Joseph Krist

Publisher

NYC BUDGET – THE GAMES BEGIN

The realities of governance appear to be slowly dawning on the Mayor. He has not, so far been able to convince the State Legislature to provide the level of new tax revenue he desires. He also does not appear able to understand that there is another way to balance a budget besides increasing revenues. Unable to show a real ability to find savings on expenses, the willingness of the State to provide more funding is weakening.

This has culminated in the delay of the release of the Mayor’s proposed FY 2027 budget beyond the required May 1 date. The demands for more money from the State have contributed greatly to the month long delay in the formal adoption of the State budget for the FY 27 which began on April 1. Over that period, the Mayor has proposed reducing pension funding contributions to provide revenue for other spending such as universal child care.

As we go to press, a preliminary summary state budget has been agreed to in Albany. The City will get funding for universal child care which is not available to other State residents. The tax on second homes valued at $5 million and above has made the cut. It will deliver an estimated $500 million but that is only some of the budget gap. The Mayor now is expected to issue what is being referred to as a “placeholder” budget while efforts continue to obtain more revenue for the City.

PUBLIC POWER SOLAR

Salt River Project (SRP) in Arizona announced an agreement with NextEra Energy Resources to develop 3,000 megawatts (MW) of new solar generation by the end of 2034. The agreement calls for the construction of 500 MW of solar per year from 2029 through 2034. SRP has more than 3,000 MW of carbon-free resources currently serving its customers, including more than 1,500 MW of solar and more than 1,570 MW of battery storage supporting its grid.

Colorado Springs Utilities issued a competitive solicitation for up to 300 megawatts of utility-scale wind, solar and energy storage projects. 

Responses are due by June 5, 2026.

The launch of California’s first-of-its-kind solar-covered canal was announced. The pilot project is a public-private and academic partnership between the California Department of Water Resources, Turlock Irrigation District (TID), solar development firm SolarAquaGrid LLC, and the University of California, Merced. It will support a test of the technology. The overall project – Project Nexus – will measure how much clean energy the solar panels generate, how much water is saved by reducing evaporation, whether water quality improves, and whether covering canals reduces the cost of maintaining them.

ILLINOIS BUDGET

The Civic Federation in Chicago has released its view of the executive budget proposed by Governor Pritzker. Governor Pritzker’s FY2027 State of Illinois budget proposal balances the books amidst a $2.2 billion budget gap, offering a “maintenance” budget that yields a modest general funds surplus of $24 million. The report notes that the State’s core tax base—personal income, corporate income, and sales taxes—has been growing more slowly than spending on core (non-Medicaid) services. 

The State’s Budget Stabilization Fund (“rainy day fund”) remains underfunded and has seen little growth since FY2023. At 4.5% of general funds expenditures, reserves remain well below the recommended 8% threshold (one month of operating expenditures) and far below the national average. 

BIG BEAUTIFUL MEDICAID

Nebraska, on May 1, became the first state to require certain Medicaid enrollees to work, train, or go to school under a rule mandated by congressional Republicans’ One Big Beautiful Bill Act. Under the Act, requires the 42 states, along with the District of Columbia, that fully or partially expanded Medicaid under the 2010 Affordable Care Act to implement a work requirement starting in 2027. In Nebraska, which is implementing the provision eight months before the law requires, about 70,000 Medicaid enrollees will need to meet the requirement.

The law’s “medical frailty” exception created a long list of health conditions that can be considered for the exemption. It was posted last week by the state and includes many types of cancers and mental health and heart conditions. Georgia has had a work requirement under its partial Medicaid expansion since 2023. Only about 8,000 people signed up for the coverage in its first two years — far fewer than the 25,000 that state officials predicted for the first year alone — and many have been denied benefits because of paperwork issues.

Only two other states plan to implement the work requirement early: Montana, which plans to launch in July, and Iowa, which plans to go live in December. The Congressional Budget Office estimates that work requirements will reduce federal Medicaid spending by about $326 billion over 10 years. The agency also estimates that 4.8 million more people will be uninsured in 2034 because of the work requirement. While 28 states and Washington, D.C., will offer hardship exemptions, three of those states won’t adopt all four exemptions allowed by the law and two — Iowa and Indiana — don’t plan to adopt any.

Six states plan to use AI to assist with the work requirement implementation in some way, such as for document processing or comparing beneficiary data from different sources, KFF found. Two states, Maryland and New Mexico, plan to use AI to analyze claims data. Three states — Arkansas, Missouri, and Oklahoma — plan to use AI to interact directly with people on Medicaid and assist them with identifying and uploading verification documents and data. Adults on Medicaid will have to reverify that they’re working, or that they’re exempt from the requirement, at least every six months. Some states plan to check quarterly.

BRIGHTLINE’S CLOUDY OUTLOOK

Brightline “has stated that it does not currently have the liquid funds necessary to service its debt and meet such other obligations as they become due.” Brightline has delayed its interest payments that were due earlier this year. Its grace period expires June 15. “However, substantial doubt remains as to the ability of the Company to continue as a going concern,”. Yes, the dreaded words have been uttered.

It is supposed to pay $117 million in interest this year, payments which have so far been deferred as it scrambles to raise cash. Sales totaled $214 million last year, a 14% increase, but only about half the growth expected. The train service operating loss totaled $127 million last year, an improvement from the $153 million operating loss a year earlier. The company’s total loss, made worse by interest payments, was $233 million. 

Rides between Orlando and South Florida increased 16%. Regional rides between its five stations in South Florida grew 8%. It reconfigured its fleet and schedule in October to offer more frequent service for South Florida commuters. the average fare per person on its short haul routes fell and stayed about the same for its long distance service. While ridership was up, Brightline has found it difficult to raise average fares 

HOSPITAL M & A

University of Pittsburgh Medical Center (UPMC) and Common Spirit Health have signed a definitive agreement to transfer ownership of Trinity Health System, including Trinity West, Trinity East, Trinity St. Clairsville Neighborhood Hospital, Trinity Twin City Medical Center, and associated clinics, to UPMC. The transaction, if finalized and approved by regulators, would allow UPMC to expand into Ohio, where it currently has virtually no presence.

Currently, the academic health system has more than 40 hospitals primarily in Pennsylvania, with locations in Virginia, Maryland and New York.

It has yet to be announced if the official Catholic affiliation and name will be maintained once the transaction is complete. Trinity serves a patient population of some 200,000 people at its four hospitals.

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