Joseph Krist

Publisher

NEW YORK CITY

The results of this week’s mayoral primary in New York have the press hyperventilating over the potential for the City to have a socialist mayor. In the midst of all of the tumult, it is important to emphasize some of the security features supporting the City’s general obligation debt. Those features were adopted in the wake of the City’s 1975 financial crisis.

Primary among them is the procedure for securing the property tax revenues supporting general obligation bonds. Property tax revenues are accumulated monthly and can only be applied to general obligation debt service before any other use. Collections of those taxes are annually well in excess of the City’s annual general obligation debt service requirements.

The City could also lose control of its financial operations in the event that balanced budgets are not adopted. Should the City budget for a deficit of $100 million or more, a control board can be established by the State to oversee the City’s budget. There are powerful incentives for the City to keep its fiscal house in order and for a Mayor to keep control.

This will be one of the weirdest elections for Mayor the City has seen for some time. Currently, there are four candidates for the November ballot including the current mayor Eric Adams. How serious all of the candidates are is subject to debate. The next four months provides an opportunity for candidates like the socialist candidate to explain how they would implement policies consistent with their politics.

At the same time, the tumult around the election could create a buying opportunity. The situation is reminiscent of the first bond issue under the Dinkins administration. Many of the same concerns expressed then are being expressed now. When the City sold bonds in February, 1990 those concerns generated an 8% coupon on thirty year general obligations callable in ten years. The resulting 8% plus annual return over ten years from those bonds until they were refunded looked good in one’s portfolio.

ELECTRIC VEHICLES

Ford Motor said that it was committed to completing and opening a battery plant in Michigan, even if Congress and President Trump make the project ineligible for tax incentives. The $3 billion plant, in Marshall, Mich., 100 miles west of Detroit, is planned to use battery and manufacturing technology that Ford licensed from a Chinese company, Contemporary Amperex Technology Ltd., known as CATL. The announcement comes as Congress considers a budget plan which would eliminate or severely slash tax incentives of electric vehicle production.

If the credits survive, they could offset about a quarter of the cost of the plant. The House version of the Republican bill would eliminate credits for plants that were built with materials or technology from China, Iran, North Korea or Russia. In Georgia, U.S. battery plants use technology from suppliers based in South Korea or Japan, which are not targeted by the bill. The Michigan plant is scheduled to start production next year and is supposed to create 1,700 jobs. The plant has already been affected new tariffs that Mr. Trump has imposed. The manufacturing machinery for the plant is in transit from China and will be subject to higher tariffs.

This week, LG Energy Solution, a division of the major Korean battery manufacturer, is now producing battery cells for grid-scale energy storage at a site in Holland, Michigan. The company spent $1.4 billion to expand the factory, which previously made electric vehicle batteries. Lithium iron phosphate chemistry (LFP), offers fire-safety benefits, durability, and lower costs compared to the typical electric vehicle chemistries.

Until now, American battery customers had to rely on Chinese suppliers.. LG’s facility appears to be the largest giga-scale LFP production in the U.S. Japan’s AESC recently launched LFP production at its factory in Smyrna, Tennessee. The company initially intended to install these manufacturing lines in Arizona, but by shifting the LFP equipment to the space in Holland, LG could open commercial production a full year earlier than originally planned. The Holland manufacturing space covers the area of 42 football fields, and will employ 1,700 people when fully staffed. 

NUCLEAR REVIVAL

Governor Kathy Hochul announced that New York is planning to build a nuclear power plant which would produce half as much power as the Indian Point complex north of New York City that was shut down four years ago. Since then, that power has been replaced largely by natural gas as New York no longer has operating coal generators. New York derives about one-fifth of its electricity from three nuclear plants operated by Constellation Energy on Lake Ontario.

The plan articulated by the Governor is short on basic details – cost, schedule, location. The New York Power Authority will manage the project but the expectation is that it will be built through private entities. In January, Constellation and the New York State Research and Development Authority sought federal funding for their effort to obtain permits for one or more advanced reactors at the Nine Mile Point Clean Energy Center in Oswego.

The U.S. Supreme Court, by a 6-3 vote, reversed a federal appeals court ruling that invalidated the license granted by the Nuclear Regulatory Commission to a private company for the facility in southwest Texas. The licenses would allow the companies to operate the facilities for 40 years, with the possibility of a 40-year renewal. It is estimated that some 100,000 tons of spent fuel, some of it dating from the 1980s, has been held at current and former nuclear plant sites nationwide and growing by more than 2,000 tons a year. 

The NRC granted the Texas license to Interim Storage Partners, based in Andrews, Texas, for a facility that could take up to 5,500 tons (5,000 metric tons) of spent nuclear fuel rods from power plants and 231 million tons (210 million metric tons) of other radioactive waste. The facility would be built next to an existing dump site in Andrews County for low-level waste such as protective clothing and other material that has been exposed to radioactivity. 

STADIUM DEALS

It has been a busy Spring in the world of stadium deals as governments use the budget process to create financial support for professional sports stadiums. The legislation comes as two Major League Baseball teams play in minor league stadiums. One, the Tampa Bay Rays, may be sold to interests which may or may not wish to keep the team in greater Tampa Bay. In the interim, repairs to the existing stadium in St. Petersburg are underway with the hope of being ready in Spring 2026. The other, the A’s, broke ground on a new $1.75 billion stadium in Las Vegas, expected to be completed in time for Opening Day 2028.

The Arizona Diamondbacks (MLB) are in position to secure up to $500 million with extensions to existing state taxes to help fund renovations to Chase Field.

The Arizona legislature voted to approve the recapture of sales taxes from the stadium and other adjacent buildings over the next 30 years to update infrastructure at the retractable roof facility which has been home to the D-backs since 1998 and is owned by the Maricopa County Stadium District. The Diamondbacks say they will also contribute $250 million of the team’s money to help fund renovations. 

Missouri lawmakers enacted legislation that includes hundreds of millions of dollars of financial aid intended to persuade the Chiefs and Royals to remain in the state. Lawmakers in Kansas voted to authorize bonds for up to 70% of the cost of new stadiums in their state. The Royals have bought a mortgage for property in Kansas. The offer from Kansas is scheduled to expire June 30. The Chiefs and Royals currently play at the Truman Sports Complex where Arrowhead Stadium and Kauffman Stadium share parking facilities. Their leases with Jackson County, Missouri, expire in January 2031.  

The Royals property acquisition comes in the wake of Jackson County voters’ defeat of a sales tax extension that would have helped finance an $800 million renovation of Arrowhead Stadium and a $2 billion ballpark district for the Royals in downtown Kansas City. That opposition led to the inclusion of items not related to stadium finance in the legislation. When Kansas Gov. Mike Kehoe called lawmakers back into session earlier this month to consider stadium legislation, he agreed to allow an amendment requiring most counties to put a hard cap on increases in property tax bills.

In 75 counties, tax bills would not increase more than 5% per year from a base amount, or the rate of inflation, whichever is less. In 22 others, no increase in the basic bill would be allowed. That has raised questions as to the constitutionality of the plan as the Missouri Constitution requires that property taxes be “uniform upon the same class or subclass of subjects.” That may require reconsidering of the plan in the legislature this fall.

Then there is the situation in Cleveland. When Cleveland was awarded a franchise to be reestablished as the Browns, state legislation was enacted which included provisions limiting where the franchise could relocate in the future out of its stadium. The Art Modell Law (he moved the original Browns to Baltimore) keeps the Browns from moving out of downtown Cleveland or so it was thought. The Browns are in the midst of purchasing a suburban Cleveland site for an enclosed stadium. There is pending litigation over exactly what the limits were under the law. Now, the state budget includes provisions which establish the law allows Ohio pro sports teams who play in tax-supported facilities to move within Ohio when their leases expire.

And oh yes, the legislation included $600 million in funding from the state for the Browns new stadium by creating a new Sports and Culture Facility Fund through the escheatment of $1.7 billion from the state’s unclaimed property fund, which has grown to $4.8 billion in size. The plan leaves an additional $1.1 billion for future stadium construction asks from Ohio’s other pro sports franchises.

The Hamilton County commissioners voted to approve the framework of a new lease keeping the Bengals downtown in Cincinnati through at least 2036. The new agreement calls for a $470 million renovation of Paycor Stadium, of which the county will contribute $350 million and the Bengals/NFL will contribute $120 million, as well as agreeing to begin paying rent for the first time. They will pay $1 million over the next three years and then $2 million each year of the final eight years of the agreement, as well as for any extension years. The improvements are expected to take two to three years and currently involve no state funding. 

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

PORT OF LOS ANGELES

The first tangible evidence of the impact of tariffs on international trade comes in the form of operating data from America’s busiest port. The Port of Los Angeles processed 716,619 Twenty-Foot Equivalent Units (TEUs) in May, 5% less than last year. After 10 straight months of year-over-year growth, overall cargo volume slowed due to the impact of tariffs on both imports and exports. Imports dropped 19% compared to April. May 2025 loaded imports came in at 355,950 TEUs, 9% less than the previous year. Loaded exports landed at 120,196 TEUs, a 5% drop from 2024. The Port processed 240,472 empty container units, 2% more than last year. After five months in 2025, the Port of Los Angeles has handled 4,063,472 TEUs, 4% more than the same period in 2024.

The Los Angeles Harbor Commission approved a 2025/26 fiscal year (FY) budget of $2.7 billion for the Port of Los Angeles, a 3.1% or $82.5 million increase over the previous fiscal year’s adopted budget. The proposed budget for FY 2025/26 anticipates cargo volumes of 8.2 million TEUs, a decrease of approximately 9.9% over the previous fiscal year’s adopted budget. In the FY 2025/26 budget, operating revenues are forecast at $657.6 million.  Approximately $470.3 million of those revenues are expected to be generated by shipping services at the Port. Operating expenses are estimated at $427.1 million.

The Port of Long Beach experienced a significant 8.2% decline in cargo throughput in May, processing 639,160 TEUs as tariffs continue to impact global trade flows. At Long Beach, imports fell 13.4% to 299,116 TEUs, while exports decreased 18.6% to 82,149 TEUs. The only positive movement came from unused containers being sent back to exporting countries, which saw a modest 3.2% increase to 257,895 TEUs.

Following the Trump administration’s implementation of a 145% tariff on Chinese goods in April, many retailers had suspended or canceled orders. However, activity has resumed after tariffs were reduced to 30% with a 90-day pause extending until August 12. Similar temporary pauses on reciprocal tariffs with other nations will last until July 9. Looking ahead, the National Retail Federation’s Global Port Tracker forecasts a mixed outlook for U.S. containerized imports. While June through August should see increased activity as importers take advantage of the tariff pause, volumes are expected to decline sharply in the latter part of 2025. September imports are projected to fall 21.8% year-over-year, with October showing a 19.8% decrease.

CARBON CAPTURE

The Iowa House approved a request to call a special session to override Governor Kim Reynolds veto of eminent domain legislation. Each house needs a two thirds majority. It seems as though the required two thirds of the Senate may not be achieved.

We have been highlighting the many targets of cutbacks announced by the U.S. Department of Energy in May. The agency cancelled some $3.7 billion of grants to a variety of public and private entities. The latest example is on in Wyoming. There a $49 million grant was made under the Biden administration for a “large-scale” carbon capture pilot project at the Dry Fork Station coal-fired power plant north of Gillette, WY.

It’s not clear whether there is support for private funding for the project. In 2020, the state passed legislation which was designed around the idea of keeping coal-burning power plants open by retrofitting them with carbon capture technologies. Electric utilities Black Hills Energy and Rocky Mountain Power, the only two Wyoming coal plant operators subject to the mandate, have indicated it could cost between $500 million and $1 billion to retrofit just one of several coal units subject to the state law.

They unsurprisingly support recent efforts to repeal the carbon capture mandates.

FLORIDA BUDGET

After one of the more politically contentious budget sessions in many years, the Florida legislature passed a FY 2026 budget totaling $115.1 billion. That is some $500 million less than the governor’s proposed budget, and $3.5 billion less than last year’s adjusted total. A long debate over tax cuts was at the core of the squabbling which forced the legislature into a special session. All of this conducted in front of a backdrop of potential scandal and a looming election for Governor in 2026.

The debate before the special session was mainly over whether to cut property taxes or sales taxes. The approved budget does neither. Instead, it eliminates the state’s business rent tax. The budget also includes tax cuts for several specific interests including casinos, airlines and NASCAR.

The legislature advanced a proposed constitutional amendment that would set aside $750 million a year — or an amount equal to up to 25% of the state’s general revenue, whichever is less — into a reserve fund that lawmakers could only use for emergencies. The measure has to be approved by 60% of Florida voters to be implemented.

On the spending side, lawmakers set aside $4 billion for scholarships for private and religious education, two years after the Legislature expanded the state’s voucher program to make all K-12 students eligible, regardless of family income. Some 2,200 vacant positions are effectively eliminated. At the same time, state workers will receive an across-the-board 2% raise, while state law enforcement officers and firefighters will get a 10% total raise, and a 15% raise if they’ve been on the job for at least five years.

MTA UPGRADE

It may often appear to be all doom and gloom for New York’s MTA but that’s not true when it comes to its debt ratings. Moody’s has upgraded to A2 from A3 the rating on the Metropolitan Transportation Authority, NY’s (MTA) $17.1 billion of outstanding Transportation Revenue Bond (TRB), and revised the outlook to stable from positive. Those are the bonds effectively paid from the farebox. The upgrade comes amidst MTA’s ongoing battles with the federal government over operating and capital support and the effort to halt congestion pricing.

That did force the State legislature to confront the need to fund the ongoing capital needs of the Authority. The results were positive and led to an upgrade. According to Moody’s “The upgrade of MTA’s TRB rating reflects increased political and financial support from New York State (Aa1 stable) and New York City (Aa2 stable) for the system’s substantial operating and capital needs.

The state’s recent payroll mobility tax (PMT) increase for MTA filled a significant gap in the $68.4 billion 2025-2029 capital program which will accelerate asset investment, protect service quality and support future revenue growth. The new PMT increment will generate $1.4 billion annually, is dedicated to capital projects and will allow MTA to borrow $23 billion, in addition to $10 billion supported by the operating budget, with only moderate growth in leverage metrics and fixed costs.”

CBO ON IMMIGRATION

The number of people entering the United States increased sharply starting in 2021 and peaked in 2023 before slowing in 2024. All told, the surge in immigration that started in 2021 added an estimated 4.4 million people to the U.S. resident population in 2023. The surge continued beyond 2023, but it slowed starting in June 2024, when an executive order suspended the entry of most noncitizens at the southern border, and has slowed further in 2025.

This week the Congressional Budget Office released estimates of how the surge in immigration that began in 2021 affected state and local budgets in 2023. The surge led to a direct increase in revenues of $10.1 billion, primarily from sales taxes, and a direct increase in spending of $19.3 billion, chiefly for public elementary and secondary education, shelter and related services, and border security. The result was a direct net cost of $9.2 billion in 2023, amounting to 0.3 percent of state and local spending (net of federal grants-in-aid).

In addition to estimating the direct effects of the surge, CBO calculated an alternative measure that includes the potential broader or longer-term effects and costs that were borne without adding to spending—such as crowding in public schools and public transportation systems. By either measure, the surge imposed a net cost. By that measure, the surge in immigration had the potential to increase revenues by $18.8 billion and spending by $28.6 billion, resulting in a potential net cost to state and local governments of $9.8 billion in 2023.

FLOOD INSURANCE REALITIES

The majority of flood insurance policies are provided by the federal government, through an arm of FEMA called the National Flood Insurance Program, or NFIP. Only 6% of Americans hold it. The experience in the wake of Hurricane Helene has drawn attention again to the need for and cost of flood insurance. Across Western North Carolina counties, only about 6,500 total policies from NFIP were in place.

The NFIP can cover up to $250,000 in home structure losses and $100,000 in home contents losses. Usually, people only have a policy if their mortgage requires it. That’s often because that property has received federal assistance for flood-related damage before. But 43,700 paid losses were associated with Helene, accumulating to $1.8 million total paid out by NFIP. The average paid loss came in at $40,709.

The Heritage Foundation’s Project 2025 calls for the dismantling of the NFIP and advocates for flood insurance to go private. The problem is that the private insurance industry has essentially stopped covering flood risk. During the first Trump administration, he planned a new system which changes the way the NFIP calculated rates, bringing models up to date. This new system would have increased rates, so Trump abandoned it during his bid for reelection. The Biden administration implemented the new rating system, raising flood insurance rates for 75% of flood insurance holders.

IS THERE A DOCTOR IN THE HOUSE?

On May 27, the Trump administration suspended new interview appointments for foreign nationals applying for J-1 visas. The visas, for participants in cultural or educational exchange programs, are used by most medical residents arriving from overseas. They did this just in time to put enormous pressure on hospitals to recruit doctors to begin work on July 1, the traditional staring date for new residents.

One in five U.S. physicians was born and educated overseas, according to the Association of American Medical Colleges. New doctors from other countries account for one in six medical residents and specializing fellows at U.S. teaching hospitals. Many of the 6,653 noncitizen doctors accepted for residency positions in the United States this year this year had already secured visa appointments before May 27. Those from banned countries who are already in the country are able to remain.

Hospitals and clinics in rural areas of the country already rely heavily on international graduates. This year, there were about 40,000 residency positions offered through the national match system, but only 28,000 graduates of U.S. medical schools. It was always a bit risky to go to an emergency room on the Fourth of July weekend given the brand new status of the residents. Now there may not even be enough of them.

NUCLEAR

The Supreme Court rejected Texas’s bid to overrule federal approval of a nuclear waste storage facility. In a 6-3 decision, the court upheld the Nuclear Regulatory Commission’s decision to issue a license to a company that wanted to store nuclear waste off site from a power plant. The opinion said that Texas, as well as private company Fasken Land and Minerals, did not have the right to sue over the license. 

“Under the Hobbs Act, only an aggrieved ‘party’ may obtain judicial review of a Commission licensing decision,”. “Texas and Fasken are not license applicants, and they did not successfully intervene in the licensing proceeding. So, neither was a party eligible to obtain judicial review.” The case in question concerns a license issued in 2021 to Interim Storage Partners (ISP) that would have allowed it to store nuclear waste for 40 years in West Texas.

The question in the underlying case was about whether the Nuclear Regulatory Commission should be allowed to license private off-site nuclear waste storage sites. That question itself was not at issue in the case.

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

CARBON PIPELINE VETO

In Iowa, House File 639 would have increased insurance requirements for hazardous liquid pipelines, limited carbon pipeline permits to one 25-year term and changed the definition of a common carrier for pipelines, making it more difficult for the projects to use eminent domain. The bill would have required pipeline operator to carry insurance that covered any loss or injury from accidental, negligent or intentional discharges from the pipeline, and to cover insurance increases that landowners face due to the pipeline.

The bill passed after a four year effort. It received support from both parties in the Legislature. Nonetheless, Governor Kim Renyolds – who is not running for Governor in 2026 – vetoed the bill. She claimed that the bill was too broad and threatened the state’s ethanol industry. She cited the aviation fuel industry as a potential source of demand for biofuels and said that the bill would stifle that industry.

The arguments at the core of the debate have always been over private property rights. Over the years, the arguments have been over whether the pipelines are a public or private carrier. Those opposed to the project say a private company should not be given the right to condemn agricultural land. South Dakota voters recently codified that opinion with a law that specifically bans CO2 pipelines from the right of eminent domain.  

Politically, the veto seems to fly in the face of public sentiment. Even the 2025 Iowa Republican party platform opposes the use of eminent domain by the use of a private party or for-profit entity. It was an issue in the 2024 Iowa Republican caucuses. Nevertheless, further attempts to revisit pipeline regulations in Iowa in the near term are unlikely.

A special session of the legislature could be called but two-thirds of the Legislature must sign a petition to request a special session, and to override a veto, two-thirds of the members from each chamber must vote to pass the bill again.

IS THERE A POLICY?

Microsoft Corp. announced some 15 days ago that it has agreed to purchase up to 622,500 tons of low-carbon cementitious materials from Sublime Systems’ first commercial factory in Holyoke, Mass., as well as the full-scale factory it plans to develop in the next six to nine years. Imagine the surprise at Sublime and in the Commonwealth at the news that this very project would not be receiving a promised $87 million from the Department of Energy. This stems from the proposed termination of the DOE Office of Energy Development which we covered last week.

The Holyoke factory is expected to be completed in 2027 and provide jobs for at least 70 people after it opens. The plant will still get some subsidies, including $47 million in federal tax credits that remain in place, $1.05 million in state tax credits, and $351,000 in local property tax breaks. It has significant private funding support – $45 + million in venture capital and investments from two legacy cement producers of $75 million.  

Here is where ideology triumphs again. This project has significant public and private support. Some of the funding comes from large concrete producers for whom a project like this could be competition. They are investing as rational business people. Why is that bad policy?

OFF THE RAILS

With the President’s comments this week, the already highly troubled California high speed rail line managed to be cited as a justification for sending troops into the City of Los Angeles. That follows after the US transportation secretary released a compliance review report that said the project was in default of the terms of its federal grant awards. He said, “there’s no viable path to complete the rail project on time or on budget.”

The project has long been a favorite target of criticism from the President. In 2019, Donald Trump cancelled almost $1bn in funding for the project. The Biden administration, however, restored that funding and later allocated another $3.3bn toward the project. The state has supplied 82% of the $14bn already spent on the project. The state has now focused not on the original route designed to connect California’s metropolitan areas, but on a 171-mile stretch in the Central valley, which is expected to be completed by 2033 at a cost of more than $35bn. 

Governor Gavin Newsom’s budget proposal before the legislature extends at least $1 billion per year in funding for the next 20 years “providing the necessary resources to complete the project’s initial operating segment.” The Feds insist that this is insufficient to fund the $7 billion gap to complete the Central Valley section. 

USDOT gave California until mid-July to respond and then the administration could terminate the grants.

Earlier, the U.S. Department of Transportation and Amtrak released a joint statement on April 14, 2025, announcing that the previously awarded $63.9 million grant under the Corridor Identification and Development program for the Dallas to Houston HSR line was being cancelled, and Amtrak would no longer be a partner on the project. Investors for Texas Central have indicated they will continue to pursue the project as a fully privately funded venture.

Separately, Fort Worth and Arlington have also commissioned an economic impact study to determine the benefits of the proposed HSR line from Dallas to Fort Worth. That study is anticipated to be complete by the end of 2025.

In the meantime, the coalition of rural Utah counties pushing the development of an 88-mile railroad connecting the Uinta Basin oilfields with the national rail network approved a plan to seek $2.4 billion in private activity bonds from the U.S. Department of Transportation to fund the railroad’s construction. That is some $500 million more in bond financing than was requested by the counties in 2023.

The bonds are only expected to cover 70% of the cost of the project, so the bonding request pins total construction around $3.4 billion, or around $3.8 million for every mile of track. When the Surface Transportation Board reviewed the project in 2020, the projected cost of the Uinta Basin Railway was $1.4 billion. The Transportation Department is authorized by Congress to distribute no more than $30 billion in the tax-exempt bonds, an amount that was doubled in the 2021 Infrastructure Investment and Jobs Act. 

COAL REALITIES

The effort to force electric utilities to operate coal-fired generation plants in spite of their uneconomic operating profile got a little less support from the data. A recent report was released which reviewed the economics of operating coal plants across the country. It comes as operators in Michigan and Pennsylvania face the reality that operating these plants will only drive up the cost of power to retail customers.

The cost to generate electricity from coal has increased faster than the rate of inflation, the new report found. It was 28% more expensive to generate electricity from coal last year than it was in 2021. The latest report analyzed 181 coal plants that were still in operation at the beginning of this year. One state which stood out was the coal hotbed of West Virginia. Among the 15 where costs increased the most: The Pleasants Power Station in Pleasants County, WV which was supposed to shut down in 2023.

The impact on customers? According to data from the U.S. Energy Information Administration, the cost to generate electricity rose 162% at Pleasants from 2021 to 2024. Appalachian Power and Wheeling Power’s three West Virginia plants saw cost increases of more than 50%. Residential electricity rates in West Virginia have increased 24% since 2021, the report says, higher than the 16% increase in the Consumer Price Index in the same time.

BAY AREA TRANSIT WOES

A recent analysis for the Metropolitan Transportation Commission found that collectively, BART, Muni, AC Transit, Caltrain and Golden Gate Transit face a total deficit of $3.7 billion in the five fiscal years beginning in July 2026.

BART and San Francisco’s Muni system account for $2.9 billion of that total, with both facing staggering shortfalls — $380 million for BART, $320 million for Muni — in fiscal 2026–27.

BART said that it might have to suspend service on two of its five lines, reduce service on those runs to just one or two trains every 60 minutes, shorten daily service hours and shut down some stations as a result. Muni management has made it clear that the agency might need to suspend service on 20 bus lines, cut the frequency of service by 50% and end service at 9 p.m.

A bill, SB 63, recently passed the Senate and will be taken up next by the Assembly Transportation Committee. It would impose additional sales taxes in San Francisco, Alameda and Contra Costa counties to support day-to-day operations and to improve regional transit connections. The MTC has estimated that the sales taxes — a half-cent in Alameda and Contra counties and up to one cent in San Francisco — would raise up to $550 million a year. The bill also allows San Mateo and Santa Clara counties to opt in to the ballot measure, a decision each county would have to make by Aug. 11.

The legislation comes as ridership on BART remains well below prepandemic levels negatively impacting farebox revenues.

FLORIDA TOURISM

Orange County, FL released data for collections of its tourism taxes for the month of April. $30.3 million was collected in April, which was down nearly 10% or $3.3 million from April 2023. It’s the biggest decrease since February 2021. April 2024 collections were lower than March 2024 collections by $10.2 million or 25.3%. It is difficult to make a true “apples to apples” comparison because of the different timing of Easter and Spring breaks between the years.

That’s disappointing because it’s harder to assess the Canadian effect on tourism to Florida. We look at what data we can. According to StatCan, for the month of May 2025, Canadian-resident return trips by air from the U.S. were down 24.2% year over year. The May 2025 decrease is even bigger than the drops in April 2025 (19.9%) and March 2025 (13.5%).

Last month’s 24% decline in air travel from Canada to the U.S. is eclipsed by the decline in Canada-to-U.S. automobile traffic. Canadian-resident return trips by automobile dropped 38.1% in May 2025. It’s the fifth consecutive month of year-over-year declines. It’s also the biggest drop in three months, surpassing the 35.2% decrease in April 2025, and the 31.9% decrease in March 2025.

TEXAS WATER

Given its historic reliance on underground water supplies, Texas is facing many of the same issues impacting water supplies which face its western neighbors. The supply situation has spawned a number of ideas for solutions including multi-state pipelines. The feasibility of those ideas has not proven out so now the state and its fossil fuel industries are generating another idea.

Governor Greg Abbott has signed a law that allows oil and gas companies to treat and sell fracking wastewater — also known as produced water — for reuse. That could include discharging it into rivers and streams or even applying it on farmland for crop irrigation. That has generated immediate pushback from a variety of interest groups. Texas Agriculture Commissioner said the most logical use for treated produced water may not be on crops at all. “I would suggest, probably, a better use of it would be fracking. Let this oil industry reuse it.”

The law shields oil producers, landowners, and treatment facilities from legal liability if treated water causes harm, unless there is gross negligence or criminal behavior. 

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

This year is providing one of the most uncertain budget seasons that we can remember. Many of the states are going through fairly contentious budget negotiations and votes. One thing common to them all is the uncertainty around the pending federal budget being negotiated in Congress right now. No one can say with any certainty what that budget will look like or what the impact of changes resulting from that budget will be. We do know that many of the potential cuts would lead to higher expenses for state governments. Policy changes in the areas of transportation, energy and public health will put immediate increased pressure on both state budgets and economies. State fiscal years will be underway when a final deal is reached in Congress. We can expect to see the fallout from that budget fairly quickly.

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ILLINOIS BUDGET

Illinois passed a $55 billion budget just before the midnight deadline over the weekend. The budget includes new or increased taxes on sports betting and tobacco products. Lawmakers did not pass plans to address a fiscal cliff facing the state’s public transit system or funding for a new Bears stadium. The taxes increased include a 25-cent tax per wager for sports betting licensees’ first 20,000 wagers and 50 cents per wager after that; an increase in tobacco products from 36% to 45%; subjecting businesses that move profits to other countries to the state’s corporate income tax.

The fallout from the failure to address Chicago’s public transportation funding needs has become quickly apparent. The games have begun in terms of efforts to generate public support. CTA, Metra and Pace officials said they would soon begin planning cuts in their 2026 budgets. Four of eight CTA rail lines would see service suspended on all or portions of the lines. And more than 50 stations would close or see service significantly scaled back.

Lawmakers could return to Springfield for a special session over the summer to consider a pending bill, which already passed the state Senate, or to negotiate a new proposal. They also have the option of taking it up during the fall veto session.

The failure to act during the just ended budget session has created a higher hurdle for lawmakers’ approval. With the spring session over, bills now require 60% approval instead of a simple majority.

CARBON MITIGATION FUNDING CUT

The Department of Energy is canceling over $3.7 billion in funding for projects that would cut carbon emissions and toxic air pollution from power plants and industrial sites. The impact is geographically diverse. Red state/Blue state status does not appear to be a factor. The impact is not just on smaller entities. Some of the largest participants are among the nation’s leading companies.

Kraft Heinz will lose its $170 million award to install clean heat technologies at 10 of its food production facilities. Beverage giant Diageo North America will no longer receive the $75 million it was promised to help install thermal energy storage systems from startup Rondo Energy at production facilities in Kentucky and Illinois. A $75 million grant to back American Cast Iron Pipe Co.’s ​“Next Gen Melt Project,” which would have lowered emissions from iron and steelmaking at its site in Birmingham, Alabama is being taken back. It also includes $75 million for United States Pipe and Foundry Co. to replace a coal-fired furnace with electric arc furnaces.

The Trump administration is getting rid of funding for several efforts to decarbonize the production of cement, one of the most carbon-intensive industries in the world. The cancelled funding includes $189 million for Brimstone and $87 million for Sublime Systems, two startups pioneering new low-carbon cement production methods. Global cement giant Heidelberg Materials will lose its $500 million award to capture carbon emissions at a massive existing cement plant in Indiana. And the National Cement Company of California won’t receive its $500 million grant to take a multi-technology approach to cutting emissions from its plant in Lebec, California.

Funding for carbon capture and storage projects at power plants will be scrapped, too. Calpine will not receive a pair of $270 million awards to retrofit power plants in Texas and California.  

WHERE’S THE OIL BOOM?

U.S. energy firms this week cut the number of oil and natural gas rigs operating for a fifth week in a row to the lowest since November 2021. It was the first time since September 2023 that the number of rigs declined for five straight weeks. The oil and gas rig count declined by about 5% in 2024 and 20% in 2023. After five years of steadily increasing capital investment, independent exploration and production (E&P) companies said they planned to cut capital expenditures by around 3% in 2025 from levels seen in 2024.

PUERTO RICO GRID FINANCE

The US Department of Energy announced that it was redirecting $336 million of federal money originally granted by the Biden administration for the development of renewable generation and microgrids. The funding will instead be directed to be used to reinforce Puerto Rico’s legacy grid and traditional centralized generation infrastructure. The same infrastructure crushed by Hurricane Maria in 2017, the same infrastructure that continues to fail. The same infrastructure that has produced three island wide blackouts in ten months.

That is what makes support from the Puerto Rico government for reinforcement of a failed system at the expense of projects that work so disappointing. It is clear that they are afraid of offending the federal government but that requires supporting decisions which reflect politics and ideology rather than actual events on the ground. At the end of March, LUMA reported over 1.14 gigawatts of grid-connected distributed solar capacity, with an additional 2.34 gigawatt-hours of distributed batteries connected to the grid. Solar power produces over 2 terawatt-hours of electricity each year, which accounts for more than 12.5 percent of Puerto Rico’s total residential electricity consumption annually. 

Can it work? Adjuntas is a small municipality with a population of about 18,000. The town operates five microgrids which provide 228 kilowatts of photovoltaic capacity and an additional 1.2 megawatt-hours of storage, which serve residences and fifteen commercial businesses. The town participates in a research study with the US Department of Energy to see if microgrids can be interconnected to create a functioning system over a wide area.

The town was in the midst of testing when the April 16 blackout occurred. The process of connecting multiple microgrids known as grid orchestration created a system which was able to “keep the lights on” in the entire town without being connected to the legacy grid during that event. One might think that the experience showed the merit of the idea. Instead, DOE and its ideological leader went the opposite way and removed funding for such projects.

Throughout the entire Puerto Rico financial disaster, the gap between what people want and what the government advocates for grows ever wider. The current entity running the power system LUMA has little public support as it seems to view its reason for being to be that of “restoring” a system that did not work very well in its best era. The new government seems less inclined to go against anything the Trump administration wants. In the meantime, local non-profits are generating proposals and projects that reflect local needs and conditions. But DOE pulls the funding.

All this occurs while the PREPA bankruptcy continues to drag on.

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