City of New Orleans Sacks Half Its Workers

Their homes are gone, their city evacuated, and now, some 3,000 “non-essential” city workers have been told by the City of New Orleans that the municipality can no longer afford to pay them. In a cost-cutting measure, Mayor Ray Nagin has decided “emergency leave without pay” is the way forward starting on Saturday, and final paychecks will go out this month. While he doesn’t seem to have much choice, one cannot help but wonder, is this any way to revive a city?

The mayor’s communications director, Sally Forman, said that police and firefighters would not be affected, and medical, sanitation and sewage workers could count on continued employment. However, recreation, parks, economic development, housing, finance, technology and legal functionaries other than police will be reduced to zero. If employees haven’t been contacted by their direct superior by now, they are to consider themselves part of the “pretty permanent” dismissals.

The city has seen its $13 million a month sales tax revenue drop to zero since the end of August when Hurricane Katrina broke the levees and flooded the city. “We are just not able to put together the financing necessary to maintain staffing at City Hall at its current level,” Mr. Nagin told the local daily, the Times-Picayune. “We have no revenue stream, and the prospect of getting revenue streams is pretty dicey. I think we can limp along for another month or two, but beyond two months we'll have to see.” The lay-offs will save between $5-8 million monthly from a city payroll of $20 million monthly.

Borrowing to keep the city employees hasn’t worked either. “We've talked to local banks and other financial institutions,” the mayor said, “and we are just not able to put together the financing necessary to continue to maintain our city hall staffing at its current levels.” In short, the private sector has no faith that New Orleans will get itself together any time soon.

The idea of rebuilding New Orleans without an economic development staff, without a housing department, without a parks department and without the rest may be appealing to the hard-core free marketers in America, but this is exactly the sort of action that will slow, not hasten, economic progress. Demand must be enhanced, not reduced, for the market to bring the city back. It is amazing that the federal government has pledged $200 billion to fix the Gulf but cannot find $8 million a month to keep these people employed. That's 3,000 families that won’t be buying things to rebuild, 3,000 more families not paying sales taxes, 3,000 more families with no reason to stay.

Moreover, New Orleans is not the only local government that is essentially bankrupt. The devastation of the rural areas of the Deep South, which have largely been missed by the media (because it is more inaccessible and the pictures are less dramatic), has left many counties and parishes (what Louisianans call counties) as broke as New Orleans. If Mr. Bush and his people believe that state and local officials are better placed than federal bureaucrats to guide redevelopment (and one cannot disagree) surely it is wise to pay for the continued existence of those state and local authorities.

© Copyright 2005 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.
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