New Orleans Seeks More State Aid to Cover Expenses

City officials signal need for additional state assistance as they struggle to pay municipal employees and cover budget shortfalls.

Feb. 6, 2026 at 9:55am

Got story updates? Submit your updates here. ›

Facing another round of uncertainty over being able to cover future payroll expenses, New Orleans leaders have signaled a need to ask the state for more financial assistance. The city has used most of a $125 million loan it secured in November to bridge a cash shortfall, and officials say only about $6 million remains after the latest draw. 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 struggles highlight the ongoing challenges facing cities in the aftermath of the COVID-19 pandemic, as they work to rebuild reserves and rein in spending. The city's reliance on state aid also raises questions about the long-term sustainability of its budget and the need for more robust financial planning.

The details

The city council said the Louisiana legislative auditor approved its request to use $6.8 million to pay employees, and officials warned that after the latest draw, only about $6 million remains from the $125 million loan. The police department ended the year $37.9 million over its adopted general fund personnel budget, with $24.5 million in year-to-date overtime costs, $1.43 million in merit pay, and $1.69 million in terminal leave.

  • In November 2025, the city secured a $125 million loan.
  • On February 6, 2026, the city council discussed the spending and the need for additional state assistance.

The players

New Orleans

The city of New Orleans, Louisiana, which is facing budget shortfalls and seeking more state aid to cover expenses.

Louisiana Legislative Auditor

The state agency that approved the city's request to use $6.8 million to pay employees.

New Orleans Police Department

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

Bureau of Governmental Research

A New Orleans-based research organization that has recommended the city develop a five-year financial plan to achieve a structurally balanced budget and set a clear policy for general operating reserves.

Got photos? Submit your photos here. ›

What they’re saying

“I anticipate that next week you'll be out. There's probably going to be an uptick in overtime due to Mardi Gras. So if there are remaining funds, it's going to be very little. After that, the general fund will start to pay for payroll.”

— Chris Province, Official, Louisiana Legislative Auditor's Office (The Center Square)

“That would be up to the state bond commission. I can't say to how they would handle another (loan).”

— Judy Dettwiller, Director of Local Government Services, Legislative Auditor's Office (The Center Square)

What’s next

The city council will likely need to request additional state assistance to cover its budget shortfall, and the state bond commission will determine the terms and conditions of any new loan.

The takeaway

New Orleans' ongoing financial struggles highlight the need for cities to develop robust, long-term financial plans that can withstand unexpected shocks and ensure the sustainability of essential services. The city's reliance on state aid also raises questions about the role of state governments in supporting local budgets, especially in disaster-prone areas.