The devastation of Hurricanes Rita and Katrina compounded the fiscal stress that many Louisiana communities were already facing.

A study entitled “Municipal Bankruptcy in Perspective” – recently released by the Bureau of Governmental Research (BGR) and the Public Affairs Research Council of Louisiana (PAR) – suggests that the City of New Orleans and other municipalities affected by the hurricanes should consider bankruptcy as one tool that could be used to help restore fiscal stability.

“…Debt repayment should be considered in the larger context of restoring the communities’ health and recovery,” according to the report.

While the study does not take a position for or against bankruptcy, it points out the advantages and disadvantages of this option, along with an overview of federal and state bankruptcy laws.

The City of New Orleans and the Orleans Parish School Board were both experiencing financial stress prior to the hurricanes, which hit hardest in the Cameron, Orleans and St. Bernard parishes. Restoring finanical health – while attempting to rebuild the community and its infrastructure – translates into a greater challenge than ever.

BGR and PAR recommend that New Orleans and other affected municipalities consider and evaluate all options – including bankruptcy – as they try to put the pieces back together.