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The city's budget shortfall of about $100 million is affecting its bond rating.
Moody's has downgraded New Orleans' issuer rating as well as its general obligation and tax bond ratings from A2 to A3.
The downgrade comes as New Orleans City Council works to adopt the Fiscal 2026 budget.
An expert with Morgan Stanley says the downgrade isn't a good thing, but it's not a crisis, since most investors see A3 as a favorable grade.
Still, the downgrade could mean the city pays higher borrowing costs.
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