Mayor Landrieu: Detroit bankruptcy is a wake-up call

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wwltv.com

Posted on July 19, 2013 at 5:30 PM

Updated Saturday, Jul 20 at 1:24 PM

Paul Murphy / Eyewitness News
Email: pmurphy@wwltv.com | Twitter: @pmurphywwl

NEW ORLEANS -- Mayor Mitch Landrieu is reacting to Detroit's decision to declare bankruptcy.

"Detroit should be a wake-up call," he said. "Bankruptcy is an awful option for any major American city and it always has to be the absolute last resort."

Landrieu also said for Detroit to be on its back in bankruptcy is really a sad thing for America.

But, he admitted New Orleans has its own financial challenges.

The mayor cited a firefighters pension system severely out of balance, courts with too many judges and expensive federal consent decrees for the police department and parish prison.

"As wonderful as we're doing in so many areas, we have financial pressures visited on the city that if not managed well, could force us into awful decisions that could lead to layoffs or tax increases or God forbid, the awful decision and you don't want to ever get close to that," Landrieu said.

In 2006, the independent budget watchdog organization Bureau of Governmental Research studied the possible implications of New Orleans declaring bankruptcy after Hurricane Katrina.

BGR President and CEO Janet Howard said, thankfully, the city was able to address its financial difficulties without having to take that drastic step.

"There were a huge number of employees that were laid off at that time and something Detroit doesn't have here, there was a big infusion of assistance from the federal government," she said.

As for the city's current challenges?

"Some of the areas (the mayor) is flagging are areas that really do need to be investigated," said Howard. "We're doing a study right now on what's the appropriate size for the courts. To the extent, what ever the costs are for the consent decrees, those either have to be met by cutting somewhere or by increasing taxes."

"We are not going to be great by accident and if we don't on purpose find a way make tough decisions now, we could find ourselves like Detroit and a lot of other cities that are found in distress," said Landrieu.

The mayor criticized some members of the New Orleans legislative delegation for not supporting his proposals to restructure the firefighters pension system and to reduce the number of judges in juvenile court, which he says would have reduced costs.

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