Joseph Krist

Publisher

This week, we update a couple of recent comments. The trade deal agreement with China does remove two items which were having real world impacts on American interests. Rural America will benefit from the resumption of imports of American soy beans  by China. Soybean purchases will take a couple of years to return to levels seen pre-Trump 2.0. The second is port fees. We recently cited examples of the impact of anti-China policies on shipping and trade. With the relaxation of short-term trade tensions. It will take a while for trade flows to renormalize since so much was shipped in July and August.

__________________________________________________________________

NOVEMBER REALITIES

November 1 has emerged as a crucial date in the Congressional standoff and government shutdown. Without a continuing resolution, funding stops for significant social service programs most prominently SNAP, the program supporting some 42 million Americans. The impact of cuts like that can have potentially serious impacts especially in the nation’s largest cities.

NYC has explained the potential negative impact of impending federal funding cutbacks on the City. The federal government will cease paying SNAP benefits November 1^st which has not occurred in prior shutdowns. In 2025, about 1.8 million NYC households received monthly support through SNAP and spent $5 billion throughout fiscal year 2025 in retail establishments. Even with a reopened government, recipient numbers are projected to fall due to increased and more difficult compliance requirements.

Several OBBBA changes related to SNAP impact the State and the City. Shifting more of the City’s administrative costs by increasing the City’s cost to process applications, screen for eligibility, and distribute benefits. The federal government previously split those costs in half with the City, but starting in 2026, the federal government will pay only 25% of the costs, forcing the City to pay the remaining 75%.

The new work requirements were originally scheduled to begin in March 2026, at the end of the State’s most recent waiver for work requirements related to the pandemic and job availability. Instead, in early October, the USDA announced it was terminating all previously issued waivers nationwide. The USDA estimates that each $1 spent on SNAP results in $1.54 spent in the total economy. These benefits totaled about $5 billion in NYC in City fiscal year 2025, spent in any one of over 8,600 NYC retail establishments, 40% of which are convenience stores and 26% are grocery stores. Applying the USDA multiplier, SNAP’s total impact on the NYC economy could be up to $7.7 billion.

NEW ORLEANS

The State of Louisiana Fiscal Affairs Committee is one of those entities you usually do not hear about much. It is responsible for reviewing and, on occasion, intervening in the financial stability of cities and parishes through the appointment of fiscal administrators, who are empowered to formulate local budgets, hire and fire personnel and approve contracts unilaterally, without the consent of elected officials. We last saw similar situations around Detroit in the last decade.

The actions follow intervention in the City’s budget process by the State’s increasingly active Governor. The City had asked for a $125 million loan to assure that payroll is met through year end 2025. According to the incoming Mayor, the only way the State Bond Commission would approve the $125 million bond request is if the council agreed to have a state administrator take over the city’s finances. 

The fiscal administrator law was recently amended to make it easier to trigger a fiscal review. If a political subdivision fails to meet any of ten listed conditions, including having insufficient revenue to cover a year’s worth of operating expenditures, it can be subject to takeover. As you would expect, the move to impose an administrator is not sitting well especially with a newly elected Mayor.

LAYOFFS

With so much attention on the lack of official data from the federal government, one has to look for more anecdotal evidence of what is going on in the economy. That is especially true for the labor market. So, we have noticed some clear headline events around jobs. Amazon is clearly looking to eliminate hundreds of thousands of warehouse and fulfillment jobs. They are also looking to reduce white-collar positions by the tens of thousands.

General Motors plans to lay off 1,750 workers indefinitely in the coming months and an additional 1,670 temporarily as it reduces electric vehicle production. After Tesla, G.M. sells more battery powered cars in the United States than any other manufacturer. Rivianannounced 600 layoffs, about 4% of its workforce, amid an EV market pullback, marking its third layoff this year. Paramount is going to lay off about 2,000 employees — about 10% of its workforce. UPS said it’s cut about 34,000 operational positions — and the company announced another 14,000 role reductions.

NUCLEAR

Santee Cooper announced that it has signed a letter of intent regarding the potential sale of two unfinished reactors at the abandoned V.C. Summer project in South Carolina to Brookfield Asset Management. The 2.2-GW project was mothballed in 2017 following delays and cost overruns. Santee Cooper has maintained equipment at the site over the past eight years in the hope that the project could become viable again. It launched a competitive bidding process in January.

Initial expressions of interest from over 70 potential bidders and 15 formal proposals were submitted. The letter of intent with Brookfield establishes a six-week initial project feasibility period during which the parties will select a project manager and evaluate construction providers to resume construction of the two nuclear units. The agreement comes along with the announcement of an agreement with Westinghouse Electric, Cameco and Brookfield and the US government to fund $80 billion of nuclear power development.

Google and NextEra Energy will collaborate to restart the 600-MW Duane Arnold Energy Center in Iowa as part of a larger partnership aimed at accelerating nuclear deployment across the U.S. Google and NextEra say they expect Duane Arnold to be back online in early 2029. The Federal Energy Regulatory Commission in August approved a waiver request that will allow NextEra to restart the facility. NextEra shuttered the plant in 2020.

HYDROGEN

Recent weeks have seen a slew of indications that the Trump administration is pulling the plug on federal funding for the development of so-called hydrogen hubs. Initially, seven such groupings of various production facilities were to be located across the country. While the effort was very ambitious and full development of hubs unlikely, it is disappointing that efforts in this area are slowing significantly.

That leaves efforts to develop hydrogen fueled generation and/or production facilities to the private sector. Hyundai Motor Group says its plan to invest $6 billion to develop a low-carbon steel mill in Louisiana ​“remains unchanged,”. This comes after tax credits supporting green hydrogen projects were cut for the green hydrogen needed to produce clean iron and the immigration raid on a factory the automaker is building in Georgia.

There had been real concerns that potential investments could be reduced or withdrawn in the face of policy hostility. Hyundai recently said construction at the Georgia plant is being slowed due to labor shortages, and work on at least 22 other South Korean projects in the U.S. has nearly all halted, according to the press reports in South Korea.

The Louisiana project is set to come online in 2029. It will use direct reduced iron, a cleaner method of making iron that relies on natural gas or hydrogen instead of the coal that fuels a blast furnace, the Hyundai facility is slated to produce 2.7 million metric tons of steel each year, including​“low-carbon steel sheets using the abundant supply of steel scrap in the U.S.”

Initially using what’s called blue hydrogen, a version of the fuel made with natural gas and equipped with carbon-capture technology to prevent the emissions from entering the atmosphere. But by 2034, Hyundai intends to start producing green hydrogen — made with renewable energy — at the facility to power the process.

Green steel has had a rocky road on the path to development. Perhaps reading the tea leaves before President Trump returned to office in January, Swedish steel company SSAB suspended talks with the Department of Energy for a $500 million grant to support a green-steel project in Mississippi. In June, Cleveland-Cliffs decided against implementing its plans to replace the blast furnaces at its Middletown Works facility in Ohio with cleaner, hydrogen-ready technology, also with $500 million in financing from the federal government.

BATTERIES LOSE TAX POWER

In 2022, the State of Michigan lured a Chinese electric vehicle battery manufacturer to build a $2.1 billion production facility near Big Rapids, about 200 miles northwest of Detroit. State lawmakers approved nearly $175 million in incentives for the project. From the start there were political concerns about the manufacturers Chinese roots. Support for the plant was pressured especially as trade issues grew between the US and China.

The state is now holding Gotion Inc., the manufacturer, in default of $23.6 million of incentives, accusing the company of abandoning the project. Michigan informed Gotion that it was in default of economic development grant obligations because no “eligible activities” had occurred on the site’s property in over 120 days. The state is seeking to claw back $23.6 million that was disbursed toward the purchase of the site’s land. $26.4 million remaining from the grant that was not spent will be returned to the state, Emerson said. Citing a lack of progress on the project, a different $125 million grant was not distributed to Gotion.

When the project was proposed, officials said the factory would produce over 2,000 jobs. 

MORE FEMA CUTS

FEMA has denied the state’s request for a second time for help following a March ice storm that left significant damage in Northern Michigan. Gov. Gretchen Whitmer had appealed the initial denial in August, seeking funding to repair homes, utilities and risk reduction efforts. While the funding for home and utility repairs was denied, a request to fund long-term projects to reduce future risks, is still under review.

The denial comes after President Donald Trump announced in July he was approving $50 million in assistance for storm recovery efforts. But that was limited: FEMA approved assistance to state, local, tribal and territorial governments and certain private nonprofit organizations. State lawmakers included $14 million for northern Michigan ice storm recovery in the new budget approved this month. 

MUNICIPAL UTILITY SOLAR FEE CHALLENGE

The municipal utility which provides electricity in Bowling Green, OH is being sued over its solar energy fees. It puts a spotlight back on the debate over how to fund an existing utility’s generation and transmission base as more customers move to employ solar panels and batteries. A monthly charge is imposed by the city of Bowling Green’s municipal utility on its few customers with solar panels on their rooftops. Customers who use batteries to store surplus solar power pay even more.

It is the latest effort to reduce the revenue hit to legacy utilities from the expansion of individual generation. In response, one customer is suing the City over its fixed monthly charge. Bowling Green said that the city adopted its $4-per-kilowatt monthly charge for installed renewable capacity ​“to ensure rooftop solar customers were paying for the electric service they were receiving, and that the rooftop solar customers were not being subsidized by non-solar customers.”

It is almost a formulaic response which is unsurprising given its use almost exclusively by proponents of the legacy providers. Bowling Green supports one as it does have a long-term ​“take-or-pay” contract to obtain half of its power from the Prairie State coal plant in Illinois. That coal plant is a top ten national carbon emitter and the “leader” in Illinois.

That has created a real knot for the utility to untie. The case is being made that the solar customer is actually subsidizing the traditional customers. That is because the utility pays 7.9 cents a Kwh under its net metering scheme but it sells the power across its system for 13 cents a Kwh. Customers have noticed.

ALASKA LOCAL DEBT

The State of Alaska has been working to find ways to tighten its financial belt as it works through periods of lower oil revenues. Alaska’s current oil prices are below  what lawmakers budgeted for. This has led to the State looking at solution’s for its budget. Some of them will have direct impacts on the debt funding ability of local governments.

The state’s School Bond Debt Reimbursement Program started when the Alaska pipeline supported oil production in the 1970’s. Local governments borrowed money to pay for new or improved school facilities, and the state committed to help repay the debt over time. The cost for the state to fully fund projects under the program would have been roughly $47 million a year.

Now, 17 Alaska municipalities and school districts that are trying to close budget shortfalls after the state cut its payments for school construction and renovation projects by roughly 25-30% this year. In 2015, the Alaska Legislature paused funding of new projects for 10 years, a moratorium that expired on July 1. But the state kept paying for pre-moratorium debt. That has provided funding for up to 70% of local debt under the program.

This isn’t the first time lawmakers have reduced annual funding under the reimbursement Program.  In 2019, the governor cut the program and left districts to manage the additional funding requirements for debt payments from 2020 through 2022.. Then, in 2023, they back-paid districts and municipalities for those three years. There is no requirement that the State do so. If oil prices rise, that may deliver more revenue to potentially fund the program.

The timing of the reduction creates a dilemma for potential borrowers. The reduction in funding coincides with the expiration of the 10-year moratorium on the program. While this has created pressure to open the program beyond the existing borrowers, the funding cut works against that. The uncertainty raises concerns about small government’s ability to adequately plan and budget for debt service is support is sporadic rather than consistent.

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

NUCLEAR

The plans for the development of new nuclear generation at Entergy Northwest’s Hanford site are beginning to take shape. Amazon and the utility agreed on a plan to build small modular reactors which would be funded by Amazon. The Cascade Advanced Energy Facility would be built by Energy Northwest and SMR developer X-energy. The plan is to build up to 12 SMRs, using X-energy’s advanced nuclear reactor design. 

The project will employ three 320 megawatt (MW) sections to make up the full 960 MW plant. Initially, Energy Northwest is to develop four SMRs in the first phase of Cascade, with an initial capacity of 320 MW and the option to expand to 12 units with a capacity of 960 MW. Construction is currently expected to start by the end of this decade, with operations targeted to start in the 2030s.

Holtec International confirmed this week that 68 fresh fuel assemblies were delivered to the 800-megawatt Palisades nuclear plant and placed in the spent fuel pool for inspection and storage until workers begin loading them into the reactor core. Holtec wants to build install an additional 600 MW of capacity from SMRs at the 432-acre site along Lake Michigan.

PUERTO RICO GRID

The U.S. District Court for the District of Puerto Rico ruled that the Federal Emergency Management Agency should have considered solar power as part of the agency’s analysis for how it would distribute federal grant funding for rebuilding Puerto Rico’s electrical grid. The decision came at virtually the same time that the Department of Energy announced it would reallocate hundreds of millions of dollars away from solar technology.

Instead of funding rooftop solar and battery storage installations set to begin next year, the $365 million would be used to foot the bill for repairs and emergency measures to stabilize and harden the current fossil fuel-based grid. The reallocated money was part of $1 billion Puerto Rico Energy Resilience Fund offered by DOE’s Grid Deployment Office in 2023, following consultation with local communities.

The funds were intended to pay for renewable energy for low-income people with special energy needs, like powering ventilators or other kinds of medical equipment. It is estimated that about 12 percent of Puerto Rico’s residential customers get their power from rooftop solar, totaling more than 163,000 installations. The average installation cost is $30,000 so that limits the practical availability of solar to lower income users.

FEMA

No applications for homeowner buyouts and disaster mitigation funding through the Federal Emergency Management Agency have been approved since Tropical Storm Helene hit Western North Carolina a year ago, Gov. Josh Stein said Oct. 13.

The Hazard Mitigation Grant Program is a FEMA-funded program that allows property owners to apply for federal buyouts after disasters.

It is designed to reduce or eliminate future damages by paying for structural elevations or the buyout of damaged properties. Applications are processed at the county level and then sent to the state and FEMA for approval, where the federal government provides 75% of the funding for applications and the state provides a 25% funding match.

Only about one-fifth of applicants for federal disaster assistance from Kerr County, TX have been deemed eligible to get financial help so far, leaving hundreds without governmental aid more than three months after deadly floods ravaged the county on July 4.

A new study from the PEW Foundation takes a shot at estimating the potential vulnerability of individual states as federal disaster aid cuts through eliminating FEMA take hold. For each state, Pew looked at the highest single-year and average annual federal disaster aid received over a period of twenty years alongside total fiscal year 2024 reserves—which for purposes of this analysis includes only rainy day funds and excess general fund dollars—and fiscal 2024 general fund spending.

Using these metrics, Arizona is the best positioned and Louisiana the worst. Louisiana’s highest one-year federal aid totaled $31.8 billion—nearly 30 times the state’s reserve balance in 2024—and Mississippi’s $15.9 billion was 25 times its reserves. The study set aside the data for those states as such outliers to arrive at more meaningful average and median data.

Vermont’s highest one-year federal aid equaled more than 90% of the state’s 2024 reserves, meaning that absent federal assistance or significant budget management action by state leaders, a comparable disaster in 2024 could have depleted almost all the state’s savings. Five other states—Colorado, Hawaii, Iowa, New Jersey, and New York—had one-year federal disaster aid that exceeded 50% of their available reserves. At the other end of the spectrum, federal disaster aid never exceeded 1% of reserves in Arizona, Delaware, or Wyoming during the 22-year period, and in 27 other states, the highest single-year aid amount fell below 20% of reserves.

It is not a surprise that low spending states like Mississippi in addition to Louisiana should fare poorly. The next most “vulnerable” states are a diverse group – New York, Florida, Vermont and Iowa. At the same time, the data does reflect that in spite of what one might assume, California is one of the states expected to face a lower impact on its budget.

WIND

The Danish shipping firm Maersk canceled a $475 million contract earlier this month for a ship that was custom designed to install massive turbines at the Empire Wind power project off the coast of New York. The ship’s builder, Singapore-based Seatrium, said it was evaluating its options for the vessel, which was nearly fully built, and could take legal action.

Rhode Island’s Blount Boats, which began building crew transfer vessels for offshore wind in 2016, said it has stopped building those vessels completely. Houston-based Seacor Marine announced in August it would sell two U.S.-flagged liftboats — used on the Block Island and South Fork offshore wind farms — to Nigerian oil and gas services company JAD Construction for $76 million, citing delays and cancellations.

It was estimated last year that more than two dozen U.S. ports were pursuing on shore infrastructure projects to support offshore wind projects. Many of those lost critical funding after the DOT canceled 12 grants worth $679 million in August, hitting projects in states including Massachusetts, New York, California, Maryland, and Virginia. In Northern California, the Humboldt Bay offshore wind port that lost $426.7 million is expected to be delayed by about five years to at least 2035.

Equinor’s South Brooklyn Marine Terminal, which will support its Empire Wind project, is 70% complete and has employed about 3,000 workers, according to a company spokesperson. It is the onshore job potential that has held back efforts to completely shutdown the project. Now as other projects see their funding cut or eliminated, the impact on the onshore jobs these projects created becomes clearer every day.

FEDERAL R&D CUTS AND NEW YORK CITY

The role of higher education and research in the New York City economy is a significant one. Since World War II, the federal government has been a primary funding partner through agencies like the National Institutes of Health (NIH) and the National Science Foundation (NSF). In 2024, NIH awarded $2.8 billion to 110 NYC institutions. NYC colleges spent over $5 billion on R&D in 2023, with the federal government accounting for half of those expenses.

Columbia University led with over $1 billion in R&D expenditures, followed by NYU at about $800 million, and Mount Sinai’s Icahn School of Medicine, which relied on federal funds for two-thirds of its nearly $1 billion in research spending. At Yeshiva University, which houses the Albert Einstein College of Medicine, about two-thirds of research funding also came from federal sources. Across CUNY campuses, federal funds totaled roughly $136 million, nearly half of all research spending.

Higher education institutions comprise a key sector of New York City’s economy and society. In recent years, the sector has enrolled half a million students across 100 higher education institutions (including satellite campuses), employed more than 140,000 workers, and generated around $35 billion in annual economic activity by one estimate.

AMAZON CUTS

Press reports have indicated that Amazon’s automation team expects the company can avoid hiring more than 160,000 people in the United States it would otherwise need by 2027. Amazon’s U.S. work force has more than tripled since 2018 to its current level of 1.2 million. The reports show that management told Amazon’s board last year that they hoped robotic automation would allow the company to continue to avoid adding to its U.S. work force in the coming years, even though they expect to sell twice as many products by 2033. 

Amazon’s robotics team has an ultimate goal to automate 75 percent of its operations. Amazon plans to copy the Shreveport design in about 40 facilities by the end of 2027, starting with a massive warehouse that just opened in Virginia Beach. And it has begun overhauling old facilities, including one in Stone Mountain near Atlanta. That facility currently has roughly 4,000 workers. But once the robotic systems are installed, it is projected to process 10 percent more items but need as many as 1,200 fewer employees.

Part of the attraction of Amazon warehouses was the jobs they provide. The jobs are supposed to offset the other impacts of these large facilities. Now, the jobs are being reduced and development plans in Virginia to support a “second headquarters” for Amazon have not panned out. No one seems to regret the decision not to support Amazon’s proposed NYC office development.

HARVEY, ILLINOIS

Harvey, Illinois has been in the news for over a decade over its fiscal issues and inability to balance current operations. That unfinanced spending is estimated to be $164 million debt accumulated under previous administrations. Now, the Harvey City Council has voted to become only the second city in Illinois to seek “financially distressed city” status with the state, which temporary shut the city down. “This has been many years of mismanagement, of overextended finances,” according to the mayor. The city says 69 employees, across multiple departments, including police and fire, have been temporarily furloughed, without pay or benefits. Ninety-eight essential personnel will report to work to maintain core city operations. But overall, 41% of city staff was furloughed.

The vote clears the way for the state to assume financial control of Harvey and possibly, city leaders hope, to bail the city out. Illinois does not allow its municipalities to declare Chapter 9 bankruptcy. East St. Louis is the only other Illinois city to seek state oversight under the distressed municipalities law. As is the case in Pennsylvania, state involvement does not necessarily lead to long term success in restructuring. Municipalities have languished for decades under Commonwealth oversight.

The situation in Harvey is complicated by actions taken by East St. Louis under state oversight. There the city was unwilling to make the sort of budgetary decisions that the State saw as necessary. Attempts to impose changes on the City by the State were successfully challenged in court. This raises concerns about the ability and willingness of the City to make adjustments going forward. After all, it took 30 years for Scranton to emerge from the Commonwealth of Pennsylvania Act 47 legislation.

FLORIDA PROPERTY TAX DEBATE

It is becoming clear that some sort of ballot question will be on the Florida ballot in 2026 dealing with property taxes. There are currently three different proposals being floated in the state legislature to potentially amend the state constitution through voter initiative.

One proposal (HJR 201) would eliminate non-school homestead taxes. A second proposal (HJR 203) would phase out non-school homestead property taxes over 10 years. The homestead tax exemption would increase by $100,000 annually under this proposal. A third would exempt people ages 65 and older from paying non-school taxes on their homes.

Currently, homeowners can qualify for a homestead exemption from local-government and school-district taxes on the first $25,000 of the taxable values of their properties and from local-government taxes on the values between $50,000 and $75,000. One or all or none of the proposed amendments could appear on the November 2026 ballot.

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

TRANSIT FUNDING

Governor Newsome signed legislation (SB 63) allowing for a ballot item to appear on the November 2026 ballot to increase funding for mass transit across the Bay Area. If approved, the measure would add a half-cent sales tax in Alameda, Contra Costa, San Mateo, and Santa Clara counties to fund regional systems like BART, Caltrain, AC Transit, the San Francisco Bay Ferry, and the San Mateo County bus system. In San Francisco, the rate would be 1 cent to cover additional San Francisco Municipal Transportation Agency deficits.

The bill authorizes two ways to qualify the measure. The first option is for a transit board representing agencies across the Bay Area to send it to voters in November 2026, a harder battle because new taxes typically require a two-thirds majority approval. If the item appears as a voter initiative, it would need only a simple majority to pass. A legislative analysis of the bill estimated that a ballot measure could raise hundreds of millions of dollars annually through the tax for transit systems, and would likely “reduce pressure on the state to fund them.”

The final version of the bill includes enhanced accountability requirements for transit systems. In Illinois, a fall session of the Legislature will have to confront the issue of transit funding head on. The primary issue for many is the need for accountability. That includes the potential merger of management responsibilities for the three systems serving Chicago. The existence of three boards of directors for the systems has been along standing problem. Any funding legislation will, like the California legislation, include provisions regarding management.

Seminole County, FL officials have approved a new two-mile toll connector to Orlando Sanford International Airport. The Central Florida Expressway Authority voted to approve construction of the connector linking State Road 417 to Orlando Sanford International Airport. Specifics on toll pricing and funding sources for the $200 million cost have not yet been released. Officials have not provided a construction start date or timeline for completion.

In Florida, Brightline has announced changes to its scheduling to address demands for more frequent service. It’s a mixed bag as hourly round trips between Miami and Orlando will be reduced from the current 15 to 10, departing about every two hours, while short-distance frequencies between Miami and West Palm Beach jump to 18 each way including the Orlando trains. fares within South Florida are being revised to fixed commuter-style “peak” and “off-peak” amounts according to trip length, rather than rising or falling based on percentage of capacity sold, as Miami-Orlando pricing will continue to do.

NEW YORK BUDGET REALITIES VS.  RHETORIC

As the potential election of Zohran Mamdani approaches, there has been much discussion about how the City divides its resources to satisfy the demands of its diverse and always changing populace. This is the time of the year when much is said about how the City spends its money. There is usually a mixture of hyperbole and disinformation that the average voter doesn’t really figure out. Information to offset those efforts often lacks for real data.

Helpfully, the NYC Independent Budget Office (IBO) has provided some real data. If you focus on the campaigns, some of it may surprise folks. IBO looked at spending in terms of how many dollars out of each hundred dollars is spent. The largest share of the budget, $29.71 out of every $100, goes to the Education budget category, which exclusively contains the Department of Education (DOE) which runs New York City Public Schools.

$16.37 out of every $100 goes to the Human Services budget category, which includes activities like administering food assistance, cash assistance, and rental support, running the City’s shelter system, overseeing child welfare and juvenile justice, and providing meals and seniors centers to aging adults. $3.49 out of every $100 go towards the health budget category, which includes spending on activities like public health programming, enforcing health regulations, responding to health emergencies, disease prevention, and funding public hospitals and clinics. The category includes Department of Health and Mental Hygiene, which is a City-operated agency, and City contributions to NYC Health + Hospitals.

Public safety always gets a lot of attention from proposals to defund, redeploy, or increase headcount. This cycle is no exception so here’s reality. $10.11 of every $100 goes towards public safety and judicial system costs, covering all emergency response agencies, such as the New York Police Department, the Fire Department of New York, and New York City Emergency Management. This category includes City spending on items such as equipment, fuel, training, medical supplies, and more. In addition, all five District Attorneys, the Department of Probation, and oversight agencies, like the Civilian Complaint Review Board, are also included in this category.

For those whose greater concern is the liability side of the balance sheet, two concerns predominate. Debt service payments account for $5.66 out of $100. This budget category pays for the City’s borrowing to finance the Capital Budget. The City contributes to five pension systems that serve different groups of public employees: The New York Employees’ Retirement System (NYCERS), the Board of Education Retirement System (BERS), the Teachers’ Retirement System (TRS), the Fire Pension Fund (FPF), and the Police Pension Fund (PPF). Together, these pension contributions cost $8.90 out of $100.

$1.28 out of $100 funds the transportation budget category, which includes activities like paving and maintaining streets, highways, bridges, tunnels, and public plazas, managing traffic lights and signals, operating the Staten Island Ferry and direct contributions to the Metropolitan Transportation Authority.

NOT OVER UNTIL IT’S OVER

We have been reporting on the long strange trip that the effort to enact transportation funding legislation in Oregon. After a number of hurdles were overcome, the final bill was finally passed this month. That doesn’t mean that the bill has been signed. That is where things get interesting.

Under Oregon law, citizens can refer bills passed by the Legislature to the ballot for voter approval as long as they can collect enough valid signatures within 90 days of the Legislature adjourning. A group has announced its intention to undertake such an effort. There is one holdup – the group can’t actually begin collecting signatures until the governor signs the bill. For the transportation tax bill, House Bill 3991, that doesn’t have to happen until 30 business days after lawmakers’ Oct. 1 adjournment.

So, the Governor is delaying actually signing the bill until the deadline to do so arrives. That would leave a bit over a month to garner the 78,116 signatures required by a Dec. 30 deadline. The details of a proposed ballot question have not been released but it would likely reference certain items in the bill. A six-cent gas tax increase, a temporary doubling of a payroll tax that funds transit, and hikes to vehicle registration fees are likely targets for those looking to get the issue on the ballot.

CHICAGO BUDGET

A social media tax, new yacht docking fees and a renewed employee surcharge lead the list of novel revenue sources Mayor Brandon Johnson is pushing in his 2026 budget to fill a $1.15 billion hole.  The $16.6 billion budget proposal introduced does not include hikes in property taxes, garbage fees and grocery taxes. The Mayor has included some new efforts to expand the tax base through new levies.

The Mayor proposes a “community safety surcharge” that taxes businesses with more than 100 workers $21 per month per employee, more than five times what it was under Mayor Rahm Emanuel, who dissolved it in 2014. Head taxes as they are known have proven to be unpopular. Hence its elimination in 2014. One innovative proposal from Mayor would tax social media. He proposes that the tech companies pay 50 cents per Chicago user after the first 100,000 to fund and insulate mental health services from federal funding cuts.

The Mayor also announced that he’d would use $1 billion from unused money in special taxing districts. The plan would see of that amount being transferred half going to Chicago Public Schools to cover, among other things, required pension funding for CPS employees that was at the center of disputes between the City and   CPS that resulted into the firing of the school superintendent. In any event, the pension funding move is yet another one-time solution for a long-term problem.

PORT OF LOS ANGELES

The Port of Los Angeles processed 883,053 Twenty-Foot Equivalent Units (TEUs) in September. While cargo was lower in the month compared to last year, the Port still had its best quarter on record. September 2025 loaded imports came in at 460,044 TEUs, 7.6% less than last year. Loaded exports landed at 114,693 TEUs, about the same as 2024. The Port handled 308,317 empty container units, 10% less than last year.

 The Port closed out the third quarter moving 2.9 million TEUs, its best three-month quarter ever. Nine months into 2025, the Port of Los Angeles has handled 7,817,057 TEUs, 3% more than the same period in 2024. Nevertheless, uncertainty is the ruling feeling of the day as tariffs and ship fees begin to take effect. The Port points out that “Approximately 20% of vessels that call at the Port of Los Angeles are China-made. Some cargo-handling equipment and cranes are also manufactured in China.“ In addition to tariffs, the ship fees throw a real wrench into things.

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

HOSPITAL MERGER

Saint Peter’s University Hospital is the largest component of Saint Peter’s Healthcare System, Inc. approximately $587 million in FY 2022 total revenue system located in New Brunswick, New Jersey. It was upgraded to Baa2 by Moody’s in 2023. While the hospital has managed to maintain adequate financial results, it faces potential pressures from the need to update an aging physical plant. It also sticks out in its market as a single site hospital which is dominated by larger systems.

This has led the hospital (owned by the Catholic Church) to pursue mergers with one of the large multi-hospital competitors in New Jersey over the last several years. Saint Peter’s previously tried to partner with RWJ Barnabas Health but ran into anti-trust action from the federal government related to the parties no longer having to compete to provide the lowest prices and the best quality and service. Both organizations mutually agreed not to go forward with that merger in 2022.

Atlantic Health System (AHS) is a large multi-hospital (6 acute care sites) system with numerous ambulatory and physician practice sites and over $5.1 billion in revenue. The System provides a broad range of adult and pediatric services over an eleven county service area, including services to Pike County in Pennsylvania and Orange County in New York. The flagship hospital, Morristown Medical Center, includes a Level III NICU, a cardiac surgery center and a children’s hospital.

In June 2024, AHS and Saint Peter’s University Hospital, NJ (Baa2 stable) signed a definitive agreement to merge. The organizations had not yet received regulatory approval as of July of this year. Now, the two entities announced that the proposed merger has been called off. This puts St. Peter’s in a tough spot as it does not have the resources on its own to make significant capital expenditures needed to keep up with competitors.

ILLINOIS AND FEDERAL CUTS

The Illinois Governor’s Office of Management and Budget (GOMB) has released its annual assessment of the state budget and its outlook reflecting a quarter of activity. Through the first three months of fiscal year 2026, several revenue sources have shown stronger than expected results, but GOMB expects the negative impacts of H.R. 1 on business tax collections will far outweigh any overperformance in other areas. As a result, GOMB estimates a combined $449 million net decrease to the General Funds revenue forecast.

The State’s three largest revenue sources (individual income tax, corporate income tax, and state sales tax) are estimated to total $43.548 billion, a net decrease of $827 million (1.8 percent) from the revenue estimate at the time of the fiscal year 2026 budget enactment.

The fiscal year 2026 budget’s revised estimated operating expenditures are $55.115 billion. This amount includes a $303 million continuing appropriation that was invoked by the State Employees’ Retirement System (SERS) at the start of the fiscal year. This continuing appropriation authority may be invoked annually to true-up the State’s contribution to the system if the previous fiscal year’s General Revenue Fund appropriated amount is less than what the certified percent contribution relative to actual General Revenue Fund personal services payments would require.

The result is an estimated deficit for fiscal year 2026 of $267 million. Based on the current assessment of revenues and maintenance budget pressures for fiscal year 2027, estimated expenditures would exceed revenues by $2.2 billion. Illinois now joins Florida and Colorado in facing looming budget gaps in the wake of the OBBBA.

OREGON TRANSPORTATION FUNDING

The Oregon legislature finally passed a transportation funding package which allows the state to avoid layoffs in the Oregon Transportation Department (ODOT). The final votes to enact the legislation were held up by one member’s health issues with interim actions keeping funding alive until a vote could be held. The legislation would raise about $4.3 billion over the next 10 years to fund road maintenance and operations by raising the gas tax by six cents, nearly doubling most vehicle registration fees and doubling the payroll tax used to support public transit from 0.1% to 0.2% of a paycheck  — among other fee hikes for electric vehicles. 

The details include a gas tax increase from $0.40 to $0.46, effective Jan. 1, 2026; an increase in annual registration fees from $43 to $85 for passenger vehicles; $63 to $105 for utility vehicles, light trailers, low-speed vehicles and medium-speed electric vehicles; and $44 to $86 for mopeds and motorcycles. The bill increases title fees for passenger vehicles from $77 to $216. The legislation also funds public transit by doubling the payroll tax used to support public transit from 0.1% to 0.2% until Jan. 1, 2028.

Electric vehicle owners will see an increase to registration surcharges for electric and highly fuel-efficient vehicles, from $35 to $65 annually for cars with a 40+ mpg rating and from $115 to $145 annually for electric vehicles. The legislation also phases in a mandatory road usage charge program for electric vehicles by 2031. Electric vehicle drivers have been able to opt into the OReGO and pay 2 cents per mile in exchange for lower registration fees. The proposed change would mandate electric vehicle drivers participate in that program or pay a flat $340 annual fee. 

CLIMATE AND ENERGY

The Nebraska Attorney General sued the Omaha Public Power District (OPPD) this week seeking to stop a plan to retire three of five power-producing units at the utility’s North Omaha Station and switch the other two coal-fired units to natural gas. The suit seeks to stop the changes as well as prevent OPPD from pursuing any policy that prioritizes considerations other than price or reliability, including “environmental justice.” 

The issue will come down to whether the plan violates a 1963 Nebraska law requires that the state “provide for dependable electric service at the lowest practical cost.” OPPD’s plan says moving forward is contingent on opening new power-generation facilities this year. The politics of the move are obvious as the defendants in the lawsuit are OPPD, its CEO and president and six of eight elected OPPD directors who support the plan.

The goals of the plan are not new as they date back to 2014 and 2016, when OPPD directors agreed that, by 2023, OPPD would retire the three North Omaha units in operation since the 1950s and switch the other two in operation since the 1960s from coal to natural gas. The oldest three units switched to natural gas in 2016. The plan was revised in 2022 and then made contingent upon the construction of two new power-producing stations. Those facilities would produce 600 megawatts, more than all of the units operating now in North Omaha.

As that litigation unfolds, another front has opened in the carbon sequestration debate. The Tallgrass’ Trailblazer pipeline, which extends several hundred miles and transport CO2 from ethanol plants in Nebraska, Colorado and Wyoming to an underground storage site in Wyoming, reported its first shipment. The pipeline formerly carried natural gas, but the company was able to convert the pipeline to instead sequester liquified carbon dioxide. That allowed it to avoid many of the issues stopping other carbon pipeline projects.

Nebraska does not require state approval for CO2 pipelines. 

COAL

Sandy Creek is a single-unit, 932-megawatt (MW) plant located near Waco, Texas. It is the newest large coal-fired power plant in the United States having started commercial operations in May 2013. It is the type of plant favored by climate conservatives for its reliability. That makes it a bit more ironic that the facility will generate no power until March 2027, according to the Electric Reliability Council of Texas (ERCOT). The repairs to remedy two major outages in 2025 will take that long.

Since the end of February of this year, Sandy Creek has been in operation for less than 48 hours. When the plant opened in 2013, the EIA reported that coal provided 38.1% of Texas’ power; gas accounted for 42.2%, nuclear 9.8%, solar 0.04%, and wind 9.2%. By 2024, coal had fallen by two-thirds to 12.6%. Meanwhile, gas rose to 47.8%, nuclear was 7.4%, solar rose to 7.6%, and wind increased to 24%.

SALT RIVER PROJECT

Arizona’s Salt River Project (SRP) will add a 5-MW/50-MWh iron flow battery to its system through a pilot project and storage purchase agreement with a private developer. The capacity will be sold to SRP under a 10-year energy storage agreement. The company’s technology uses a combination consisting mainly of iron, salt and water to store and discharge energy.

The unit will join others under tests at SRP’s Copper Crossing Energy and Research Center in Florence, Arizona. Those projects include a gas generation unit and a solar complex. The plant will be the second battery test which does not rely on what are generally referred to as rare earth minerals at the Florence Center. This continues into SRP’s efforts to use non-lithium batteries and support long duration energy storage (LDES) technologies. It also enables the project to claim a 90% domestic supply content.  

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

RESILIENCE AND A NEW REALITY

In communities participating in the federal flood insurance program, any home that has been “substantially damaged” must be rebuilt to the latest flood-resistant standards or demolished. Under the rule, “substantial damage” means the cost of repairing the home would exceed half its market value, as determined by local officials. FEMA estimates that buildings constructed to floodplain management standards sustain, on average, 80 percent less damage during floods.

In Pinellas County, where Gulfport is, officials have processed about 250 demolition permits for homes in unincorporated areas since October — about four times the number issued during the same period last year. A Republican whose district includes most of Pinellas County, has pushed to waive the rule, calling it an “overreach” by the federal government.

The potential for problems extends beyond Florida. Recent reporting has found that there are huge discrepancies between what higher income households receive and what lower income individuals receive from FEMA. It’s the product of many factors but for those who receive lower amounts of assistance, it can be a real barrier to rebuilding to the new standards.

MEDICAID WORK RULE REALITIES

Fiscal conservatives have pushed for years for work requirements be applied to Medicaid recipients. In October 2020, Georgia received federal approval to test Medicaid work requirements for an initial 5-year period. Its program, called Georgia Pathways to Coverage, is available to people between the ages of 19 and 64, with incomes at or below the federal poverty level, who would not otherwise qualify for Medicaid. Georgia originally planned to begin enrollment in July 2021, but legal challenges delayed implementation until July 2023.

As of May 2025, Georgia reported that 7,463 people were enrolled, far fewer than the 25,000 the state had expected to enroll during the first year of the program. No surprise there since one of the unstated aims of the program is to make enrollment and reporting more difficult. The low number of enrollees qualifies as mission accomplished for the idealogues. For the pure fiscal hawks, the Georgia experience could easily be a cautionary tale for states implementing work rules.

The Government Accounting Office (GAO) has released a report documenting the Georgia program’s operations. Between 2021 and June 2025, Georgia spent $54.2 million on administrative costs, compared with $26.1 million on providing medical care, according to GAO. About $50.8 of the administrative spending went toward changing the state’s system for determining people’s eligibility and enrolling them. In addition, the state used $20 million it received under the American Rescue Plan Act of 2021 to advertise the program.

STATES

The first quarter for most states ended this week so we will soon get an opportunity to see what the impact of all of the economic and policy uncertainty will be on state budgets. We are starting to see signs that states face an increasingly difficult time in recent budget analyses in several of them.

Florida faces significant budget gaps going forward. The legislators chose to put off hard decisions until after the 2026 gubernatorial elections. This has resulted in several multibillion dollar projected budget gaps for the fiscal years beginning in July of 2026. Add on the uncertainty that many important sectors of the state economy rely on and you have a formula for negative credit pressures.

There was one piece of good news. The Federal Emergency Management Agency gave the state $608 million to pay for the construction and management of Alligator Alcatraz and Deportation Depot, which Florida officials say are totally state-run facilities.

Kentucky has been embarking on a program of tax cuts even as it faces long standing budget issues like pension funding. The Commonwealth recently released tax collection data for July and August which show declines in tax revenue beyond any projected by the legislature. In Colorado, state economists projected that the general fund, which covers most day-to-day operations in the budget, would be about $841 million in the hole if state spending continues on the current trajectory into next year. 

Federal cuts to states of $911 billion over 10 years would represent 14% of federal spending on Medicaid over the period. The spending cuts vary by state; Louisiana, Illinois, Nevada, and Oregon are the most heavily affected with spending cuts of 19% or more over the period.

SHUTDOWN COSTS

Ports will be one of the first sectors to see the impact of the federal government shutdown. Customs and Border Protection (CBP) inspects import shipments at maritime centers, airports and land border crossings with Mexico and Canada. The most recent government shutdown lasted 35 days from December 2018 to January 2019, and saw 800,000 federal workers furloughed or forced to work without pay.

CBP remained operational but lower staffing levels led to slower inspections and longer dwell times for shipments moving through major ports. Delays grew by as much as 15% to 20% through the Port of Los Angeles-Long Beach, while importers of regulated goods such as perishables and pharmaceuticals faced shipment holds.

NEBRASKA CLIMATE REPORTS

A 312-page report authorized by the Nebraska Legislature in 2022 was released. It  predicts increased stress on the state’s water resources, particularly increased irrigation demand as growing seasons expand and more water evaporates from the soil and crops. The State Climatologist said “Reputable climate scientists worldwide continue to be in near unanimous agreement (greater than 99%) that human influences have warmed the atmosphere, oceans and land.”

The report was initially scheduled to be completed by the end of 2024 but was delayed by “editing concerns”. In this most conservative state, this raised suspicions about political pressure. Nonetheless, the report cites some pretty clear data regarding changes to Nebraska’s climate over some three decades. It was authorized by a conservative legislature under a very conservative Governor. That makes it a bit harder to politicize the findings.

PENNSYLVANIA MASS TRANSIT FUNDING CRISIS

The budget stalemate dragging on in Pennsylvania has been over the issue of state funding for agencies like SEPTA. Now in the midst of that fight, the National Transportation Safety Board urged Philadelphia’s regional transit authority to suspend use of more than half of the rail cars that serve the transit agency’s regional lines, saying the aging trains pose an “unacceptable” risk of fires. Urged is the important word as the NTSB has no direct authority to order such a move.

NTSB said SEPTA should lay out a plan within 30 days to replace or retrofit rail cars. There have been several fires since February of this year. They have occurred on its Silverliner IV fleet, which has been in service since the mid-1970s. It numbers some 225 cars. It will be interesting how this safety matter is treated under the current federal transit regime given the demographics of the passenger base.

The issue will highlight the problems that SEPTA has faced over the years in terms of capital spending. The agency has been a favorite target of Pennsylvania lawmakers. But, fifty year old railroad cars?

ELECTRIC VEHICLES

The expiring tax credits which drove EV sales were seen as the primary worry for electric vehicle producers. The issue raised concerns about planned new manufacturing development designed to support the electric vehicle industry. It’s clear that the momentum behind some of these projects has slowed although the car companies insist that they will move forward. What we have not seen are impacts on existing EV production.

That has changed since General Motors’ announced that it would indefinitely delay a second shift to support Chevrolet Bolt production in Kansas City, Kansas. The next news was more indicative of the pressure on EVs as the company laid off 900 local workers to facilitate a retooling. The plant had ended production of the Chevrolet Malibu sedan and recently stopped making a small Cadillac SUV. Fairfax had been slated to produce the revamped electric Chevy Bolt.

GM plans to bring gas-powered Chevrolet Equinox production to Fairfax beginning in 2027 as part of a plan to increase domestic production designed to limit losses from tariffs. Bolt production is on schedule to begin later this year for the first shift of workers. The retooling of the rest of the plant will be for gas powered models.

Colorado is increasing the amount of money offered through the state’s electric vehicle rebate program in November as a response to the elimination of federal tax credits for the same purchases. The Colorado Energy Office announced that the state rebate for new EV purchases will increase to $9,000 from $6,000, and the rebate for used EV purchases will increase to $6,000 from $4,000. The rebate increases commence on November 3, one month after the federal tax credit for purchases ended on Sept. 30.

NEW ORLEANS

Moody’s has downgraded the City of New Orleans, LA’s issuer rating, general obligation unlimited tax (GOULT) and general obligation limited tax (GOLT) ratings to A3 from A2. At the same time, it revised the outlook to negative from stable. The numbers tell a story of significant liquidity pressure.  Available fund balance and liquidity declined to -2% and 41.5% respectively in fiscal 2024, a material and unexpected shift from 6.1% and 56.9% in 2023. While additional restricted reserves are available and increase fund balance to 7.9% of revenue, management reports further decline in the city’s financial position thus far in fiscal 2025 driven by revenue declines and increased expenses due in part to unplanned, one-time events. 

In the end, governance is a key driver of this rating action, reflecting budget management practices that have led to escalating reliance on reserves beyond planned levels and ongoing narrowing of the city’s financial position. 

SHELBY COUNTY

While the City of Memphis deals with troop deployments, the county it is the seat of is struggling with basic financial operations. The Comptroller of the State of Tennessee has rescinded their approval of the Shelby County budget for the fiscal year beginning July 1. The County noted that in its approval for last year’s budget, “it outlined very specific future requirements that the County had to meet in order to receive an approved budget from our Office.”

“Because the County failed to meet those requirements, we are unable to approve the County’s fiscal year 2026 budget as explained below. Pursuant to state law, outside of an emergency, the County may not issue debt or financing obligations without an approved budget from our Office. Our Office has statutory authority to waive this limitation for emergency financial transactions.”

The problems are pretty basic. “First, the detailed budgets for Memphis-Shelby County Schools were not included. Second, the detailed budgets were not consistent with state law that requires presentation consistent with generally accepted accounting principles.” In addition, cash projections were incomplete and no explanations of negative balances was provided. This all information required under state law.

BRIGHTLINE WEST COST UPDATE

Brightline West’s 218-mile railroad will now cost $21.5 billion, according to the United States Department of Transportation, The initial projection was $16 billion. The higher cost has led the projects’ ultimate sponsor and “deep pocket” Fortress Investment Group to seek a $6 billion loan from the Trump administration for its “privately financed” project. The increases are driven by construction costs were increasing due to rising labor and material costs.

The federal loan will take the place of a $6 billion bank facility in Brightline West’s original financing plan. The company plans to raise equity to cover most of the $5.5 billion increase in construction costs. It initially targeted an equity raise of $1 billion. Given the steadily increasing costs, private financing was just not effective enough. The loans are being made under the Railroad Rehabilitation and Improvement Financing program. A loan can fund as much as 100% of a railroad project with repayment periods of as long as 35 years and interest rates equal to the cost of borrowing to the government plus a premium to account for credit risk.

We continue to be amused at best by the way the Brightline projects continue to tout themselves as private enterprises. Both the East and West Brightlines received significant advantages in terms of favorable right of way situations as well as tax- free debt financing. Now, the managers of Brightline West have admitted that a subsidized loan from the federal government is key to the success of the project.

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.