Will there be more shoes to drop?
That’s the question New Orleans officials were asking Thursday after Mayor Helena Moreno announced that the city has retracted a $110 million bond sale request before the State Bond Commission rather than have the commission reject it.
The mayor said the city appears to be facing retribution from Republicans angered by of Attorney General Liz Murrill by an Orleans Parish grand jury.
"I made the decision to withdraw our application before next week's Bond Commission meeting because it had become clear that denial was imminent,” Moreno said in a statement, adding, “we are hearing warnings that some state leaders may pursue separate efforts to target the City's finances, including the casino lease proceeds that recently strengthened our reserves and other critical funding sources.”
Several Republicans confirmed that the indictment of Murrill — which the Louisiana Supreme Court has suspended for now — has exacerbated tensions between the city’s Democratic officials and Republicans elsewhere.
“I can’t imagine New Orleans would get anything they’re asking for now,” said state Sen. Alan Seabaugh, R-Shreveport. “And I would be very surprised if they kept everything they’ve got now.”
Added Rep. Debbie Villio, R-Kenner: “The issues surrounding the indictment of our great Attorney General are very troubling. While — in theory — these issues stand alone, they also lead to serious concerns about much larger systemic problems in New Orleans.”
Gov. Jeff Landry responded to Moreno’s statement by writing her a letter in which he ratcheted up pressure on her.
Landry noted that the city won state approval in November to borrow $125 million from a bank that it repaid in May — but he didn’t note that Moreno inherited a budget mess from Mayor LaToya Cantrell that created the need for the short-term loan.
The governor also noted that the city received an upfront payment recently to future Caesars casino lease revenue. He said the deal cost the city $50 million in future lease payments, “a decision that is tantamount to the largest ‘pay day loan’ by a municipality in recent times.”
Landry then asked how the city could “urgently” request the $110 million bond sale one day and then say the money isn’t needed.
“The City’s ongoing inability to meet basic cash-flow requirements is unacceptable and raises serious concerns about management and transparency,” Landry wrote.
Moreno responded evenly Thursday night to Landry’s letter, saying that when city officials sought the short-term bank loan last year, they said publicly it “would likely be necessary as part of the City’s multi-year financial recovery.” She added that the Louisiana Legislative Auditor, who has been working with city officials to straighten out the finances, acknowledged that.
“Our request this year was therefore consistent with the recovery path that had been discussed from the outset, not the result of a new or unexpected financial development,” she wrote.
Moreno also addressed Landry’s question on how the mayor could now say the money wasn’t needed.
Without the $110 million in bond proceeds, the mayor wrote, “we are compiling a plan that defers tens of millions of dollars in projects, implements an additional $20 million in mid-year reductions affecting City operations, public safety and essential services, aggressively pursing collections owed to the City, and continue utilizing furloughs and other temporary cost-saving measures while we stabilize our finances. This path is achievable, but it is unquestionably more painful.”
Political fallout
Ron Faucheux, who spent two terms as a state legislator from New Orleans, said he worries about the fallout for New Orleans from the ongoing fight.
“The city always needs state help, and this fight badly hurts that effort,” Faucheux said in a text. “It also aggravates the underlying partisan divide. New Orleans is a blue city in a sea of red. I worry that the next state elections will become a nasty partisan and racial war, which would be a disaster for the state and city.”
The indictment is only the latest in a series of developments in recent weeks that have put Democratic-led New Orleans at odds with Republicans elsewhere in the state.
New Orleans officials were taken aback during the just-completed legislative session to eliminate nine judgeships in New Orleans, revoke funding for 10 assistant district attorneys and erase the position of Calvin Duncan, the newly elected Criminal District Court Clerk.
Landry added to the friction, in the eyes of New Orleans officials, by vetoing $33 million worth of projects for the city just after the session ended.
In turn, Republicans believe that the indictment of the popular Republican attorney general was payback by the city. In her indictment, a grand jury accused Murrill of committing 16 felonies by sending letters to Moreno, Orleans Parish District Attorney Jason Williams and five City Council members that threatened to remove them from office for opposing the law that eliminated Duncan’s job.
No evidence has emerged, though, to show that any city officials orchestrated the indictment.
to Murrill’s letter, saying she felt threatened by it but wouldn’t back down in her criticism of the attorney general.
But in an interview on Wednesday, Moreno said she played no role in Murrill’s indictment.
“I didn’t even know grand juries could do this,” she said, speaking of their ability to investigate crimes. “This is a court thing. Overall, it’s becoming such a distraction, and I just have to stay focused on the city and taking care of the city. That’s the lane where I stand.”
‘It’s gone too far’
Analysts with the State Bond Commission had raised questions in recent days about the city’s request.
The city was seeking the state’s approval to sell $110 million in “taxable limited tax bonds” and pay back the money over 16 years at a 7.3% interest rate, with most of the interest and principal to be paid at the end, “making it a very expensive loan,” said state Treasurer John Fleming, who chairs the State Bond Commission.
The bond commission and the treasury department “are not a party to plans for punitive actions,” Fleming added.
In her statement, Moreno said the residents of New Orleans will lose from any punishment by the state Republican leadership.
“Targeting finances will be detrimental to city services which we are improving every day, along with public safety where we have made historic strides,” she said. “Our murder rate is now so low that it is comparable to levels not seen since 1969. New Orleans is on a roll. We are finally making significant progress.”
In April, city officials cut a deal to bolster their reserves by selling the next nine years of revenue from its lease with Caesars’ casino. In exchange, the city received $103 million.
The attorney general’s office has filed a public records request for documents related to the deal, an administration official said. This refers to the concern Moreno expressed in her statement about the casino lease.
State Sen. Jimmy Harris, a Democratic senator from New Orleans who has a good working relationship with Landry and Senate President Cameron Henry, R-Metairie, said he is concerned that other actions by the Republican leadership may ensue.
“But I hope at some point everyone can be adults,” he said. “We all understand that politics plays into this. I get it. But when you’re now hurting the citizens you’re supposed to protect, the people who count on you, that’s when I think it’s gone too far.”
Harris said he will reach out to Landry but not immediately given the high political temperatures.
Members of the New Orleans City Council released a statement backing Moreno.
“"It is disappointing that the City's financial needs have become the subject of political disagreement rather than collaborative problem-solving,” the council members said. “New Orleans is an economic hub and powerhouse that anchors revenue for the State of Louisiana as a whole. Simply put, when New Orleans wins, Louisiana wins.”