An amendment to the city charter that aims to rein in spending is set to be considered by the New Orleans City Council in January.

The council is expected to decide on guardrails to stop city departments from spending more than the amount the council approves each year. The charter change would also need voter approval.

An ordinance introduced by Council President J.P. Morrell would amend the section of the city’s Home Rule Charter that governs how the annual operating budget is administered and enforced. If approved, the budget would be less of a guideline and more of a hard limit, with additional reporting to the council to catch problems sooner.

“If you had that charter amendment where the budget had to specifically define where each dollar is spent, it would be very easy for the council and a mayor to determine this is what we can afford,” Morrell told the city’s Fiscal Review Committee in Novemeber. “I think that, really, the opportunity here is to change budgeting in New Orleans forever.”

The proposed changes are aimed at preventing the city’s finances from worsening, as they did this year. In mid-November, city officials secured a $125 million loan from the State Bond Commission to bridge a mounting cash shortfall and cover payroll expenses. The loan came with tight state oversight.

In early December, the city unanimously adopted a $1.6 billion operating budget for 2026 that includes around $150 million in cuts and $74.5 million in previously untapped revenue.

Under Morrell’s ordinance, the city would be prohibited from making allotments, reallotments or inter-department transfers of operating funds if the changes could cause spending to exceed the amount appropriated for that fiscal year. Diverting from the budget would require council approval.

The city’s chief administrative officer and director of finance would be required to deliver monthly reports to the council on expenditures, including approved allotments and reallotments, and show whether current and anticipated spending is staying within the approved budget. The proposal also directs them to respond promptly to council requests for additional information needed to monitor spending.

A third major provision would bar the city’s finance department from approving or issuing any requisition, purchase order, voucher or check that could cause spending to rise above the budgeted amount.

Morrell told the Fiscal Review Committee that New Orleans’ current system has allowed overspending because “there is simply no requirement … that the budget be balanced,” and because the budget can function as a “giant suggestion” reconciled later by the administration.

His ordinance calls for the charter amendment to appear on the Nov. 3, 2026 ballot. If voters approve, the revised charter would take effect Jan. 1, 2027.

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