New Orleans Plans Bond Talks With Rating Agencies

BECKY BOHRER

NEW ORLEANS (AP) — City officials plan to hold high-stakes talks with three rating agencies that could determine whether New Orleans can sell up to $40 million in bonds for street work.

The plans come as the City Council grapples with how to fill a projected $68 million budget deficit next year, and less than a year after the agencies gave the city investment-grade ratings that indicated they had faith in New Orleans' efforts to get back on track after Hurricane Katrina.

The funds are seen as important to helping keep on track some rebuilding projects, and the city has to convince the agencies of its financial footing. Since the 2005 storm, the city has relied on federal loans to help balance its budget, but Mayor Ray Nagin said last month he expected the last of that $240 million to be gone this year, leaving New Orleans with self-generating revenues — taxes and fees — to keep government operating. The city also expects to fall well short of its goal of having about 8 percent of general fund expenditures set aside in an emergency fund next year.

Officials have blamed the projected deficit in part on lower-than-expected sales taxes pegged to the national recession and the city facing higher-than-expected payments on a pension fund deal.