Mayor Landrieu Faces $67 Million Budget Deficit With "Eyes Wide Open"



Mayor Mitch Landrieu encouraged the audience to face the city's $67 million budget deficit with "eyes wide open" at his State of the City speech at Xavier University this afternoon, announcing citywide budget cuts of 25 percent for the next six months.


After his speech, Mayor Landrieu talks with Brazella Briscoe, manager of the Zion Harmonizers, who sang songs such as "If I had a Hammer," "In the End," and "Build me a Cabin," to warm up the crowd this afternoon.

More after the jump.

Landrieu compared the city's budget to the "hell hole" spilling oil into the Gulf of Mexico, adding that "like the spill, it's worse than we thought, and there are no quick fixes." The mayor drew whistles from the crowd when he said a thorough audit showed a budget hole of $62 million, not the $35 million he was told about during his transition into office — following the first five months of the year in which the budget was "mismanaged from the top to the bottom." Then he added a further $5 million deficit that was not properly accounted for in 2005, to make $67 million, drawing looks of shock and a broad silence.

Landrieu said his administration faces "nothing but hard choices," starting with the elimination of 50 positions in the police department. He said he has ordered his departments to review overtime spending and reduce hiring and travel. The city has also been wasting money, said Landrieu — spending over $50,000 to store $70,000 worth of unused furniture still in boxes, for example.

Despite the grim budget outlook, the mayor delivered an optimistic speech, 67 days into his term. "While it is true that we have inherited a myriad of problems and City Hall is dysfunctional, it is also true that we own it now," he said. "All of us, together."

Landrieu said the city's partnership with the Department of Justice is vital to reform "systemic weaknesses" in the police department. There have been 35 murders in the last 67 days, and Landrieu linked violent crime to a failure of the city's education system — highlighting his effort to request $2 billion from the Federal Emergency Management Agency to rebuild the city's schools. The New Orleans Recreation District is also "in shambles," Landrieu said, highlighting his effort to put a governance change for the agency before voters on October 2.

In economic development terms, Landrieu hinted about the planned reopening of the Hyatt Regency New Orleans hotel next to the Superdome, a story broken Wednesday by City Business Magazine and confirmed by Hyatt on the afternoon of Landrieu's speech.

Landrieu slammed Universal Health Services, incorporated, which owns the shuttered Methodist Hospital in New Orleans East. He recently offered the group $9.7 million to buy the vacant property but they declined, he said. The best offer UHS has so far made is to sell the property to the city for $40 million.

Landrieu expressed frustration that 80,000 residents in New Orleans East, Gentilly and the Ninth Ward are 30 minutes from an emergency room, and told those residents he is "on your side." The mayor is "frustrated that an out-of-state Fortune 500 company would propose such a deal after pocketing over a quarter of a billion dollars in Katrina insurance proceeds," he said, before promising a formal strategy announcement on the hospital on July 15.

All of the city's contracts are being reviewed, processed, and in some cases, terminated, said the mayor — highlighting the shortcomings of one contractor in repairing Armstrong Park. "A rushed process led to shoddy workmanship," said Landrieu. "Even basic tasks, like pouring the cement, were botched and had to be redone multiple times."

The speech was warmly received, with Landrieu even managing to elicit a big laugh from the crowd by making a Boudreaux and Thibodeaux joke, moments after announcing the 25 percent budget cuts across the board.

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