The Hayride: Inside The Louisiana State Bond Commission’s Bailout Of Bankrupt New Orleans

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The past few months have been an absolute financial nightmare for New Orleans. The New Orleans City Council and Mayor-elect Helena Moreno scrambled to create a band-aid solution for the estimated $160 MILLION budget deficit the city faces for 2025.

But like magic, that band-aid materialized over the past two weeks. Thanks to a not-so-tough Louisiana State Bond Commission, which two weeks ago gave its stamp of approval, the City Council secured a $125 million loan from JP Morgan Chase. Just like that, the Democratic-controlled Council voted to approve $125 million worth of “revenue anticipation notes” from JPM at an interest rate of 3.5%.

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For those who don’t know, the Louisiana Bond Commission is entirely comprised of Republican politicians–including, but not limited to, Gov. Jeff Landy, AG Liz Murrill, Sen. Cameron Henry, Treasurer John Fleming, Rep. Julie Emerson, and Secretary of State Nancy Landry.

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During the meeting, the Commission members failed to give any meaningful scrutiny to the city’s financial management. Not a single Republican on the Commission pressed the Council about the city’s multi-million-dollar revenue shortfall or City Hall’s wildly excessive overtime spending.

The toughest the questioning got was when Gov. Landry spent 10 minutes or so walking Moreno and City Councilman J.P. Morrell and Louisiana Legislative Auditor Mike Waguespack through the process of trying to impose fiscal discipline on the city in exchange for the state giving it a bailout.

But the Commission gave the City Council everything it wanted–an approved loan with oversight from the Louisiana Legislative Auditor’s office (LLA). That could certainly turn inconvenient, depending on what Waguespack and his people find, but all Moreno and Morrell care about is that the money keeps flowing – and it will, for now.

Before the meeting, Gov. Landry and AG Murrill had publicly voiced concerns about the spiraling fiscal issues in New Orleans. In fact, both Landry and Murrill explicitly requested the Commission to appoint a fiscal administrator over New Orleans in late October.

Landry wanted the Legislative Auditor involved in the oversight of the loan because he wants, essentially, a forensic audit of New Orleans’ finances. At the end of the day, though, he let up on his demand for a fiscal administrator.

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By the end of the meeting, the Commission voted unanimously to approve the city’s’ $125 million loan request. No fiscal administrator for now.

Hopefully this doesn’t turn out to be the same old political theater: empty promises, closed-door dealings, and minimal oversight. Hopefully this decision will result in an accounting of how New Orleans, with a budget of a little more than $800 million, could have put itself in the hole by almost 20 percent.

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The voters of New Orleans put Cantrell and Moreno and Morrell in charge of the city; there is no reason to believe this mess will be fixed from below. And Landry, Murrill and the rest of the Bond Commission know taking on running the day-to-day finances of Louisiana’s big blue city is about as thankless, if not hopeless, a task as there is to take on. State Treasurer John Fleming, who chairs the Bond Commission, is running for the U.S. Senate against Bill Cassidy – do you think he’s interested in being held responsible for the shambles New Orleans’ books have become?

Ditto for Rep. Julie Emerson, who chairs the House Ways and Means Committee and is also running for that Senate seat.

Everybody involved would rather cross their fingers and hope Moreno and Morrell discover some semblance of fiscal continence – because New Orleans is now the crazy uncle in the state’s basement, fiscally speaking, and it’s better if it’s quiet down there because it’s certain good things aren’t going to happen.

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At the end of the day, the Republicans on the Bond Commission chose short-term political peace with New Orleans politicians over long-term financial stability. The New Orleans City Council had no leverage–yet the Commission folded to the city’s incompetence when it mattered most.

And what’s most problematic here is that without taking control of the city’s finances and putting its rapacious government on a diet, the Bond Commission–clearly taking its cues from Henry–has now put Louisiana’s Republican majority on the hook for the future bad decisions of its Democrat leaders.

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But if and when New Orleans goes deeper into the hole, it will be Henry–dragging along Murrill, Landry and the other Republicans on the Bond Commission–who will be in that hole with her (Helena Moreno).

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Maybe there was no choice but to sign off on that loan. But our Republican leaders are going to have to learn to deal much more harshly with messy leftists in the state’s big blue city if we’re going to have the Louisiana renewal we need.

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