New Orleans Faces Deepening Financial Challenges, Earning a “D” Grade

New Orleans’ financial condition worsened in fiscal year 2023, with the city facing a $2.1 billion shortfall. This equates to a Taxpayer Burden™ of $18,300, earning New Orleans a “D” grade and classifying it as a “Sinkhole City” in Truth in Accounting’s latest report.

The city's financial decline was primarily driven by issues within the Firefighters’ Pension Fund. Actuaries projected that the plan’s assets would not be sufficient to cover benefits for current members, prompting a decrease in the discount rate from 7.5% to 3.26%. This change significantly increased the city's estimated pension liability, placing further strain on its long-term financial stability.
Despite pension-related challenges, New Orleans saw a $4 million increase in general fund revenues in 2023, largely due to higher red-light camera enforcement and traffic fines. However, this revenue growth is not enough to address the city’s substantial $1.5 billion in unfunded pension benefits and $388.6 million in unfunded retiree healthcare obligations.
Key findings from the report include:

• New Orleans had $1.5 billion available to pay $3.5 billion in bills.
• The city’s financial shortfall amounted to $2.1 billion, leaving each taxpayer with an $18,300 burden.
• Pension liabilities remain a significant financial challenge despite revenue growth.

New Orleans must implement long-term solutions to manage its financial obligations while maintaining critical public services. A balanced strategy focused on sustainable fiscal management will be essential for improving the city’s financial outlook.

For those interested in a deeper dive into New Orleans’ finances—and how it compares to other major U.S. cities—you can read the full Financial State of the Cities 2025 report here.