New Orleans City Council President Jackie Clarkson defended the council’s decision to not roll forward on a 10 mill property tax increase that Mayor Ray Nagin said was vital to the city’s recovery.

The council passed the 2009 budget Monday without raising property taxes to fill a $24 million dollar shortfall that largely stemmed from the evacuation and response following Hurricane Gustav.

Nagin vilified the move, saying that it would set up the city for financial turmoil in the future and could seriously slow the city’s recovery.

“I want to put it on the record that I’m predicting in 2010 we’re going to have a financial train wreck,” Nagin said after the council approved 2009 budget.

But Clarkson was all smiles Tuesday morning on the Eyewitness News set, and she was confident in the council’s decision to use already allotted federal funds instead of further taxing citizens. To fill the shortfall the council opted to use funds from a Community Development – a federal allotment of cash that Clarkson referred to as “free money.”

“That’s a loan that’s going to be forgiven. That’s like free money; why not use it?” Clarkson said. She admitted, though, that the loan had not been forgiven yet, but that she expected upcoming Obama administration would do so.

“Do you think we’re going to hold on to a $10 million disaster loan in the Obama administration? I don’t,” Clarkson said.

She added that with the recent spurt of natural disasters, such as damages from Hurricane Ike in Galveston, Texas, and the Midwest flooding during the summer, there is a new chapter for America where disasters would be treated like “foreign invasions,” with the federal government forgiving more of its loans.

Clarkson feels that the city’s approach of not raising taxes will spark a growth in revenue, something she said is sorely needed.

“We do think about taxes and a little bit about cutting, but we never think revenues,” Clarkson said. “We have to think revenues, and we have to get smart about it. The opportunities now in this city are second to none.”

Clarkson said she was disappointed that the council did not cut part of the New Orleans Sanitation Department. She said the city was overpaying as much as 15 percent to the department.

“I tried to cut sanitation’s budget, and I only had three of us voting for it. We have documentation for the last two years through my research and Mrs. Head’s research that we’ve been overpaying 15 percent, and so we need to get that straight,” Clarkson said.

There is a pending audit launched by the Nagin administration into the department. Most of the money allotted for the department has been put in reserves until that audit is finished on Dec. 12, Clarkson said.

While Nagin’s disapproval of the budget seemed to spark tension in the council – City Council Vice-President Arnie Fielkow sharply responded to Nagin’s comments, which you can watch here – Clarkson said that he was allowed his opinion and that the drama was nothing out of the ordinary.

“This was not unusual. I try to keep the peace as president of the council. It's not about who you fight with, it'd about what you get done," Clarkson said. "I feel we got plenty done.”