New Orleans officers instructed the Metropolis Council this week the a battle to satisfy payroll is feasible earlier than yr’s finish, blaming a convergence of delayed federal reimbursements, runaway time beyond regulation and weaker-than-expected income.

Chief Administrative Officer Joe Menace stated town has relied for years on upfront “advances” from FEMA to maintain its post-Katrina Joint Infrastructure Restoration road and drainage work shifting. The town fronts prices and later will get reimbursed; latest advances usually arrived in $90 million to $120 million tranches.

However with a federal authorities shutdown and the Federal Emergency Administration Company’s Katrina program dealing with a tough cease on Dec. 31 except prolonged, the most recent giant advance hasn’t materialized. Regional FEMA officers have endorsed pushing New Orleans’ deadline to 2028, Menace stated, however the closing sign-off is stalled at FEMA headquarters.

With out that money bridge, the Normal Fund has needed to cowl building invoices, program administration and payroll for undertaking groups – simply as working pressures mount.

Finance Director Romy Samuels stated time beyond regulation blew previous budgets throughout a number of departments in early 2025 – police, fireplace and particular occasions amongst them – whereas income softened within the second half of the yr because of state coverage modifications that decreased metropolis collections mid-fiscal-year and regular late-year dips in gross sales and tourism.

“It was an ideal storm,” Samuel stated.

Council members pressed why the administration didn’t increase alarms earlier. Officers stated the FEMA extension request went in Aug. 7 and, till the shutdown, they believed approval was imminent.

Since early September, Menace stated he has imposed a hiring freeze, slashed journey and discretionary spending, restricted time beyond regulation to prior approvals, and begun every day cash-management conferences. He warned that whereas October payroll seems lined, November and December are in danger with out short-term financing.

Some speedy steps are underway.

The town despatched a 30-day demand letter to the Sewerage & Water Board over an $87.5 million receivable – a few of it courting again greater than a decade – for paving and different shared prices.

Council leaders stated any borrowing request will want an in depth, credible plan to curb spending by Mardi Gras and keep away from a repeat in 2026.

In addition they urged aggressive collections on excellent fines and reimbursements, and insisted time beyond regulation controls stay in place.