Posted on 11/04/2005 10:45:39 AM PST by abb
NEW ORLEANS (Reuters) - New Orleans is seeking federal aid and new loans to ride out a $204 million budget shortfall caused by the expected loss of all property tax revenue in the short term, the city's mayor said on Thursday. ADVERTISEMENT
"If we project out based on maintaining essential personnel and essential services throughout the year, the amount of money we're borrowing still leaves a gap of about $204 million," Nagin told Reuters in an interview.
"We're not bankrupt. We've been out of cash. We have a liquidity problem. But we have been careful to make sure that we continue to pay our debt service, which would cause all sorts of problems," Nagin said.
Hurricane Katrina killed over 1,000, forced tens of thousands of New Orleans businesses to close and left some 250,000 homes uninhabitable.
The city, which had a pre-storm population of almost half a million, is only expected to bounce back to about 250,000 in the short term given the dire shortage of housing.
Nagin said the city, which has still not recovered sufficiently to begin fining parking violators, did not expect to be able to collect any property tax revenue "any time soon."
In response, Nagin has cut general fund expenditures by over a third and laid off thousands of city staff.
"We have enough funds right now to operate until March next year, so that gives us some breathing room to try to figure out some solutions -- more federal resources come into play. We're talking to some banking institutions. And it just depends on how quickly on how the economy starts to come back," Nagin said.
New Orleans has over $530 million in general obligation bonds outstanding and $155 million in pension bonds, according to Standard & Poor's Ratings Services. Related entities such as the New Orleans Exhibition Hall Authority and the New Orleans Sewerage and Water Board also have outstanding debt.
Nagin said that although aid had been slow in coming, the city was in the process of applying for $120 million in federal borrowing under the Community Disaster Loan program.
Forced to try to woo major businesses back to the city, Nagin said executives have told him they needed to see a strengthened levee system, better schools and streamlined government in order to invest again.
"They don't want to see the bloated government that we had in the past," said Nagin, a former cable television executive who faces a possible primary election in February.
The price might be such that somebody like Bill Gates can just buy the city outright.
Yeah something like that. ;)
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.