New Orleans dropped its request for revenue anticipation notes it said it needed to make November and December's payroll in order to avoid a state takeover and instead will cut spending and attempt to collect outstanding revenue.

The city's Democratic government needed the approval of the Louisiana State Bond Commission for the $125 million RANs it was planning. The commission was scheduled to consider the matter Thursday but Louisiana's Republican leadership made it increasingly clear the city would have to consent to a fiscal administrator for an indefinite period to gain the commission's approval for the notes. All 14 members of the commission are Republicans. The city on Wednesday dropped the request.

What the state sought "is beyond a payday loan," said New Orleans City Council President Jean-Paul Morrell. "It's like we take out a loan, pay it back and they take our house," said Morrell, who like the mayor and rest of the council is a Democrat.

A fiscal administrator "is essentially the state coming in and taking over the city," said Mayor-elect Helena Moreno.

Louisiana Gov. Jeff Landry Tuesday called on the bond commission to deny the city's RAN request, urging the state's Fiscal Review Committee to instead consider a fiscal administrator for the city.

Moreno said the council heard that State Attorney General Liz Murrill — a member of the fiscal review committee — would insist on a fiscal administrator before approving RANs.

New Orleans "has been substantially overspending, exceeding its budget by millions of dollars for three consecutive years," Murrill wrote in a post to the X site Wednesday. "Mayor LaToya Cantrell issued a clear warning in January of this year and a call to action, but nothing happened. The City Council intentionally budgeted only $57K for overtime pay when history showed it needed to budget at least $60 million. Now the city wants approval of a $160 million in a short-term loan without any strings attached."

Although Cantrell was "notably silent," Murrill continued, "Moreno has adamantly refused to consent to a fiscal administrator as a condition of obtaining bond commission approval. Her objections only raise more questions and concerns about the city's profligate spending, lack of meaningful oversight and opposition to accountability."

The city's fiscal year coincides with the calendar year.

Morrell said Wednesday afternoon the council's efforts to approve several financial measures that morning should have pleased state leaders.

The city issued RANs during the COVID pandemic and repaid them, Morrell said. The city planned to repay the $125 million RANs it requested with real estate taxes it receives in January.

"We are more than willing to work with the state to consider options for oversight," Moreno said. It is possible the city will seek bond commission approval for some form of borrowing in the near future, if the state can agree to a different form of oversight, she said.

Operating without the RANs will mean the city will have to work hard to pull in revenues and reduce expenditures, Moreno said.

New Orleans Councilman Joseph Giarrusso said the city's sewerage and water board has promised to deliver $9 million it owes to the city "soon." The city also expects $9 million from a cultural fund that can be used for the general fund.

The U.S. Federal Emergency Management Agency owes the city tens of millions of dollars, Giarrusso said, but the total is yet to be determined. Finally, the federal government owes the city $45 million through the American Rescue Plan Act.

New Orleans is seeking to collect these sums as quickly as possible, Giarrusso said.

The city could also use $32 million allocated — but not yet spent — for two projects, Giarrusso said.

The city also has $37 million in a rainy-day fund, Giarrusso said.

The city is considering directing all departments to end overtime until the new fiscal year, Moreno said.

Furloughing or laying employees off remains possible, Morrell said.

The city could impose impact fees for events in the city to cover costs incurred, like police overtime, Morrell said.

The shortfall will negatively impact city services, Moreno said. The city council is considering cancelling contracts and delaying payments to vendors.

City council members will meet with state representatives next week, Moreno said.

Moreno said the city council passed a balanced budget last year with healthy fund balances. A few months into the year, things began to change and the city's now departed chief administrative officer and its Department of Finance gave different takes on the city's financial condition. The city council ultimately determined the city faced a $160 million deficit.

Councilman Oliver Thomas said he asked the departed CAO in January if the city was headed to a dire situation and was told it wasn't.

The CAO and Cantrell told the council in January and February the city was taking steps to avoid the expected deficit including limiting overtime, Morrell said. The council found out after the city hired Joseph Threat as CAO that the city's use of overtime was curbed only in September.

The city wasn't paying much attention to overtime in the last few years because federal ARPA money was covering it, Morrell said. There was no ARPA money in 2025.

Moody's downgraded New Orleans' issuer default rating to A3 from A2 early in October, citing a material narrowing of liquidity. Due to unforeseen local circumstances — leading to unanticipated spending — and the federal shutdown, the city's financial situation has deteriorated this year. Threat discovered last week the city didn't have the money to make its payroll in November and December.

The Louisiana Legislative Auditor Mike Waguespack released a report in mid-October projecting the city would have a $159.8 million deficit this fiscal year unless changes were made.