LATOYA CANTRELL, MAYOR CITY OF Ew ORLEANS October 5, 2020 Ms. Lisa M. Hudson Director of Personnel Department of Civil Service 1340 Poydras St., Suite 900 New Orleans, Louisiana 70112 RE: FORMAL REQUEST TO INVOKE FURLOUGH FOR CITY EMPLOYEES Dear Ms. Hudson: As we approach the 2021 budget season, the ?nancial implications the City of New Orleans faces due to are far reaching. As a result, we are at an extremely consequential point in time and must demonstrate that we are being thoughtful, prudent, and responsible as it relates to the City?s ?nancial integrity and position. The City of New Orleans began 2020 in better ?nancial health than at any point since Hurricane Katrina. General Fund revenue was expected to grow by 1.2% in 2020 to a total of The City was projecting an unrestricted fund balance of and a restricted savings fund balance of We had recently received bond rating upgrades from Moody?s and allowing us to ?nance capital projects while paying less in interest rates. Unfortunately, the impact of the COVID-19 pandemic has been severe and devastating the bottom has dropped, and we must manage our ?nancial status accordingly. The economic structure of New Orleans, particularly its reliance on the tourism and hospitality industries, positions New Orleans to have a steeper and longer recovery than most other cities. We are projecting a loss of approximately in revenues in 2020, which represents more than 20% of anticipated revenues. The two revenue streams most impacted as a result of the pandemic are sales taxes and ?nes and forfeitures. Together, these two areas represent over 96% of our estimated revenue losses. As we approach the 2021 budget season, we will continue to face unprecedented ?nancial challenges as a result of the pandemic. The upcoming budget year will be unlike any other we have seen before. Over the last six months, we have done everything in our power to close this revenue gap. For 2020, we were able to ?nd in one?time money to supplement our revenue losses. Additionally, we signi?cantly cut expenses by implementing multiple cost reduction measures to mitigate impacts on critical operations and services. These measures have included both a hiring and spending freeze, the evaluation of non?essential contractual obligations, the request for Departments to submit cost reduction and reorganization plans, and the mandate for Departments to implement a 20% budget reduction for the 2021 ?scal year. 1300 PERDIDO STREET SUITE 21304 I NEW ORLEANS, LOUISLANA I 70112 PHONE 504.658.4900 I FAX 504.658.4958 I alla age. Ms. Lisa Hudson October 5, 2020 Page 2 These efforts still leave us with a projected funding gap of millions of dollars. We had hoped to be able to close this gap by obtaining additional CARES Act funding from the State. The CARES Act, enacted in March 2020, allocated Coronavirus Relief Funding directly to local governments with more than 500,000 residents but relied upon state governments to distribute relief funding to smaller units of local government. Based upon the initial allocation to the State of Louisiana, we anticipated receiving approximately in CARES Act funding this year. However, the State Legislature has repurposed much of this funding and we now expect to receive only or about 40% of what was intended for our City. Over the last several months we have had extensive conversations with legislators and the State to advocate for the restoration of this funding. We held off on taking signi?cant personnel actions such as furloughs or layoffs out of hope that these conversations might yield additional funding. However, the end of the fiscal year is rapidly approaching, and we can no longer afford to hold out hope for funding that may never come. It is imperative that we begin to sharply reduce expenditures now in order to ensure that we can meet our ?nancial obligations this year. These actions are extremely critical and will be necessary for the City?s current ?nancial stability and future trajectory. Therefore, I am forced to officially request that the City invoke a furlough in accordance with Rule XII, Section 9.1 of the Civil Service Rules. This request is being made to avoid layoffs in 2020. All employees, including members of our public safety Agencies, classi?ed and unclassi?ed employees, and General Fund as well as non-General Fund employees will be required to take six (6) furlough days through the end of the year. Employees who are funded solely by federal, state, local, or foundation grants will be exempted. Exempted Departments and Agencies are the Aviation Board, the Sewerage and Water Board, all Public Benefit Corporations, and all classi?ed and unclassi?ed personnel employed by these Departments and Agencies, as they operate without City General Fund revenues. I will participate in this furlough and will encourage all other elected officials who receive their salary from City funding to participate as well. I further request that the Civil Service Commission waive the 30-day notification period required by Rule XII, Section 9.1(a) and the 10-day noti?cation period required by 9.1(f) so that we can begin furloughs immediately and minimize their impact on City services by spreading them out over the six remaining pay periods. Accordingly, we would like to begin the furloughs effective October 2020 and ask that the Commission hold a special meeting as soon as possible to authorize this request. I appreciate that this request will have signi?cant consequences for our many dedicated and hard- working City employees, and I do not make it Unfortunately, I anticipate that I may need to make additional requests of the Commission in the coming months. As we approach the 2021 budget cycle, the City is facing revenue shortfalls as severe as we experienced in 2020, but without the expectation of the one-time funds or federal funding for 2021. We will only be able to reduce personnel expenditures enough to fill this funding gap through some combination of furloughs, pay reductions, and/or layoffs. When we introduce the 2021 budget at the end of this month, that budget will necessarily include personnel spending cuts that will require action from the Commission or Personnel Director. I know that you appreciate the unprecedented situation that the City is in and that we share the common goal of continuing to provide necessary services to the residents of New Orleans even in these dif?cult times. I ask you to approve this request so that we can continue to provide these services in a fiscally responsible manner. Ms. Lisa Hudson October 5, 2020 Page 3 Thank you for your thoughtful consideration of this request. Should you need any additional information, please do not hesitate to contact my Chief Administrative Of?cer, Gilbert Monta?o. Sincerely, LaToya Cantrell Mayor, City of New Orleans cc: Chief Administrative Of?cer Gilbert A. Monta?o Chief Financial Of?cer Norman White Commissioner Michelle Craig Commissioner Brittney Richardson Commissioner John Korn Commissioner Mark Surprenant Commissioner Clifton Moore Councilmember Jason Rogers Williams, At Large Councilmember Helena Moreno, At Large Councilmember Joseph I. Giarrusso District A Councilmember Jay H. Banks, District Councilmember Kristin Gisleson Palmer, District Councilmember Jared C. Brossett, District Councilmember Cyndi Nguyen, District