NEW ORLEANS - On July 10, the New Orleans City Council unanimously approved a plan to issue up to $90 million in tax revenue bonds to pay people who won lawsuits against the city but have waited years — sometimes decades — to receive their money.
The decision aims to resolve a mounting backlog of court-ordered judgments tied to personal injury cases, police misconduct, and lawsuits alleging city mismanagement. Councilmembers said the move is necessary to fulfill legal obligations while managing the city’s strained finances.
“This is about making good on debts we owe,” said Councilmember Joe Giarrusso. “We can’t fix what happened in the past, but we can ensure people aren’t waiting another decade to be paid.”
Funding Maneuver
Instead of paying the $90 million directly from the city’s budget — money the city doesn’t currently have — New Orleans will borrow from investors by selling bonds. The bonds will be issued in two parts: $40 million in 2025 and another $50 million in 2027. The city will repay investors over 20 years, using tax revenues, with interest.
However, city officials said the plan does not include paying the additional interest that would normally accrue on unpaid judgments, potentially leaving plaintiffs with less than they would otherwise have received.
Typically, legal judgments earn interest to compensate plaintiffs for the delay in receiving their money. By waiving those payments, the city avoids additional costs but effectively reduces what plaintiffs will ultimately collect.
The move spotlights a longstanding problem in New Orleans, where financial constraints and budget shortfalls have led the city to postpone paying court-ordered debts. City officials warned that while the bond plan offers relief now, new lawsuits could create fresh financial strains in the future.
Issuing bonds spreads the cost over time but adds millions in interest payments and increases the city’s debt obligations. Still, city leaders argue it’s the only practical way to clear the backlog and avoid further legal and reputational damage.
Payments under the bond plan are expected to begin once the State Bond Commission approves the financing, with all judgments scheduled for payment by the end of 2027.
Types of Lawsuit
Many of the judgments New Orleans owes stem from personal injury lawsuits. These include people who were hurt by city vehicles, injured on unsafe public property, or suffered harm due to city employees’ actions. The damages cover medical bills, lost income, and compensation for pain and suffering.
Other judgments come from cases involving police misconduct. People have sued the city over excessive force, wrongful arrests, or civil rights violations carried out by police officers. Some lawsuits also involve claims of wrongful imprisonment or malicious prosecution, resulting in significant monetary awards.
Another group of lawsuits involves city mismanagement and contract disputes. These cases include contractors suing for unpaid work, disputes over city land use decisions, and employees suing the city for wrongful termination or discrimination.
There are also hundreds of smaller judgments, sometimes for amounts under $10,000. These involve minor property damage, small injury claims, or disagreements over fines and fees. While individually small, they add up to a substantial total when combined.
