Joseph Krist

Publisher

COLLEGES

The fight between Harvard and the President is gaining the most attention but the efforts of ICE to round up international students and withdraw visas is a concern to many other schools, especially state universities. Increasingly, reports grow regarding the revocation of visas and subsequent detentions of some international students. If that results in reduced enrollments by foreign students, it is raising financial concerns. This represents an escalation of efforts to restrict foreign students dating to the first Trump administration.

The fear is that even if restrictions on student immigrants are relaxed, that there will be less demand from this cohort. It is of great interest to the universities reflecting the fact that these students are typically “full fare” paying customers. It also is a way to put pressure on public universities where strictly financial measures would have less impact. Those schools are also under enough pressure as the federal funding for research is under siege.

PUERTO RICO BLACKOUT REDUX

On April 16, the electric system serving Puerto Rico once again managed to blackout the entire island. Luma Energy, the private operator of the system asked for three days to identify the likely cause. Among the possibilities are something wrong with a protective system intended to keep a breakdown on a single line from shutting down the entire power grid, and that a transmission line in western Puerto Rico might have been affected by overgrowth.

Luma warned in March that the system’s power supply would probably not be sufficient to meet peak demand over the summer. The government has solicited bids for an additional operator or operators to provide more power on the island. Until contracts are awarded and progress made on generation infrastructure, Puerto Rico will have to rely on some luck to avoid additional negative impacts primarily related to hurricanes.

POLITICS AND EDUCATION

The Texas legislature is on its way to enacting one of the largest taxpayer-funded school voucher programs in the country. The program would provide about $10,000 to students for private school tuition, or up to $30,000 for disabled students. It would also offer up to $2,000 for home-schooling costs. If demand exceeds funding, priority for the money will go to children with disabilities and those from low-income and middle-class households who were previously enrolled in public schools.

The money could eventually become available to any child, including those already enrolled in private education. The Texas program is expected to reach up to 90,000 students in its first year. An amendment to put the measure to a popular referendum was voted down. The program would be capped at $1 billion in its first year, but could grow quickly, potentially reaching an estimated $4.5 billion annually by 2030. The funds can be used for private school tuition and for costs associated with home-schooling, including curriculum materials and virtual learning programs.

Texas public schools have not seen their budgets increase along with inflation. As part of the negotiations to win over the Texas House, lawmakers also approved nearly $8 billion in additional funding for public schools.

MAYORS, BUDGETS AND ELECTIONS

One is running for reelection after being bailed out of criminal charges by questionable decisions by the Trump administration, one just won election, and one faces reelection pressures in 18 months. They have in common potential budget problems which will require hard choices as well as candidates available to challenge incumbents.

Since our last issue, the City of New York has seen the race for mayor attain some level of clarity. The issue is not whether there will be a new mayor but rather who. Mayor Adams is haunted by a trail of questionable ethical and managerial issues. He has weak campaign funding. And the real estate industry, the oil that moves the gears of New York’s political engine, has clearly coalesced around Andrew Cuomo. This follows strong union support for Mr. Cuomo.

For the current budget process, neither side of City Hall is dealing with a strong hand as the combination of term limits and a looming November election. So many of the players in the budget process are running for other offices that there are many distractions. The recent financial market volatility will make budget assumptions that much harder to develop. The impact of declining international tourism could be significant.

In Oakland, the new mayor is the City’s long time Congresswoman Barbara Lee. She inherits ongoing budget difficulties and the aftermath of the recall of the prior mayor and subsequent indictment. Lee has inherited a budget deficit of $87 million, rooted in revenue shortfalls, continued growth in spending, and the rising costs of pensions and insurance. The budget is approved on a two year cycle so this is the only chance the Mayor will be able to address the budget. Her term will end six months before the end of the budget biennium.

Los Angeles sees both the City and County facing significant budget issues. They are not just the result of the fires. The County is looking at a $2 billion shortfall. This week, the Mayor of Los Angeles released her proposed budget. The starting point was a $1 billion projected budget gap. The budget proposes 1,600 layoffs which would represent nearly 5 percent of the 32,405 positions currently in the city’s workforce. The Mayor also proposed the elimination of around 1,000 vacant positions.

NEW YORK BUDGETS AND FEDERAL MONEY

The ongoing battles between New York and the federal government will only complicate the City’s effort to enact a balanced budget. The various threats to reduce federal funding and the continuing possibility of arbitrary “take backs” of previously transferred funds introduces a level of risk heretofore not associated with federal funding.

Some City agencies rely heavily on direct federal funding. For instance, according to the Mayor’s Office of Management and Budget (OMB), federal funding totals over half of the budget of the Department of Housing Preservation & Development and more than 40% for the Administration for Children’s Services. Separate from the City’s budget, federal funding is also critical to the New York City Housing Authority, Health + Hospitals, and the Metropolitan Transportation Authority.

Governor Hochul recently indicated the federal Department of Homeland Security has revoked hundreds of millions of dollars in infrastructure resiliency programs, including millions of dollars that flow to the City. The news comes as the state budget has yet to be adopted despite a March 31 deadline. The good news is that the holdup has nothing to do with fiscal matters but rather a contentious debate over proposed changes to criminal justice policies. The Legislature continues to fund state operations and there is no likelihood of any impact on the State’s bonded debt.

NUCLEAR

In Arizona, a proposed bill would have let large industrial energy users build a “small modular nuclear reactor” in their facility without having to get a certificate of environmental compatibility. And in rural Arizona, they would also be exempt from local zoning restrictions. In Indiana, HB 1007 incentivizes the creation of SMRs in Indiana by adding a state tax credit for any developmental expenses. lawmakers removed a provision that gave utilities a tax credit for investing in SMRs. The legislative analysis estimates that the 20% tax credit, at a minimum, will cost $280 million.

The Palisades nuclear plant restart project in Michigan received some more financial support from the trump administration. The project has received about 10% of $1.52 billion in U.S. financing that was to be made available under the IRA. It was the second disbursement by the administration to Palisades with more than $151 million of the original loan guarantee having been disbursed.

CARBON CAPTURE

South Dakota regulators determined Summit Carbon Solutions’ pipeline route as proposed in its permit application is “not viable, Summit Carbon Solutions’ pipeline route as proposed in its permit application is “not viable.”  Summit submitted new documentation with the commission this month stating that it would rather work with its current application.

Restarting the approval process could force Summit to effectively start the whole process over. At a previous meeting, the commission denied Summit’s request for a pause in permit proceedings. Since then, a law was enacted to halt Summit’s ability to use eminent domain. The company recently told the commission this month that it would rather work with its current application and route than seek court orders or refer the ban to the voters.

In Iowa, the Senate is debating the first measure on pipelines to become eligible for floor debate in the Senate in several years. The Iowa House has been consistent in the last few years in passing legislation to address farmer concerns about eminent domain. In the Senate, an attached amendment makes significant changes to the bill. It is not a partisan issue in that the House efforts over the last few years have been bipartisan. The Senate has a Republican super majority so partisanship is not the hurdle which needs to be overcome.

PORTS

There has been a significant drop in container vessel traffic headed to Los Angeles and Long Beach due to tariffs on Chinese goods. Estimates of scheduled arrivals for the week ending May 3, show the number of freight vessels leaving China and headed to the Southern California ports, the main U.S. ports receiving Chinese freight and other Asian trade, The number is down 29% week-over-week. That is not a surprise given the rush to ship before effective tariff dates.

Year-over-year, the data shows a 44% drop in vessels scheduled to arrive the week of May 4-May 10. The Gemini alliance between Maersk and Hapag Lloyd has a cancellation rate of 24.39%; followed by the Ocean Alliance, comprising CMA CGM, Cosco Shipping, Evergreen, and OOCL, at 18%; and the Premier Alliance, comprising Ocean Network Express, Hyundai Merchant Marine, and Yang Ming Marine Transport, at 15%.MSC and ZIM currently have a 10% rate of canceled sailings.

HOSPITALS

The signs of continuing pressure on operating results are driving cutbacks and closures at hospitals. The latest examples come from Pennsylvania as Crozer Health properties have begun a process to shut down on Wednesday after a bankruptcy judge approved closures of the Crozer-Chester Medical Center in Chester and Taylor Hospital in Ridley Park. The closure will result in the loss of 2650 jobs.

Along with diverting emergency patients to other hospitals, the order requires Crozer-Chester and Taylor Hospital to cease all elective inpatient admissions, post notices of the impending closures and cease all trauma, surgical, obstetrics and gynecology, burn, behavioral health, oncology and outpatient services. Prospect first filed to close the Pennsylvania hospitals on March 6, citing ongoing losses and lack of a buyer to take over in bankruptcy.

The University of New Mexico Hospital has cut 53 positions as the state’s largest public health system faces deepening financial pressures and federal funding cuts. Some, but not all, of the positions were vacant and emphasized that the eliminated positions were executive positions, not roles like floor nurses and others who provide patient care. According to testimony given to legislators by the New Mexico Hospital Association in 2024, two-thirds of New Mexico’s hospitals had higher expenses than revenue during that same year.

Providence Health, a major multi-state system in the west is also facing financial pressures. It also is pursuing lawsuits against insurers it says are delaying and shorting payments and will explore selling or contracting out for some of its programs. During the California wildfires, Providence was forced to temporarily close some outpatient clinics and halt non-emergency surgeries at some hospitals. One of its clinics in Pacific Palisades also burned down.

The health system has cut costs by restricting hiring and cutting back on expenses like sports sponsorships. Sports sponsorships have long been a staple of stadium and arena advertising. The designation as the official medical provider or hospital of a team is a longstanding practice. Nevertheless, new ground was broken this year. When the A’s moved out of Oakland and took up residence in Sacramento, they moved into Sutter Health stadium. This makes the stadium the first to serve as a home for an MLB team and have its naming rights assigned to a non-profit hospital.

LIFE AFTER FEMA

Disaster survivors in Arkansas left homeless by recent tornadoes have been blocked from receiving federal recovery aid after President Trump rejected the state’s request to declare a major disaster in March. The request followed a series of tornados across three states which killed 40 people. The denial follows executive orders signed by Trump seeking to shift the burden of disaster response and recovery from the federal government onto states.

The Trump administration had “determined that the damage from this event was not of such severity and magnitude as to be beyond the capabilities of the state, affected local governments, and voluntary agencies. Accordingly, we have determined that supplemental federal assistance is not necessary.” The State is appealing the decision. The governor, Sarah Huckabee Sanders was undoubtedly shocked that her state was the first target of the new policy.

If this is going to be the way things are done going forward, natural disaster risk should become an even greater factor when analyzing state credits.

WORKING ON THE RAILROAD

A renovation or replacement of New York’s Penn Station has gone through many iterations, governors and mayors over the 60 years since the original terminal was razed. Now the Trump administration is trying to move the most recent renovation project along. Amtrak, the legal owner of the station is replacing the Metropolitan Transportation Authority as the lead for the current renovation project. According to the US Department of Transportation, the switch will cause a savings of $120 million on a budget of $7 billion.

It is not clear what the expanded federal role will do to overcome concerns with land use that have held up the project. It also is not clear how this change will alter the debate over the potential relocation of Madison Square Garden. In the short run, the move potentially takes the Governor and the MTA off the hook in terms of managing and funding the project. It comes at the same time the federal government’s latest deadline to end congestion pricing has come and gone.

In Texas, the news for the proposed high speed rail line from Houston to Dallas was not good. The Secretary of Transportation called Amtrak’s high-speed rail project between Houston and Dallas “risky.” He also made the point that “the Texas Central Railway project was proposed as a private venture. If the private sector believes this project is feasible, they should carry the pre-construction work forward, rather than relying on Amtrak and the American taxpayer to bail them out. 

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.

Joseph Krist

Publisher

Late budgets and New York State are not an unusual couple but this year is different since the failure to enact a budget has nothing to do with budgets. It’s not clear how long either side of the issues causing contention – criminal discovery rules and restrictions on the wearing of masks – are willing to hold out to achieve their goals.

As the state process plays out, attention turns to the NYC budget. That process will occur as the mayoral primary process plays out. The Mayor is no longer under indictment or the threat of one. The Council Speaker is challenging the Mayor in the June primary. The federal government keeps up efforts to take money from the City in regard to immigration issues. Recent announcements of actual and anticipated takebacks of federal funding from the City over its sanctuary city policies have grown to nearly $750 billion.

It will be an unsettled period for the City but we do not expect that significant credit issues will arise over that time.

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CONGESTION FEES GET A REPRIEVE

The federal government and New York transit officials have agreed to allow congestion pricing, to continue until at least midsummer, and very likely into the fall. A schedule of hearings has been established that would extend the existing legal proceedings between the MTA and the federal government well into the fall. In its first two months, the program billed about $100 million in tolls. In March, about 2.5 million fewer vehicles entered the congestion pricing zone, compared with the historical average — a 13 percent decline in traffic, according to M.T.A. data. 

The court also spoke to the issue of what it sees as coercion by the Secretary of Transportation to force a halt to congestion pricing. It noted that Secretary Duffy also “appeared to suggest that the Administration may consider improperly withholding federal funds from the State of New York, as the Trump Administration has done in many other recent cases, in order to coerce compliance with its demands.”

The MTA and TBTA specifically asked whether the Secretary is contemplating taking any unilateral action on or after April 20 that might require them to seek expedited injunctive relief. The federal side did not have information to provide, but did state that, at present, they do not intend to seek preliminary injunctive relief themselves.

NEVADA ROAD FUNDING

Clark County, NV has long used fuel revenue indexing — FRI — to adjusts the county’s portion of fuel tax to inflation. The tax has been a major source of funding for roadway projects in Southern Nevada since going into effect in 2014. FRI is currently scheduled to sunset at the end of 2026 unless voters approve an extension next year. RTC currently receives 24.6 cents of the total 75.8 cents per gallon fuel tax

The Regional Transportation Commission of Southern Nevada (RTC) has warned that ending fuel revenue indexing will decrease roadway funding by two thirds — from $300 million to $100 million annually. RTC has proposed legislation which would allow the Clark County Commission, by a two-thirds vote, to extend FRI an additional decade beyond its current sunset date. Continuation beyond 2036 would require voter approval. The practice was first authorized by the Commission for the period 2014-2016.

Voters in 2016 approved a ten year extension. That ballot measure passed with nearly 60% support. A 2023 FRI bill that passed the Legislature with bipartisan support would have allowed the Clark County Commission to extend FRI indefinitely without a direct vote of the people. It was successfully vetoed by the Governor.

PURPLE LINE

The long anticipated, much delayed Purple Line light rail system in Maryland has moved one step closer to actual operation. The Maryland Transit Administration has announced that a Purple Line train is being tested on tracks using the overhead electrical wires that give it power. The plan is to test braking, propulsion, electrical, signaling, and communication systems on a fully fitted out one mile stretch of tracks. The combined design and construction process for the Purple Line is 76% finished. Track installation is 35 percent complete. The target operating date remains December 2027. That is well beyond the 2022 target date originally envisioned.

TOURISM

Recent reports show that foreign arrivals fell over 20% year-over-year at the 10 busiest U.S. airports, based on a seven-day rolling average. A slight recovery was observed, but the numbers were still down 18.4% as of March 28, 2025. Meanwhile, U.S. citizen returns increased by nearly 14% during the same period. The drop in foreign arrivals is reflects uncertainty, trade tensions, political volatility, and concerns over possible detainment or harassment for international travelers. Travel advisories issued by key American allies, including Canada, France, and Germany, have also contributed to the decline.

As of late March, international airlines have reported a softening of demand for U.S. travel, with some routes experiencing cuts. In tourist dependent New York, the Port Authority found that in February that international passenger counts at its network of airports were 1.1% lower than for February, 2024. The number of international flights was lower by some 6.3%. In anticipation of tariffs, international freight tonnage increased in that period.

HOSPITALS ON THE BRINK

The board of the Rhode Island Health and Education Building Corporation approved $165 million in debt to facilitate a sale of Our Lady of Fatima and Roger Williams Hospitals. The two hospitals are set to shut down without a sale to the nonprofit Centurion Foundation. Prospect Medical Holdings, a for profit entity which owns CharterCARE and operates Roger Williams and Fatima hospitals in Rhode Island, filed for bankruptcy in January.

One contentious issue which remains unresolved is that of property tax losses to Providence and North Providence. PILOT agreements to replace some of the lost revenues may yet be executed with the new non-profit owner but the bankruptcy proceedings did not make such an agreement required to close the transaction. North Providence estimates that it could cost the owner of an “average” home between $250 and $420 more each year in property taxes if no PILOT agreement can be reached.

In New York, Mount Sinai was finally allowed to close its east side Manhattan location. The closure had been held up by a variety of legal actions which have appeared to have run their course. Losses related to Beth Israel will decline with the reduction in services that has already occurred and the final closure now approved by the courts. The action coincides with Moody’s action to revise the outlooks for Mount Sinai Hospital’s (MSH) (NY), Icahn School of Medicine at Mount Sinai’s (ISMMS) (NY) and Mount Sinai South Nassau’s (MSSN) (NY) to stable from negative. That keeps the credits in the investment grade category.

WIND

It could likely be the exception rather than the rule over the next four years, but construction of a new offshore wind farm in NY has begun. Empire Wind is an 810-megawatt wind farm effectively breaking ground less than 20 miles from New York City. It is the first U.S. project to start at-sea wind turbine construction under a Trump second term.

On Inauguration Day, the President issued an executive order that effectively froze all offshore wind permitting and leasing pending a federal review. Empire Wind 1 is one of nine projects which had their federal permits in hand before the order. Empire Wind 1 is scheduled to finish construction by 2027. A new Brooklyn-based substation will connect wind-generated electricity to the city’s grid. which is a first. The project is advertised as being adequate to power 500,000 New York homes.

In the Atlantic, four other commercial-scale projects actively under construction are Coastal Virginia Offshore Wind, Massachusetts’ Vineyard Wind 1, New York’s Sunrise Wind, and Revolution Wind, which is shared between Rhode Island and Connecticut.

ILLINOIS COAL

The Chicago suburb of Naperville, Illinois is the largest of the 30 municipalities which purchase power for their distribution utilities from the Illinois Municipal Power Agency. The City’s purchase contract expires in 2035 and IMPA would like very much to extend its agreement with Naperville for twenty more years. IMEA has given the city until April 30 to decide if it wants to extend its contract out to 2055. A majority of IMEA participants have extended contracts.

Some 80% of the energy IMEA delivers to Naperville comes from coal-burning power plants. IMEA owns a 15% stake in the Prairie State Generation Station, a massive coal-fired power plant in southern Illinois that in 2023 released 12.4 million tons of heat-trapping carbon dioxide into the atmosphere. If Naperville chose to determine its own electric supply, it could buy energy directly from the market, contract out for power generation, or possess and operate its own generation assets — or some combination of all three.

CARBON CAPTURE

The Environmental Protection Agency has approved Occidental Petroleum’s application to capture carbon dioxide from the atmosphere and inject it underground. The facility would be the first of its kind to be approved in Texas where the oil/gas industry has great hopes for its success. Located 20 miles southwest of Odessa, the project could start storing 500,000 metric tons of carbon dioxide in deep, non-permeable rock formations 4,400 feet underground as soon as this year. 

The technology for the plant is direct air capture, or DAC. It pulls the carbon dioxide from the atmosphere and separates it from other particles in the air by incinerating them. The equipment then compresses the gas to a brine before transporting and storing it permanently underground. The Texas Railroad Commission, the state agency regulating oil and gas companies, has applied to the EPA for the power to issue similar permits. The EPA is currently accepting public testimony.

Ohio legislators are considering bills that would bar local governments from having a say in permitting projects that capture carbon dioxide emissions and inject them underground. The legislation could even force some landowners to let their property be used for carbon dioxide storage. Carbon capture and storage projects would follow a process similar to what’s used for oil and gas drilling, in which property owners must allow development on or below their land if enough neighbors support it.

Ohio’s House Bill 170 and Senate Bill 136 would give the state Department of Natural Resources ​“sole and exclusive authority to regulate carbon sequestration,” a power the agency also has over oil and gas production via existing law. The Ohio Supreme Court has interpreted the oil and gas law’s language to block local government regulation of drilling, even though general zoning rules that apply to other businesses.

The bills would also authorize a ​“consolidation” process that operators can undertake to force landowners to allow carbon dioxide storage in their property’s subsurface ​“pore space” if owners of 70% of the remaining area for an injection project have signed on. The bills call for compensation, but it’s subject to adjustments for the developer’s expenses. Neither HB 170 nor SB 136 requires any minimum payment to landowners.

The South Dakota Public Utilities Commission voted 3-0 to deny Summit’s request to put its application on hold. The PUC directed Summit Carbon Solutions to present a plan during its next meeting illustrating how the company can move forward — or not — under recently enacted legislation barring its use of eminent domain. It comes as a review shows that Summit brought 232 lawsuits against landowners across South Dakota, North Dakota and Iowa – including lawsuits seeking access to property for surveys. All 156 of the eminent domain actions were brought in South Dakota.

Iowa’s permit, which allows Summit to use eminent domain, is conditioned on the company getting permits to build its pipeline in the other states, including South Dakota.

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.

Joseph Krist

Publisher

Where to begin? If you are a budget maker in capital gains states like New York, California, Massachusetts and Illinois you have to take a serious look at revenue projections. Add to that the policy whipsaws from the White House. If Trump is to be believed, disaster recovery and healthcare will all become primary state responsibilities. Really, every state will have their own FEMA? You want states to increase taxes but you won’t allow those newly self sufficient state taxpayers to deduct those taxes? You want to give more responsibility to state and local government but you want to take away the exemption that makes it easier and cheaper to finance?

Maybe the market comes back. Maybe there are capital gains to be paid instead of losses to be deducted. Maybe a President shouldn’t tank the markets based on his own stubborn ignorance? Then again, should anyone listen to Peter Navarro?

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TRANSIT

According to the American Public Transportation Association, American transit systems have about 80 percent of their prepandemic passenger counts. Some have recovered better than others; the Metropolitan Transportation Agency in New York has roughly 85 percent of its prepandemic passengers, while the numbers for systems in Chicago and Boston hover around 70 percent. At the same time, the USDOT is threatening to withhold federal assistance to systems it perceives as not safe enough.

Bay Area Rapid Transit has lost more than half of the ridership it had before the pandemic, more than any other major system in the nation. BART is facing such difficulty that its leaders have warned of not only ending weekend operations and reducing train frequency, but also ending service altogether. This week, California legislators introduced a bill to put a sales tax measure on local ballots. It will be a hard sell especially if the economy turns sour. The region was already being held back by the difficulty in reestablishing prepandemic office attendance and associated economic activity.

GAS BANS

Last week, a federal judge dismissed a lawsuit brought by plumbing and building trade groups against a New York City ban on natural gas in new buildings. The decision is the first to explicitly disagree with a previous ruling that struck down the first in the nation ban on natural gas enacted by Berkeley, CA.. 

In 2021, New York City adopted Local Law 154, which sets an air emissions limit for indoor combustion of fuels within new buildings. The law bans the burning of “any substance that emits 25 kilograms or more of carbon dioxide per million British thermal units of energy”. That standard effectively bans gas-burning stoves, furnaces, and water heaters, and any other fossil-fuel powered appliances. To comply, developers have to install electric appliances, like induction stoves and heat pumps. The policy went into effect in 2024 for buildings under seven stories, and will apply to taller buildings starting in 2027.

Last year’s denial of a rehearing included a detailed dissent by eight of the 29 judges on the 9th Circuit, who argued that the court’s ruling had been decided “erroneously” and “urge[d] any future court” considering the same argument “not to repeat the panel opinion’s mistakes.” 

The unios argued that the city’s electrification law is preempted by energy efficiency standards under the federal Energy Policy Conservation Act of 1975, or EPCA. This law sets national efficiency standards for major household appliances like furnaces, stoves, and clothes dryers. Under the law, states and cities can’t set their own energy conservation standards that would contradict federal ones. The trade groups argued that EPCA should also preempt any local laws.

Regulating fuel use within certain buildings is standard practice in states and cities, she noted: New York City, for example, has banned the indoor use of kerosene space heaters for decades. 

PENSIONS AND CLIMATE

In a unanimous 5-0 ruling, the appellate division of the New York State Supreme Court dismissed a lawsuit that challenged the city’s decision to divest from investments in fossil fuels. The case was brought by four current and former city employees who claimed that the pension funds — representing teachers, public employees, and Board of Education staff — violated their fiduciary duties by shifting away from fossil fuel investments. It’s a tired tactic in an effort to encourage fossil fuel divestment. It is usually easy to refute.

ELECTRIC VEHICLES UNDER TRUMP

Michigan had to ‘decouple’ its first mega-subsidy deal to allow General Motors to sell one of two factories that shared a $600 million incentive. GM is transferring $120 million in incentives to LG Energy Solutions. Both companies say they’ll still reach the goals of a combined 3,200 new hires between the two plants. The state allowed General Motors to transfer $120 million in state funding and the incentive terms for its former Ultium Cells EV factory near Lansing to factory buyer LG Energy Solution Michigan.

This will enable LG to complete its purchase of the 2.8 million square foot battery factory that GM built in Delta Township. The two companies are still obligated to deliver the jobs in exchange for the already-spent $600 million in state funding awarded in January 2022. Under the terms of a revised agreement, GM will need to hire 1,840 workers at Orion Assembly. Wages originally were to be about $27 per hour, but will be set by United Auto Worker contracts. LG Energy Solution will need to hire 1,360 at the former Ultium site near Lansing. The company estimates wages of about $55,000 per year for manufacturing workers.

EV sales in February increased 10.5% from a year earlier, but they represented an overall market share of under 8%. That is one element behind Hyundai’s announcement that its new production facility near Savannah, GA will build hybrid models in addition to straight electronic vehicles. Ford, GM and Volvo have all slowed some EV plans and focused more on hybrids. The demand just has not been there. Trump’s policies against tax credits for electric vehicles are another headwind.

GAS TAXES

A MassINC Polling Group survey published last week found fifty-one percent of respondents in the Bay State said they would somewhat or strongly support replacing the gas tax with a “fee based on how much people drive, whether they drive a gas car or an electric car,”. A more specific question found a nearly identical split for eliminating the gas tax and instead deploying “tolls on more Massachusetts roads”: 52% support, 32% opposition and 16% who said they did not know. 

Gas tax revenues increased from $603 million in fiscal 2023 to $615 million in fiscal 2024, according to the Department of Revenue. Asked if Massachusetts should study the use of congestion pricing in and around Boston, 48% said yes and 35% said no.

In Oregon, a proposal has been put before the legislature to raise more than $1.9 billion in new taxes and fees every two years once fully implemented. Oregon would raise its gas tax by 20 cents, create a new 1% tax on cars sales and require electric vehicles to pay an entirely new “use charge”. Democrats have a three-fifths supermajority in both the House and Senate, meaning they can theoretically pass anything they want.

The details include: A staggered 20-cent increase to the state’s 40-cent-per-gallon gas tax. The tax would increase by 8 cents at the outset of next year, and another 4 cents in 2028, 2030, and 2032. It would be indexed to increase with inflation afterward. A new tax equal to 1% of the sale price of all cars sold in Oregon, new or used. Oregon is one of just five states without such a charge.

A new “road usage charge” that electric and highly fuel efficient vehicles would pay – either as a flat fee or based on actual miles driven in Oregon. Existing electric vehicles would be subject to that still-undefined charge beginning in July 2026. New EVs, plug-in hybrids and cars with fuel economy of 30 miles-per-gallon or better, would be added in subsequent years.

Additionally, there would be a separate usage charge for delivery vehicles used by companies with at least 10 such vehicles. The fee is meant to impact corporate delivery services like Amazon. An additional $66 onto Oregon vehicle registration fees would accompany adding $90 to vehicle titling fees, which currently range from $90 to $190. It would increase the state’s weight-mile tax on heavy vehicles by 16.9%.

Other components of the funding plan include a 3% tax on tire sales that would send $25 million a year to rail operations, safe highway crossings for wildlife and improving salmon habitat; an increase to an existing tax auto dealers pay for the “privilege” of selling cars in Oregon. The tax would be raised from 0.5% of the price of a vehicle to 0.8%. It would add $9.50 to an existing $15 tax on sales of new bicycles that cost at least $200. Funding from the tax goes to bike and pedestrian facilities. It would also increase a tax dedicated to transit service that Oregon workers pay from their paychecks from 0.1% to 0.18%. 

CHICAGO PUBLIC SCHOOLS

The Chicago Teachers Union (CTU) will vote this week on a proposal for a new contract. The deal is the product of a year’s worth of negotiations. It gets so much attention because of the Mayor’s history as a lawyer for CTU and its role in the Mayor’s campaign for office. Funding for CPS was also a major issue in the negotiations over the City’s own budget.

The offer includes teacher raises of 4% the first year and up to 5% over the next three; class-size limits of 25 in kindergarten and an average of 29 in most other grades, down from 36 or 32; doubling the number of bilingual teachers; 90 more librarians over the life of the contract. If ratified, the median CPS teacher salary would be $95,000, according to CPS. CPS says the contract will cost $1.5 billion over four years, down from an initial CTU proposal that it said would have cost $10 billion over that period.

If this contract settles the labor dispute, it still leaves the funding needs of CPS front and center as an issue for the City’s GO credit as well as for its own.

HIGH SPEED RAIL

In light of the efforts by the Trump administration to weaken mass transit and federal funding for it, much has been made of the “success” of the Brightline project in Florida as a private rail provider. The thrust of recent press has been that the project shows that high speed rail can’t be developed by the public sector. The California high speed rail project is considered to be the posterchild for inefficient government infrastructure development and is cited regularly by proponents of other projects.

That project as well as the Brightline West project were conceived to utilize existing right of way as much as possible. In Florida, the trains max out at 70 miles per hour (Acela on the Northeast Corridor top 100 mph) and they operate on existing tracks. They pass over grade crossings. Those are not what people think they are talking about when they talk about high speed rail.

As for true high speed rail projects, hurdles continue to arise in Texas where opponents of a proposed Houston-Dallas line have fought its development for more than ten years. Now the Texas legislature will consider legislation designed to impede that project. House Bill 1402 would prevent the use of state or local funding to alter roadways for the construction of high-speed rail. It has attracted a cross section of supporters.

The opposition is not just from small individual landowners. So long as potential right of way issues remain unaddressed, some developers cannot move forward with projects. As for the sponsor of the project – Texas Central – its position is that the route wasn’t chosen by them and that the current plan is the most environmentally friendly that they could come up with. As for the issue of right of way acquisition, the over 500 homes which would have to be removed are compared by Texas Central to the number of homes some Houston road projects expect to move.

That raises the whole issue of how private projects like these actually are. No one likes moving residential properties to make way for projects. There is a history of law in this country which establishes clear boundaries between public and private projects. Arguments like that of Texas Central unwittingly focus attention on the private structure and weaken support for eminent domain when it is used to facilitate private profit.

Are they reliant on the government? Here are the words of the Texas Central CEO. “I mean, obviously, we don’t have the financing put together. We don’t have all the right-of-way acquired. We’ve acquired approximately 25% of the parcels that are needed. … We’re not asking the taxpayers to pay for this project right now. What we’re saying is we have to ultimately partner with the State of Texas and with TxDOT [Texas Department of Transportation] to figure this out.”

LIFE AFTER COAL

The site of what was once Pennsylvania’s biggest coal-fired power plant will be repurposed into a $10 billion natural gas-powered data center campus. The former Homer City Generating Station, about 50 miles (80 kilometers) east of Pittsburgh, will host seven gas-fired turbines to power data centers on site with up to 4.5 gigawatts of electricity. It would be the nation’s largest gas-fired power plant and the nation’s third-largest power generation facility after the Grand Coulee hydroelectric dam in Washington and the new Plant Votgle nuclear power plant in Georgia.  

Construction is expected to begin this year and power could start flowing by 2027. Much of the critical infrastructure for the project is already in place from the former Homer City power plant, including transmission lines connected to the mid-Atlantic and New York power grids, substations and water access. That sort of infrastructure is difficult to relocate or replace at current costs. The ability to show that coal plant repurposing is viable will be through successful projects.

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