The N.O. tax base, and the quality of city services it supports, have been in steady decline for the last 25+ years. Productive, tax-paying citizens and the businesses that serve them have been leaving in droves for a long time. This has fueled the phenomenal growth in the neighboring parishes like Jefferson and St. Tammany.
Under the present circumstances, I expect that this trend will only accelerate now. The only money that's going to pay the bills in N.O. for some time to come is going to be federal aid. Nagin has not impressed me as being very rational. Not the sort of person you would want to lend your credit card to. The Feds better keep a really tight grasp on their checkbook.