnel budget. The city's year-to-date police overtime total sits at $24.5 million, alongside $1.43 million in merit pay and $1.69 million in terminal leave.

  • New Orleans secured a $125 million loan in November 2025 to bridge a cash shortfall.
  • The city finished 2025 with a $72 million deficit in personnel spending.

The players

New Orleans

The city of New Orleans, Louisiana, which is facing ongoing financial challenges and seeking more state assistance to cover expenses.

New Orleans Police Department

The city's police department, which accounts for more than half of the projected $72 million personnel spending deficit in 2025.

Louisiana Legislative Auditor

The state agency that approved New Orleans' request to use $6.8 million to pay employees and is providing oversight on the city's spending.

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What’s next

City and state officials had anticipated the need for additional borrowing while New Orleans rebuilds its reserves and reins in spending. Councilmembers wondered if the same oversight would be a condition of the next round of state funding, but the legislative auditor's office said that would be up to the state bond commission.

The takeaway

New Orleans' ongoing financial troubles highlight the need for the city to develop a long-term, sustainable plan to address its structural budget deficits, including setting clear policies for building up its general operating reserves to better withstand future financial shocks.