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Muni Credit News March 9, 2026

Joseph Krist

Publisher

TAXES ON THE BALLOT

Contra Costa County voters will decide in June whether to approve a new countywide sales tax to fund services amid federal funding cuts. If approved, the increase— 0.625 percent — would add 62.5 cents to every $100 spent on taxable goods. County officials estimated the tax could generate $150 million per year for five years, totaling $750 million.

Under state law, the local sales tax cap is generally set at 3.5 percentage points above the state base rate of 6 percent, for a combined total of 9.5 percent. However, certain voter-approved and transportation-related taxes are exempt. If approved, the increase would push most cities in the county above the local sales tax cap, with 15 of the county’s 19 cities exceeding the limit. Ten cities would have sales tax rates above 10%.

The Contra Costa measure would direct the new revenue to the county’s general fund and would not be specifically earmarked for health care or hospital costs. That means it needs a simple majority to pass, rather than the two-thirds support that would be required if it was designated for a specific purpose. The county will also need a waiver from the state Legislature to raise its sales tax cap if the measure passes.

LADWP

Moody’s has downgraded the Los Angeles Department of Water and Power (LADWP), California’s Power System revenue bonds to Aa3 from Aa2. Concurrently, the outlook has been revised to stable from negative. Pressure comes from two factors. meaningful additional debt over the next five to ten years, along with substantial contingent liabilities associated with the Palisades Fire in January 2025.

Although criminal investigations led by the Bureau of Alcohol, Tobacco, Firearms and Explosives concluded the Palisades Fire and the preceding Lachman Fire were not caused by LADWP equipment, civil lawsuits against the City of Los Angeles, including LADWP’s power and water systems, are proceeding. The power system’s current five-year CIP includes $11.9 billion in additional debt.

Moody’s also downgraded the Los Angeles Department of Water & Power, CA’s water system revenue bonds to Aa3 from Aa2. The downgrade of the water system revenue bonds reflects the potential for significant liability judgments against the city and the water and power systems as part of litigation underway by property owners and businesses affected by the 2025 Palisades Wildfire.

KANSAS EXPRESS LANES

The Kansas Department of Transportation recently opened the state’s first express lanes on the U.S. 69 Express corridor. This $572 million design-build project, known as 69Express, included reconstruction of U.S. 69 in Overland Park; widening the highway with one northbound and one southbound express lane between 103rd and 151st Streets; and interchange improvements at U.S. 69/167th Street.

The express lanes – managed by Kansas DOT and its tolling partner, the Kansas Turnpike Authority – will allow the agency to manage congestion using tolls that vary based on traffic levels and time of day to keep express lane trips congestion-free. If someone with a KTAG drives the entire length of the corridor northbound during the morning rush hour, that trip could cost $1.30. If someone only drives a portion of the corridor, say from 151st Street to 119th Street, that partial-length trip could cost $0.50.

During off-peak times – mid-day, nighttime and weekends – toll rates go down because fewer vehicles are using the highway. The rates drop to approximately $0.35 for a partial trip and $0.65 for a full-length trip. In the southbound direction during afternoon rush hour, the rates increase again as traffic increases. The rates are slightly higher in the afternoon because there is more congestion during the afternoon than in the morning rush hour. Drivers without a KTAG will pay 2x the rate on the sign. Vehicles with more than two axles will also pay a higher toll.

MANUFACTURING

According to a report from the Association of Equipment Manufacturers, total sales and indirect economic output from the heavy equipment sector was $902 billion in 2025, a slight contraction from $905 billion in 2022. There’s a similar cooling trend in the labor market, with direct employment falling to 421,000 workers, from 423,000 three years prior, the report stated. Direct sales were basically flat at $265.76 billion last year, down from $266.64 billion in 2022 according to revised figures.

The decline is a good example of how policies regarding tariffs and their negative impact on farm state incomes are playing out. Texas led the country in heavy equipment employment, with more than 50,000 jobs, followed by Iowa, with more than 32,000. Wisconsin, Illinois, and Ohio each employed more than 25,000 people. About 30 percent of the heavy equipment made in the United States is exported.

TRANSIT FUNDING

The ongoing saga of the effort to increase transportation funding in Oregon has taken a new turn. Gov. Tina Kotek signed Senate Bill 1599 March 2, moving the date of a gas tax referendum vote from November to May. House Bill 3991 created the increases to the gas tax, payroll tax and registration and title fees that referendum petitioners sought to overturn. The Governor delayed signing the bill into law in order to give referendum supporters less time to gather the necessary signatures. March 12 is the final day to submit materials for the voter’s pamphlet. Voters are widely expected to vote down the tax increases.

A federal judge on Tuesday ruled that the federal government’s attempt to end New York’s congestion pricing toll was illegal. The US transportation secretary, Sean Duffy, had warned that the federal government would withhold approval and funding from a range of highway and transit projects in New York if congestion pricing was not canceled.

The Intermodal Surface Transportation Efficiency Act of 1991 (“ISTEA”) provided for among other things, the creation of a Congestion Pricing Pilot Program, which directed the Secretary of Transportation to “solicit the participation of State and local governments and public authorities for one or more congestion pricing pilot projects” and stated that “[t]he Secretary may enter into cooperative agreements with as many as 5 such State or local governments or public authorities to establish, maintain, and monitor congestion pricing projects.”

The Court found that the Secretary’s actions were arbitrary and capricious, an abuse of discretion, and not in accordance with law. The February letter was based on the conclusion that Congress did not give the Secretary the authority to approve the CBDTP. That conclusion was an error of law. Not unexpected under this administration.

GATEWAY TUNNEL

The Regional Plan Association recently said that that a six-month delay to the Hudson Tunnel project could add $720 million to $1.34 billion to the multibillion-dollar project. The federal government has released some $236 million in funding withheld since last October, allowing construction to resume after halting on Feb. 16. But the Gateway Development Commission, which oversees the project, said it will not award two key contracts — to build the tunnel itself, as well as the surface line leading to it in New Jersey — until it is assured it has access to all $15 billion in previously committed federal grants and loans. Those contracts were scheduled to be awarded late last year or early this year.

DATA CENTERS

There has been much focus in legislatures this budget season on utility issues. In connection with the spread of data centers the idea of a “large load tariff” – special utility rates and requirements designed for huge energy users is growing. As of late 2025, more than 65 such tariffs have been proposed or approved in over 30 states, according to private analysts. States adopting data center–focused large load tariffs began to do so in 2024, led by early movers like Ohio and Indiana. More such tariffs were approved in Kansas, Michigan, and Virginia last year, and now Illinois and Wisconsin are debating their own proposals.

To protect the individual power user, about a third of the 65 large load tariffs on deck as of late 2025 require big customers to make minimum payments over a set period of years, whether or not they remain operational over that time. More than half include some form of collateral requirements or other credit risk protections. And roughly half require large customers to pay fees if they exit their contracts early.

One solution adopted by only a handful of utilities and regulators so far: requiring data centers to contract for their own clean energy and capacity. That has raised issues regarding acquisitions of outdated power plants versus the employment of renewables energy sources.

WESTERN WATER

The stalemated talks among the seven Colorado River basin states have heightened anxiety, especially in the lower basin states of Arizona, California and Nevada about future availability from the Colorado. While a plan is negotiated or federally imposed, some cities at particular risk are moving forward with efforts to generate new supplies.

The San Diego County Water Authority purchases water from the Carlsbad desalination plant under a 30-year agreement. The plant has successfully operated since 2015. The plant is operating at less than full capacity, however. The Authority’s board unanimously approved last week a memorandum of understanding to consider selling some of its water to Arizona and Nevada.

The plan would not involve sending desalinated water to other states but rather selling some of San Diego County’s allotment of Colorado River water, which in turn would generate funds to increase output at the Carlsbad desalination plant. the Water Authority is prepared to sell up to 10,000 acre-feet of water starting next year. That’s nearly 5% of the Las Vegas area’s current water use. In future years that could increase to 25,000 acre-feet or more.

Any agreement to transfer water would need to be approved by the Metropolitan Water District of Southern California, the federal government and agencies in Arizona and Nevada. Then, various water agencies would need to negotiate the details. A decision from MWDSC is pending and provisional federal support has been expressed.

MEDICAID CUTS AND HOSPITALS

Moody’s downgraded Children’s Hospital Los Angeles’ (CHLA) revenue bond rating to Ba2 from Ba1. The outlook is negative. The Ba2 rating reflects CHLA’S challenged operations, and very weak liquidity, but also its unique clinical and institutional importance. A key driver of the weak performance is CHLA’s heavy reliance on state funding due to its significant Medicaid exposure. It is a leading provider of high-acuity pediatric services, ranking it among the top children’s hospitals in the country.

At the core, liquidity is the issue. Days cash dropped to approximately 17 days as of December 31. 2025. This after sales of receivables and other maneuvers. A delay in CMS’ approval of round 9 of California’s provider fee program is a major contributing factor. The negative outlook reflects the risk of rapid credit deterioration if liquidity strategies are not achieved over the next two months.

COLLEGE OUTLOOK DOWNGRADE

Moody’s has revised Pratt Institute’s (NY) outlook to negative from stable. Pratt Institute, founded in Brooklyn, NY in 1887, is a coeducational, private, professional college and one of the largest undergraduate and graduate schools for art, design and architecture in the country. In addition to its main campus in Brooklyn, it has a campus with research and instructional facilities at Brooklyn Navy Yard and a location in Manhattan. Pratt generated operating revenue of $278 million in operating revenue in fiscal 2025 and enrolled 4,983 FTE students in fall 2025.

The issues are declining annual financial results and liquidity. The revision of the outlook to negative reflects a significant thinning in operating performance, in large part due to a substantial reduction in international students. Pratt’s high reliance on tuition revenue exposes it to a highly competitive environment and further declines in its large proportion of international students. The current restrictive environment for international students is likely to continue pressuring both sides of the ledger for at least a couple of more years.

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.

Muni Credit News March 2, 2026

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Joseph Krist

Publisher

CLIMATE LITIGATION

The Supreme Court announced it would hear arguments on a petition by Exxon Mobil and Suncor, a Canadian energy giant, in a lawsuit brought by the city and county of Boulder, Colo. That suit was first filed in 2018. In May, the State Supreme Court ruled 5 to 2, that the plaintiffs’ claims were not pre-empted by federal law, striking down a central argument that the companies have employed in their defense.

We detailed many of the pieces of litigation pending in the courts which could ultimately be impacted by a decision in this case (MCN 1.19.26). In this case, the question before the court is whether federal law precludes state-law claims seeking relief for injuries allegedly caused by the effects of interstate and international greenhouse-gas emissions on the global climate.

In addition to the question presented by the petition, the parties were directed to brief and argue the following question: Whether this Court has statutory and Article III jurisdiction to hear this case? It is a sign that the Court may be looking for a way to avoid making a decision on a significant states’ rights issues.

PROPERTY TAXES

The California Property Tax Exemption for Elderly Residents Initiative may appear on the ballot in California as an initiated constitutional amendment on November 3, 2026. The initiative would amend the California Constitution to establish a property tax exemption on the homesteads of elderly residents 60 years of age or older for certain ad valorem taxes. It would reduce local property tax revenues by exempting a principal residence from property taxes if the homeowner, or the homeowner’s spouse: (1) is 60 years of age or older; and (2) has occupied the home as a principal residence for five consecutive years or has lived in California for at least 10 years.

The exemption terminates if property no longer qualifies as a principal residence. After five years, homeowners must certify their continued eligibility to maintain exemption. Exemption does not apply to voter-approved special taxes, assessments, or bonds. A simple majority vote is required for voter approval. 546,651 valid signatures are required. The deadline for signature verification is June 25, 2026. However, the secretary of state suggested deadlines for turning in signatures of January 12, 2026, for initiatives needing a full check of signatures and April 17, 2026, for initiatives needing a random sample of signatures verified.

The Florida House of Representatives approved a proposal that would eliminate non-school property taxes on homesteaded homes. The measure seeks to reduce the tax burden on residents significantly but faces additional legislative hurdles before becoming law. If the proposal receives final approval from the state Senate and Florida voters, the tax elimination would take effect in 2027. The plan focuses specifically on property taxes used to fund municipal and county operations rather than those designated for local schools.

CHICAGO DOWNGRADE

Fitch has downgraded Chicago’s Issuer Default Rating (IDR) and outstanding GO bonds to ‘BBB+’ from ‘A-‘. Fitch has also downgraded the Sales Tax Securitization Corporation’s (STSC) outstanding sales tax securitization bonds (senior lien) to ‘AA+’ from ‘AAA’. The downgrade reflects consecutive operating deficits since 2023, the still high dependence on non-structural solutions and assumptions underpinning the adopted 2026 budget, persistent out-year gaps, and ongoing disagreements between the administration and the city council.

Fitch does not expect significant budget reductions, particularly involving broad program or service cuts. It notes that “the city is pursuing new revenue streams that require state or voter approval, but this support does not appear likely in the near term. Property tax increases, which the city can implement under home rule, do not appear to have political support. Once the budget process went off the rails in December it was pretty clear that downgrades were likely.

DALLAS AREA RAPID TRANSIT

We reported in February (MCN 2.16.26) on efforts being undertaken to reform the board structure of the Dallas Rapid Transit District to give participating cities more of a say in the system’s operations. The hope was that the new structure would encourage members to take steps to remain a part of DART going forward. This week saw the first of a couple of deadlines come upon us and now at least three of the participants – Irving, Plano and Farmers Branch – have moved to cancel elections on the issue of withdrawal from Dart scheduled for May 2. The renewal of membership binds the cities to a six year commitment to DART.

OAKLAND SCHOOLS

The board of the Oakland, CA School District has been dealing with a looming budget deficit. (See MCN 1.26.26) Like many districts it faces pressures on enrollments and attendance at the same time that inflation also pressures the expense side of the budget. Last month it indicated that a variety of steps to reduce costs which cut the projected deficit to $50 million had been identified. This left the District with some very hard choices.

One of those choices was approved this week when the Board voted to approve layoffs that could affect more than 400 positions. Nearly 80% of the district’s entire budget goes toward paying staff, administrators to teachers to support staff. The cuts could impact a wide range of staff, including substitute teachers, tutors, counselors, nurses and other support positions. The layoffs would take effect next school year. This provides some time as the state budget process unfolds to see if any additional funding is provided.

The timing of the announcement reflects a March 15 state deadline requiring school districts to notify teachers and other employees of potential layoffs for the upcoming school year. It comes at a difficult time for the Board which is in the midst of labor negotiations with the Oakland Education Association, the union representing district teachers. Union members have authorized a potential strike, which leaders say could be announced if they determine the district is not bargaining in good faith. The union said it would provide at least 48 hours’ public notice before any strike begins.

ILLINOIS MUNICIPAL ELECTRIC

The Illinois Municipal Electric Agency, a nonprofit that procures power for 32 municipal electric utilities, began a process of asking its members to extend their commitments to buy energy through the group until 2055, even though existing contracts don’t lapse for another decade. Most communities signed on, but two that account for almost half of IMEA’s power demand — the Chicago suburbs of Naperville and St. Charles — have rebelled, declining to renew their contracts past 2035.

It’s all about the Prairie State Energy Campus, a 1.6-gigawatt facility in rural southern Illinois that is the state’s largest coal plant. IMEA owns 15% of Prairie State, which makes up over a third of the agency’s power portfolio. In September, Naperville sent IMEA a proposed contract calling for mandatory net-zero emissions by 2050. The agency countered that it would “endeavor to achieve” carbon neutrality by 2050 but declined to set binding targets.

Illinois’ 2021 Climate & Equitable Jobs Act mandates Prairie State specifically to reduce carbon emissions by 45% by 2038, which would likely mean closing one of its two units. The law contains exceptions from fossil-fuel emissions limits if needed to maintain grid reliability.

THE ELECTRIC ECONOMY

The Michigan Court of Appeals once again upheld a lower court’s decision to dismiss a citizen opposition group’s legal challenge over the rezoning of the land where Ford’s mile-long BlueOval Battery Park Michigan is being built in Marshall. ruling that the city’s rezoning ordinance is not subject to a public referendum. The $3 billion factory will produce lithium iron phosphate batteries by licensing technology from China’s Contemporary Amperex Technology Co. Ltd., the world’s largest battery manufacturer. Production is scheduled to begin this summer.

In Indiana, Hanjung America, a South Korean manufacturer of parts that support the energy storage supply chain for Stellantis and Samsung, announced its first U.S.-based plant in Huntington, Indiana. It is expected to provide 350 permanent jobs after construction is complete. It will make parts for large battery storage systems called Energy Storage Systems, or ESS. These batteries are used in electric vehicle (EV) production. The parts made in Huntington will support battery factories in Kokomo, run by Stellantis and Samsung. The company plans to break ground in April and expects to begin operating in June 2027.

In Tennessee, Ford reiterated this week that it still intends to honor its commitments to the state, according to a company spokesperson, including promises to create roughly 5,800 jobs at the BlueOval City site in exchange for a $900 million state-sponsored incentives package. This in the wake of the decision to halt electric truck production by Ford in December. Ford’s 2021 agreement with the state requires the company and the BlueOval SK joint venture to create at least 90% of the total 5,800 jobs within 10 years. Meeting that mark secures Ford and BlueOval SK a $500 million state reimbursement for construction work.

Failing to reach 80% of the promised jobs by 2032 would trigger a “clawback” requirement forcing the company to pay back that $500 million in addition to $175 million, based on the value of the state’s donated land.

BlueOval SK (Ford and SK On announced plans to end their joint venture in December) currently employs around 300 people in Tennessee and construction at the plant is complete. The facility is yet to have started production. The plant will manufacture batteries for Ford under a supply agreement and SK On plans to supply batteries to other customers, including for use in energy storage systems.

TEXAS WATER

The Corpus Christi City Council approved a resolution authorizing the negotiation of a contract for the Inner Harbor Seawater Desalination Treatment Plant project with Corpus Christi Desal Partners (CCDP), a joint venture with Acciona Agua Corporation and MasTec Industrial Corporation. The vote revives a project which was halted in September. (See MCN 11.10.25)

It also authorizes construction contracts for ancillary improvements in an amount up to $11,451,526 and emergency construction contracts totaling up to $120 million for a pump station and conveyance system connecting the Western Well Field to the O.N. Stevens Water Treatment Plant.

HOUSTON FLOOD MAPS

Since FEMA last released flood zone maps in 2007 for Harris County, Texas, the region has undergone significant development and has experienced greater rainfall. These are among the factors that have led FEMA to expand designated flood zones significantly. the area’s 100-year flood zones have grown by 43%. Meanwhile, 500-year flood zones increased 30%. In total, about 420,000 properties could be reclassified as having a greater risk of flooding.

There are real implications. Any property owner with a federally backed mortgage will be required to carry flood insurance. Overall, location in a flood zone will increase the cost of insurance. Many neighborhoods impacted by this risk are more financially vulnerable. It comes in a time of lower federal support for disaster recovery which for many of the less well off is their only significant assistance.

Muni Credit News February 23, 2026

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Joseph Krist

Publisher

NYC BUDGET

Mayor Mamdani presented his preliminary budget – emphasis on preliminary – and it includes a $5.4 billion budget gap. The presentation was all over the place. The City apparently cannot survive without new taxes but there is $14 billion of new spending. The Mayor laid out two approaches both of which would saddle state legislators with the job of increasing taxes. They either raise taxes on million dollar earners in the City and get the blame directly or they “force” the Mayor to raise property taxes while being blamed by him for having to do it.

This after the Governor found some $1.5 billion of new aid that reduced the projected gap to be closed. Nevertheless, the Mayor continues to ask for increased aid from the State citing the mismatch between State revenues from the City and state aid to the City. It’s an old argument and it will play poorly upstate. It certainly did not attract a lot of support when the Mayor’s made his first “Tin Cup Day” visit in Albany to the State Legislature.

The expense side of the budget is problematic. The plan spends some $121 billion. Some 40% of City spending will be on the Board of Education. The potential for savings there is likely low. The budget would provide for an FY26 draw down of $980 million from the Rainy Day Fund. In FY27another draw down of $229 million from the Retiree Health Benefits Trust is projected. At the same time, the Mayor proposes to fund a new Department of Public Safety. The projected year 1 cost – $1.1 billion. The source of revenue? To be determined doesn’t cut it.

Income taxes on the wealthy are a central tenet of the Mayor. Recently, the NYC Independent Budget Office (IBO) released data on the City’s personal Income tax collections and the wealthy. In 2023 (the last year for which data has been released by the State) , about 3.9 million New York City residents filed income tax returns. The typical (median) filer reported about $42,700 in income, and most filers earned less than $170,000 for the year. Income is defined as filers’ adjusted gross income on their tax return. More than two-thirds of New York City income came primarily from wages and salaries, rather than investments.

The top 1% of the New York City income distribution began at $906,677 and tops out at more than $5 billion in 2023. IBO defines millionaire filers as filers with an AGI of at least $1 million. Although not quite as high as in 2021, when the count of millionaire filers went over 35,000, the number of millionaire filers hovered around 34,000 in 2022 and 2023.

The shares of overall income (measured through AGI) and overall Personal Income Tax liability attributable to millionaire filers hit a high in 2021 at 43% and 48%, respectively, driven largely by realized capital gains income from the strong stock market in that year. These shares declined to 35% and 39% in 2022, and 33% and 37% in 2023. Though on the lower end relative to recent past years, 2023 values of millionaire filers are in line with historical trends.

It has always been our view that ideologically driven approaches to municipal finances always run into reality. It’s not the ideology itself. It’s the fact that ideologically driven policies often don’t fit the realities on the ground. There is little or no appetite for tax increases in either the City Council or in the State legislature. The Governor is trying to get reelected. Increasing taxes is not a practical approach especially if it hits “middle class” homeowners rather than “the rich”.

The discussion of the potential property tax hike highlights the problems with the City’s property tax system. The system is riddled with inequalities and single family homeowners in the outer boroughs are rightfully upset with it. It is a long standing problem, and the Mayor is right to say that it needs to be addressed. Nevertheless, that reform will not occur in the next two months which is when the City can find out how much state help it will receive.

The capital side of the budget carries some impressive numbers, but the City faces enormous capital needs just in areas like housing. It will be interesting to see the politics of housing play out. The Mayor has clearly targeted landlords in his initial actions. Private landlords. Quietly, the City’s status as the largest landlord through its housing authority will create political roadblocks as the deteriorating physical plant of NYCHA facilities continues as a problem.

We’ve seen what can happen as the result of ideological approaches. Putting city council members in difficult positions initially has made Brandon Johnson’s life in Chicago quite difficult. Last minute budgets and budgets constructed solely by the local legislators have characterized a rough two years. Chicago’s credit remains under pressure as many of the long term issues pressing down on ratings go effectively unaddressed.

We know that the starting credit point for Chicago and New York differs significantly. If nothing else, the pension situations facing each city are not comparable. Nevertheless, we believe that even with balanced budgets that New York’s rating will be under pressure. As much as one would like to separate politics from the numbers, in the current environment they matter greatly. Hopefully, Mayor Mamdani embraces reality more quickly than Mayor Johnson has.

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.

Muni Credit News February 16, 2026

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Joseph Krist

Publisher

PREPA’s SUPER BOWL MOMENT

The sparking utility poles in Bad Bunny’s Super Bowl halftime show are not the optics Puerto Rico’s electric utility could have wanted. Eight and a half years after the legacy power system was wrecked, the effort to develop a modern reliable power system continues to face obstacles imposed from the outside. Service continues to be inadequate and unreliable. Utility customers in Puerto Rico experienced an average of 27 hours of power grid interruptions not related to major events like hurricanes per year between 2021 and 2024. By contrast, people living on the U.S. mainland lacked power for an average of just two hours per year, according to federal data.

In January, the Department of Energy canceled $450 million for grid resilience programs in Puerto Rico. The clawback effectively marks the end of the $1 billion Puerto Rico Energy Resilience Fund that the Biden administration launched in 2023. President Donald Trump’s DOE had previously redirected $365 million of that funding meant for rooftop solar and battery storage projects toward “practical fixes and emergency activities.” As of June 2025, 1.2 gigawatts of grid-connected rooftop solar were installed on homes and businesses, supplying more than 10% of the total energy used, according to the Institute for Energy Economics and Financial Analysis.

WIND

Offshore wind in the Atlantic can move forward again after it was victorious in its challenge of the suspension of approvals. Dominion Energy‘s Coastal Virginia Offshore Wind (CVOW) project was the latest. Once operational, CVOW will consist of 176 wind turbines generating up to 9.5 million megawatt-hours per year, or enough energy to power up to 660,000 homes.

Total project costs for CVOW, inclusive of contingency and excluding financing costs, have increased from approximately $11.2 billion to approximately $11.5 billion. That $300 million change reflected the impact of the withdrawal of approvals. The offshore wind farm is now 71% complete. Dominion said that $9.3 billion has already been invested in the project as of Dec. 31, 2025.

On land, a federal judge has allowed the SunZia Wind project in New Mexico to resume construction. It is designed to generate 3,000 megawatts of wind power. To date, the focus of opposition has come from plans to construct a high voltage transmission line to distribute power from the project. The project had completed its Bureau of Land Management environmental impact statement and received its Record of Decision prior to the announcement of the new policies of the new administration. The SunZia Transmission project is a 550-mile transmission line which will connect New Mexico’s wind resources to Arizona and California markets.

OHIO POWER GAMES CONTINUE

Ohio has become notorious for its legislative actions to try and save the coal industry. Previous efforts led to the conviction of, among others, the Speaker of the Ohio House. As a matter of fact, the former Speaker is facing another trial this summer on corruption charges linked to efforts to support coal generation. Two First Energy executives are on trial for bribery as this goes to press. That isn’t stopping the consideration of a bill (S.B. 294) written by the conservative American Legislative Exchange Council (ALEC).

The bill declares it to be Ohio’s public policy to ensure affordable, reliable, and clean energy in all applications for a utility facility certificate. It requires the Power Siting Board, when reviewing applications for electric generating facilities, to consider the use of affordable, reliable, and clean energy sources; prioritize domestic energy production (i.e., using a fuel source that is primarily produced in the United States); and minimize reliance on foreign adversary nations for critical materials or manufacturing.

It may increase the likelihood of approvals for future applications for a certificate from the Power Siting Board, particularly for projects using energy generated from sources such as natural gas, biomass, nuclear reaction, hydrocarbons that meet Environmental Protection Agency air quality standards, and renewable energy. SB 294’s definition of a reliable energy source would require it to be “readily available” with minimal interruptions during high-usage times and for it to have a 50% capacity factor. That’s the ratio of its actual power output to the potential maximum. This condition would exclude virtually all land-based wind and solar generation.

DATA CENTERS

In Virginia, legislation has been introduced which would allow the State Corporation Commission (SCC) to determine if it is in the public’s interest for large-load customers instead of residential ones to cover the cost of distributing power to data centers. If the SCC approves, those costs could shift to new and existing data centers through 2033. The SCC estimated that typical residential customers will see their rate reduced by 3.4%, about $5.52 monthly, and the data center customers’ rate will increase by a projected 15.8%.

In Kentucky, proposed legislation would only allow large data centers to have electric service from a public utility if they sign a contract agreeing to cover any transmission or infrastructure costs attributable to serving that data center. State regulators at the Public Service Commission would also have to approve the terms of the contract and related tariffs. The data center must certify that it will comply with all local and state requirements related to its operation if it is to remain eligible for the existing state tax incentives, which grant a 50-year exemption to all sales and use taxes on computer equipment at large data center developments.

In West Virginia, a different approach is being suggested. There, a proposal would allow businesses investing at least $2.5 million or creating 10 jobs to receive a tax credit, or reduction in their state tax bill for a decade. But job creation is not a requirement. And the bigger the investment, the larger the credit. This proposal follows legislation which was enacted in 2025 effectively stripping away the ability of local government to regulate data centers. In that legislation, lawmakers sought to bolster state revenues by seizing the property tax revenue that data centers generate (which normally gets directed to local public services and school districts) and diverting it to a state fund to help replace the state’s income tax.

A bill has been introduced in the Colorado legislature which would require large data center operators to build or purchase enough renewable energy to cover their annual electricity usage beginning in 2031. By the same year, those developers must enter formal contracts with utilities lasting at least 15 years to cover the cost of any grid upgrades necessary to deliver reliable power to the facilities.

In Washington, a pending bill requires utilities to establish a tariff or policy for data centers by 2027, to ensure the centers cover the costs utilities face in supplying them with enough power. The idea is that those added costs aren’t passed on to other ratepayers. The legislation also calls for data centers to curtail electricity use when the grid is strained, and to take other steps to manage the demand they put on the grid. Additionally, data center operators would be required to share a sustainability report, information on server cooling technology and data on water and energy use and emissions.

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 Baa2 from A3. The outlook was changed to negative from rating under review. Moody’s cited the city’s very limited financial position, supplemented by cash flow borrowing, with additional declines in reserves projected for fiscal 2025.

The downgrade comes as a new Mayor took office. It is acknowledged that the new administration has budgeted for balanced operations in fiscal 2026 supported by the implementation of various staffing reductions, the projection of additional revenues, and receipt of pending receivables. The downgrade so early in efforts to undertake what will clearly be a multi-year process of fiscal recovery complicates recovery efforts. It is as much a statement on the faults of the outgoing administration as it is on their comfort level with city government going forward.

MASS TRANSIT

The Dallas, TX City Council approved a proposed governance framework that would shrink the city’s voting power on the Dallas Area Rapid Transit (DART) board to at least 45%. That would mean that for the first time in the agency’s more than 40-year history that Dallas would no longer hold majority control. The plan also would guarantee each of DART’s 13 member cities at least one board seat, replacing a structure that now gives only Dallas, Irving, Garland and Plano dedicated single-city representation, and would likely expand the current 15-member board.

The goal is to try to persuade six cities – Addison, Farmers Branch, Highland Park, Irving, Plano and University Park – to end an effort to hold May elections that could let voters decide whether to withdraw from DART. The six cities have until late February to finalize their special ballots and until March 18 to rescind their election plans altogether. It’s a split between suburban users of systems – transit and utilities – and users within the jurisdiction of the city which owns or sponsors a utility seen in many places.

ESG WIN IN COURT

A federal district judge declared a 2021 law restricting state investments in companies boycotting the fossil fuel industry unconstitutional, calling it “facially overbroad” and citing First and Fourteenth Amendment concerns. The law requires the comptroller’s office to maintain a list of financial firms that refuse, terminate or penalize business with a fossil fuel company “without ordinary business purpose.” The Texas Comptroller’s office maintains a publicly available list of more than 300 companies they identified as boycotting energy companies, which was last updated in June.

Muni Credit News February 9, 2026

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Joseph Krist

Publisher

CLIMATE TAXES

Hawaii was the first state to impose a tax on tourists which was designed to generate revenues to address climate related issues in the state. (MCN 1.5.26) Those efforts were challenged in court, but the State succeeded in defending them. This has emboldened legislators in another state to undertake efforts to generate revenues from visitors to fund climate related projects.

In Oregon, the 1% for Wildlife bill, sponsored on a bipartisan basis, would increase the state’s current hotel and lodging taxes by 1.25 percent, creating a new revenue stream for the Oregon Department of Fish and Wildlife to support long-neglected habitat conservation programs. Last session, the bill passed the House, but two Republicans blocked it in the Senate. Oregon’s Fish and Wildlife Department receives some state funding, most of its budget comes from hunting and fishing licenses and federal taxes on guns and ammunition.

If the bill passes, Oregon’s statewide hotel tax rate would be 2.5 percent—the third-lowest rate in the US. The current 1.5 percent tourism tax funds the $45 million annual budget of Travel Oregon, which promotes the state’s tourism industry.

CLIMATE LEGISLATION

In Oklahoma, a newly introduced bill would bar most civil lawsuits against oil companies over their role in the climate crisis, unless plaintiffs allege violations of specific environmental or labor laws. A similar proposal in Utah would block lawsuits over climate-warming emissions, unless a court finds the defendant violated a statute or permit. Oklahoma’s bill seeks to block claims alleging fraud, misrepresentation, deception, failure to warn or deceptive marketing, all of which are central to existing climate lawsuits against oil companies. Utah’s proposal is narrower, targeting only emissions-based claims.

In Florida, SB 1628 provides a legislative finding that net-zero policies, carbon taxes or assessments, and carbon emissions trading programs are detrimental to the state’s energy security and economic interests. The bill prohibits governmental entities from adopting net-zero policies, including through comprehensive plans, land development regulations, transportation plans, or any other government policy or procedure.

WESTERN WATER

The current rules governing the Colorado River expire at the end of the year, and the Department of Interior faces an Oct.1 deadline to set water deliveries for 2027. If the states don’t reach an agreement by that point, Interior will have to decide for itself how to divide up the shrinking volumes of water. Snowpack in the river’s headwaters, which provides the lion’s share of the waterway’s flows, is off to a dismal start this winter, with temperatures in Utah, Wyoming and Colorado averaging more than 10 degrees Fahrenheit above their 20th century average for the month of December, according to the National Oceanic and Atmospheric Administration.

Snowpack above Lake Powell in Utah and Arizona is currently at 65 percent of median level — a situation that could be expected to produce just 50 percent of the typical runoff in the spring and summer. Interior’s latest projections for the Colorado River show that water levels behind Glen Canyon dam at Lake Powell could fall low enough to endanger hydropower production and downstream water deliveries as soon as September.

In Colorado, the snowpack is “the lowest on record for this point in the season,”. In Utah, “We’re in uncharted territory right now, and we’re headed toward the lowest snowpack we’ve ever had on Feb. 1,”. The snowpack in California is in better shape, particularly in the southern Sierras, where several basins have above-average accumulations.

BAY AREA TRANSIT LIFELINE

The Office of Governor Newsom, the California Department of Finance and the Metropolitan Transportation Commission (MTC) announced an agreement on a $590 million loan for Bay Area transit agencies that will avert major service cuts at AC Transit, BART, Caltrain and San Francisco Muni during the 2026-27 fiscal year that begins July 1. The state loan provides a fiscal bridge until the sales tax dollars potentially could be available.

A regional funding measure authorized by the Legislature last year via state Senate Bill 63, authored by senators Scott Wiener of San Francisco and Jesse Arreguín of Berkeley, may appear on the November 2026 ballot in Alameda, Contra Costa, San Francisco, San Mateo and Santa Clara counties. If the measure qualifies for the ballot and is approved by voters, it would establish a temporary 14-year sales tax to support transit operations. But these funds would not begin flowing until around July 1, 2027.

The loan agreement includes a clearly defined repayment structure, a guaranteed revenue source to secure the loan and an agreed-upon interest rate: 12-year repayment term, with interest-only payments during the first two years. Repayment secured by the “revenue-based” portion of State Transit Assistance (STA) that goes directly to the transit agencies. Variable interest rate tied to the state’s Surplus Money Investment Fund, ensuring the state is fully repaid at the same rate it would have earned had the funds remained in state accounts.

IMMIGRATION AND MUNICIPAL FINANCE

A group of chief financial officers from 16 states sent a letter to President Trump highlighting the negative economic and fiscal impact of federal immigration enforcement policies on state and local government. The letter focused only on fiscal issues. The message was clear.

“The economy fundamentally depends on people producing goods, providing services, and participating in commerce as workers, consumers, and business owners. For an economy to function, people must feel safe to go to work, operate businesses, travel to commercial districts, and engage in everyday economic activity. When fear disrupts these basic conditions, production slows, consumption declines, and the economic system that supports public revenues begins to break down.”

The letter comes as data begins to slowly emerge regarding the costs of immigration policies in the Biden administration. the Congressional Budget Office estimates how the surge in immigration that began in 2021 affected state and local budgets in 2023. 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.

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 those direct effects, CBO’s alternative measure accounts for expected increases in property tax revenues, additional tax revenues from greater economic activity, and nonbudgetary costs associated with greater demand for government services. 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.

POLICY REALITIES

Money from the Federal Transit Administration’s rural ferry program pays for almost half of the Alaska Marine Highway System’s operating expenses, but the Trump administration failed to open its annual grant process in fiscal year 2025, which ended Sept. 30. The ferry system’s budget runs according to the calendar year. Last spring, the Alaska Legislature and Gov. Mike Dunleavy budgeted $171 million for the 2026 ferry budget. Of that, almost $78 million was supposed to come from the rural ferry program.

Now, Alaska’s state ferry system is at risk of a partial or total shutdown this summer due to the failure of the federal government to issue make that annual grant. Alaska, secured almost $1 billion in the 2021 Infrastructure Investment and Jobs Act bill for the rural ferry program, which was written in a way to steer much of the money to Alaska. That billion dollars was to be spread across five years, and the program disbursed more than $252 million nationwide in FY22, $170 million in FY23 and $194 million in FY24. Alaska received more than five-sixths of the total distribution in that time

TRI STATE CAN’T WIN

Last week, the cooperative utilities Tri-State Generation and Transmission Association and Platte River Power Authority filed a petition asking the Department of Energy to reconsider its December order demanding that they keep running Craig Generating Station’s Unit 1, a jointly owned coal plant in Colorado, for the next 90 days. Forcing them to operate it past December will require their members to bear unnecessary costs, which constitutes an “uncompensated taking” of their property in violation of the Constitution, the petition argues.

Keeping Craig Unit 1 running for 90 days has been estimated to have a cost at least $20 million, and that running it for a year could add up to $85 million to $150 million. It will also disrupt the use of long-planned replacement resources that can provide power more cheaply and reliably than Craig Unit 1 — including the 145-megawatt Axial Basin solar farm, which may be forced to curtail its electricity generation because of grid congestion due to keeping the coal plant online.

The cooperative structure which historically allowed rural utilities to capture benefits of large scale resources is now working against them through no fault of their own. The petition from Tri-State and Platte River marks the first time a utility has publicly contested a Trump administration must-run order. There is no other end user or owner to pass the excess imposed costs to. The rate base must absorb it all.

NUCLEAR

The Trump administration has created an exclusion for new experimental reactors being built at sites around the U.S. from a major environmental law. The Department of Energy announced it would begin excluding advanced nuclear reactors from major requirements of the National Environmental Policy Act (NEPA).

The Energy Department cited the inherent safety of the advanced reactor designs as the reason they could be excluded from environmental reviews. “Advanced reactor projects in this category typically employ inherent safety features and passive safety systems,”. The Energy Department’s Reactor Pilot Program is seeking to begin operations of at least three advanced test reactors by July 4 of this year.

Some 15 sites across 5 states are under consideration for these developments.

Muni Credit News February 2, 2025

Joseph Krist

Publisher

WIND BLOWS AGAIN

It appears that five wind turbine projects off the east coast of the US which were halted by President Trump by executive action will be resuming construction.

So far, judges have allowed Revolution Wind near Rhode Island, Empire Wind near New York and the Coastal Virginia Offshore Wind project to get back to work. The latest case involved Vineyard Wind near Massachusetts. Sunrise Wind, the fifth project affected by the December stop-work order, will argue for a preliminary injunction in court on Feb. 2.

In December, the Trump administration said that it would suspend the authority of five previously approved offshore wind projects to build. The projects had received federal financial support under the Biden administration. Federal judges have been issuing preliminary injunctions against the actions which shut down construction. Federal judges have been issuing preliminary injunctions against the actions which shut down construction.

In issuing the preliminary injunction, the judge found that the government “failed to provide a reasonable explanation for why it had to stop construction,” meaning, he added, the action was “likely arbitrary and capricious.” Under the December stop-work order, Vineyard Wind was given permission to continue producing power from its 44 operational turbines. The government says that operation of wind turbines offshore raises national security issues. That led to judge to conclude that construction is not an issue since the government did not contend that it was.

ARTS AND NEW REALITIES

For many cultural and entertainment entities, the recovery from the economic impacts of the pandemic has been painfully slow. The resulting declines in attendance have reduced revenues at a time when increases in operating expenses continue. This has forced these institutions to face some difficult choices including sales of art by museums, reductions in the number of productions/exhibitions, and draws on endowments. In some cases, layoffs are the only choice.

In 2025, the Guggenheim Museum in NYC laid off 20 people and provided little to no notice. The Brooklyn Museum also announced layoffs due to a shortfall in revenue, but those layoffs were paused. In Los Angeles, the Lucas Museum of Narrative Art, projected to open sometime in 2026, laid off 22 employees. The American Alliance of Museums released a 2025 report that found more than half of museums are seeing fewer visitors than they did in 2019.

Two well-known institutions were in the news as they announced steps to deal with their financial problems. The Museum of Fine Arts, Boston notified employees of upcoming layoffs taking effect immediately. There are 520 employees at the museum, and the institution said it plans to reduce 6.3% of its workforce. More than 30 museum positions will be affected. It still has an Aa2 rating.

The Metropolitan Opera is the largest performing arts organization in the country. This has not insulated it from financial difficulties. The Met announced on Tuesday that it would lay off workers, cut the salaries of its top-paid executives and postpone a new production from its coming season. The immediate catalyst was concern that one of the Met’s latest financial gambit might not be coming to fruition.

Under a deal with Saudi Arabia, the Saudis agreed to subsidize the Met in exchange for the company performing at the Royal Diriyah Opera House near Riyadh three weeks each winter. The deal was one component of the Met’s effort to increase its revenues. It is also considering selling the naming rights to its theater, as well as possible affiliations with corporations that might want their names affixed to the house.

The cuts announced are expected to save $15 million this fiscal year and another $25 million the next. They include 22 administrative posts out of a total of 284 administrative positions. The Met’s payroll includes upward of 3,000 people. The 35 executives who make more than $150,000 a year will see graduated cuts in their pay of 4 percent to 15 percent. employees were told their full pay would be revived by August 2027, or sooner if the Met’s financial situation improved.

The moves follow two downgrades by Moody’s in 2025 which lowered the Met’s rating to B1. It is still on negative outlook. The plans announced touch on many of the issues cited by Moody’s in their downgrade action.

SMALL TOWN LAW ENFORCEMENT RISKS

The U.S. Supreme Court denied a request from Miami Township in Montgomery County, OH for an order telling a lower court to review its previous decision in its effort to get a $45 million judgment reduced or overturned. An individual won a judgment in 2022 in a federal lawsuit he lodged against the township and a former detective. (It was a wrongful imprisonment case.)

In a 1978 decision (Monell), the Court held that municipalities “can be sued directly under for monetary, declaratory, or injunctive relief where, as here, the action that is alleged to be unconstitutional implements or executes a policy statement, ordinance, regulation, or decision officially adopted and promulgated by that body’s officers.” By the same token, municipalities “may be sued for constitutional deprivations visited pursuant to governmental ‘custom’ even though such a custom has not received formal approval through the body’s official decision making channels.”

Ohio law requires a political subdivision to indemnify an employee for certain qualifying judgments. This includes civil-rights judgments under federal law. The statute places no cap or limit on the indemnification and provides no mechanism for local subdivisions to receive necessary funds from the State. Miami Township, Ohio has been ordered to indemnify a $45 million judgment against a former employee – an amount more than 10 times the Township’s General Fund annual budget.

The township argued there was a constitutional conflict between governing federal civil rights law and Ohio’s state indemnification statute covering political subdivisions. The latter requires a political subdivision, or a local government entity, to defend employees sued for actions taken while doing their job, using public funds or insurance, according to the Ohio revised code.

Plaintiff initially included a claim against Miami Township in his original complaint. But the district court granted summary judgment to the Township on that claim because plaintiff failed to establish the existence of a municipal policy or custom under Monell. Plaintiff then proceeded to trial with the municipal employee as the sole defendant and won a $45 million judgment on his two claims against that employee.

Yet the Township is now on the hook for that entire $45 million judgment, notwithstanding the dismissal of plaintiff’s claim against the Township under Monell. The Township’s liability resulted from the mechanical operation of Ohio’s state-law indemnification framework. That state-law regime renders the Township liable for the entire judgment based purely on the officer’s status as a Township employee, thus altering the scope of Section 1983 liability from what Congress chose to impose.

The township also cannot rely on insurance because its insurer went bankrupt in 2003 for incidents from the early 1990s.

CLIMATE SUPERFUNDS

Two states—New York and Vermont—have already passed climate superfund laws. The New York and Vermont laws are both facing legal challenges from the fossil fuel industry and the U.S. Department of Justice. This month, a climate superfund bill was introduced in Rhode Island. This week, a councilmember in Washington, D.C., announced a bill to study the financial impacts of climate change on the city and potentially require compensation from fossil-fuel companies.

In addition, a superfund bill in Maine was voted out of committee and will proceed to a full vote in the state Senate. Now legislation will be introduced in the Illinois legislature to establish a superfund structure. The American Petroleum Institute included fighting superfund legislation in its list of 2026 priorities, claiming the laws would “bypass Congress and threaten affordability.”

HOSPITALS AND LABOR

The pressure on the sector continues to build as employees are making significant demands to address staffing cutbacks and inflation. The three hospitals in NY which are the target of strikes saw those disputes continue. The New York State Nurses Association said contract negotiations resumed with officials at the three private hospital systems impacted by the strike: Montefiore, Mount Sinai and New York-Presbyterian.

Now, an estimated 31,000 registered nurses and other front-line Kaiser Permanente health care workers launched an open-ended strike this week in California and Hawaii to demand better wages and staffing. A five-day strike in October ended with negotiations resuming, but talks broke down in December. They are asking for a 25% wage increase over four years to make up for wages they say are at least 7% behind their peers. Adding to the complexity of the situation, negotiations are occurring on both a national and local level.

Kaiser said it paused national bargaining last month after what it described as a threatening incident involving a union official. The union has agreed to return to local bargaining, even as workers moved forward with the strike.

NUCLEAR

The Kewaunee Power Station is a partially decommissioned nuclear power plant, located on a 900 acres plot in the town of Carlton, Wisconsin, 27 miles southeast of Green Bay, Wisconsin in Kewaunee County, and south of the city of Kewaunee. It shut its doors back in 2013. It’s currently in the decommissioning process.

Energy Solutions. a provider of nuclear services based in Salt Lake City, Utah, submitted to the U.S. Nuclear Regulatory Commission (NRC) a Notice of Intent (NOI) confirming its plans to submit an application for a major licensing action for new nuclear generation at the Kewaunee Power Station (KPS) site. Studies are being conducted that will support the application to demonstrate the site’s suitability for new nuclear construction. This is a prerequisite to the development and securing of NRC approvals for this project.

Initial public reaction was positive as the locals view the plant as a source of jobs and tax revenues which was lost when the original plant closed. It is a case that is being made in association with other nuclear expansion at other locations.

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.

Muni Credit News January 19, 2025

Joseph Krist

Publisher

CLIMATE LITIGATION

The Supreme Court heard arguments in connection with more than 40 lawsuits filed by Louisiana officials seeking to hold energy companies liable for environmental damage linked to oil and gas production. In April, a jury awarded Plaquemines Parish near New Orleans, the state’s southernmost parish, $745 million in one of those cases. The Trump administration has joined the case in support of the oil companies and will argue alongside them before the court. Only eight of the nine justices will be weighing the matter.

Justice Samuel A. Alito Jr. recused himself, citing his financial interest in ConocoPhillips, the parent corporation of Burlington Resources Oil and Gas Company. The justices could also announce whether they will hear a challenge to a Colorado Supreme Court decision allowing a case brought by Boulder to continue in state court. That suit was first filed in 2018. In May, the State Supreme Court ruled 5 to 2, that the plaintiffs’ claims were not pre-empted by federal law, striking down a central argument that the companies have employed in their defense.

The case before the court is a narrow, technical point. The oil companies have claimed that the disputes should be heard in federal court because of a law known as the federal officer removal statute. That law allows federal officers and those acting on their behalf to remove legal disputes that involve their official duties from state court to federal court. The industry has fought to establish its view as to federal jurisdiction as it believes that their issues would be litigated more favorably in federal venues.

Congress has expanded the statute over the years, including with a 2011 amendment that allowed such cases to be transferred to federal court if the dispute involved actions “related to” official duties. A federal trial court judge rejected that argument, finding that the oil companies had failed to show that they extracted the oil under the order of a federal officer. The judge also concluded that the companies hadn’t shown a link between the federal contracts and the oil production at issue in the case.

In separate legal actions, the U.S. government sued California on Wednesday over its law banning fossil fuel development activities within 3,200 feet of homes, schools and other sensitive areas, saying the state law is preempted by federal law since it infringes on the U.S. government’s authority to manage federal lands and mineral resources. It’s an extension of the arguments being advanced by the oil companies in their litigation.

HOSPITAL CONUNDRUMS

The increasingly cloudy funding outlook in the near-term for the overall healthcare sector is having its impact. This week shone a light the nature of different responses to the potential negative impacts of policy changes and funding on hospitals. The first example is the strike by nurses against three of the major hospital systems in the City of New York. The nurses hope to force hospitals to ensure minimum staffing ratios. They are also demanding higher wages and more security at hospitals to reduce violent episodes and shootings.

At the same time, a different path is being taken in California. Alameda Health Care District was formed in 2002 as a local healthcare district and political subdivision of the State of California. The district is coterminous with the boundaries of the City of Alameda, serving an estimated population of 78,000. The district owns, but does not operate, Alameda Hospital, a 101-bed general acute care hospital, and Southshore Convalescent, a 26-bed skilled nursing facility. The district leases Park Ridge Rehabilitation and Wellness Center, a 120-bed skilled nursing facility.

Alameda Health System officials said the estimates it will lose more than $100 million annually by 2030 as a result of the Medicaid cuts. (See California budget above) In a statement, AHS confirmed it will eliminate 247 positions across all departments.

CALIFORNIA BUDGET

Governor Newsom kicked off the budget process this week. The Governor’s proposal outlines a $348.9 billion balanced budget for the 2026-27 fiscal year. The plan reflects more than $42 billion in additional General Fund revenue over the three-year budget window (2024-25 through 2026-27) compared to last year’s enacted budget. California enters the 2026-27 fiscal year with $23 billion in total reserves, including $14.4 billion in California’s Rainy Day Fund. The budget proposes rebuilding reserves – totaling $23 billion – including a $3 billion deposit into the Rainy Day Fund.

The Budget forecast reflects General Fund revenues that are higher by more than $42 billion over the budget window, from 2024-25 through 2026-27, than projected at the 2025 Budget Act—an increase driven by higher cash receipts, higher stock market levels, and an improved economic outlook. While the Budget is balanced in the 2026-27 fiscal year, with a discretionary reserve of $4.5 billion, it projects a deficit of roughly $22 billion in the 2027-28 fiscal year and shortfalls in the two years following.

The proposal highlights the structural risks inherent in the State’s revenue structure. While the significant revenue increase since the 2025 Budget Act is encouraging, it is important to recognize that much of this surge is attributable to a relatively small number of technology companies that have experienced a substantial increase in their share prices due to investor enthusiasm in artificial intelligence. number of technology companies that have experienced a substantial increase in their share prices due to investor enthusiasm in artificial intelligence. The dominant risk to the Budget is stock market and asset price declines—shocks that disproportionately impact high-income earners.

The impacts of the big, beautiful bill (H.R.1) included significant federal policy changes for Health and Human Services programs that are projected to result in costs of $1.4 billion General Fund in 2026-27. Of this amount, $1.1 billion in additional costs are in Medi-Cal—California’s Medicaid program that provides health care services for more than 14 million low-income Californians. In addition, H.R. 1 will add nearly $300 million in costs to CalFresh—the state’s Supplemental Nutrition Assistance Program providing food purchase assistance for adequate nutrition to more than 3 million California households.

A California initiative was put forward by a state health care union to offset federal budget cuts that threaten California’s health care system. It calls for California residents worth more than $1 billion to be taxed the equivalent of 5 percent of their assets, and would apply retroactively to anyone who lived in the state as of Jan. 1.

First, though, it needs to obtain nearly 900,000 signatures to get on the state ballot in November. The measure is opposed by Gov. Gavin Newsom, a Democrat, who has called it bad policy and argued that it would lead billionaires to move out of state.

WATER AND AI

In 2023, U.S. data centers consumed an estimated 17 billion gallons of water, according to federal and industry analyses compiled by the Energy Department and the Lawrence Berkeley National Laboratory. Hyperscale facilities alone are projected to consume between 16 billion and 33 billion gallons annually by 2028. A single large data center can require roughly 300,000 gallons of water per day depending on cooling technology, climate, and workload intensity.

In many states, data‑center operators are not required to disclose site‑level water consumption or forward‑looking demand projections. U.S. data centers now make up about 4.4% of electricity consumption nationwide. This is an increase from some 1.9% in 2018. It has been predicted that this could rise to 12% by 2028.

ARIZONA WATER

Arizona’s Attorney General has entered an agreement with Riverview LLP, a Minnesota-based dairy company that moved into one area in SE AZ over the last decade. It quickly accelerated to become a major driver of the Willcox groundwater basin’s decline. Under the agreement, the company is agreeing to reduce its groundwater usage by fallowing 2,000 acres of land and maintaining best practices to conserve water. The company also agreed to deliver $11 million to residents affected by the company’s overpumping that will pay to redrill wells, haul water and ensure the community has access to the critical resource.

State data shows more than 100,000 acre feet of water is pumped out of the aquifer than is replenished by rain or other sources and that the groundwater has been drawn down so low that it’s beneath the average well depth of the community. It’s just the latest iteration of an all too familiar pattern. A previous agreement was reached with an agriculture company owned by the Saudis that drew down well water to grow alfalfa in the desert.

COLORADO SPRINGS WANTS ITS COAL PLANT

Colorado Springs Utilities is working with local legislators on a bill that would allow the Ray Nixon coal power plant to be exempted from state laws which require it be closed in 2029 and be replaced by cleaner electricity. The Trump administration is challenging the state law under which the plant would close. Colorado officials said they were confident state laws dictating the closure of six remaining coal plants would survive the EPA challenge.

As a municipally owned utility, CSU does not need approval of an extension from the state Public Utilities Commission at least according to CSU. So, it’s not clear why they need an exemption specific to CSU from the state legislature. CSU has been seen as a laggard in efforts to plan for generation with less or no fossil fuels. It doesn’t come as a surprise given the general political environment in Colorado’s most conservative city.

IOWA CARBON CAPTURE

The efforts to regulate carbon capture pipeline development moved along two tracks this week. The U.S. Supreme Court denied a request from Story and Shelby counties requesting a review of a lower court’s ruling that county ordinances pertaining to a carbon sequestration pipeline were preempted by federal pipeline regulations. The adjudication of this case paused similar lawsuits from other counties from progressing. The court did not offer an explanation for the denial.

The Iowa Legislature has begun another new step in the effort to take up the issue of eminent domain and regulation around carbon sequestration pipelines during the current session. An Iowa House Judiciary subcommittee took up House Study Bill 507, which bans the use of eminent domain for carbon pipelines. It advanced the bill to the full committee. The House passed a similar bill in 2025 to ban the use of eminent domain by carbon capture pipelines, but the Senate did not take up the bill.

Senate leadership has also indicated it has plans to file a bill that would address the property rights issue by allowing pipeline operators to deviate from their state-approved routes in order to find willing landowners. The Senate has been the continuing barrier to enactment of changes to Iowa’s eminent domain rules.

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.

Muni Credit News January 12, 2026

Joseph Krist

Publisher

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FLORIDA VOUCHER QUESTIONS

The State of Florida has significantly expanded its school voucher programs. These programs are designed to allow less economically well off have the same access to non-traditional schools that others have. In Florida, its voucher program was expanded to greatly increase the amount of income a voucher recipient might have. This has shifted the voucher concept from one of economic empowerment to one where folks already paying private school tuition. In many cases, vouchers merely subsidize people who already were willingly paying tuition.

The Florida program has yielded other problems. Some 500,000 students across Florida, which hosts the nation’s largest school choice effort, have accepted education vouchers toward home or private schooling. It appears that many of the vouchers have sat unused. It’s not clear why. The result is that there are $400 million in vouchers sitting in student accounts.

In October, it was revealed the state’s 2024-25 education budget had a $47 million shortfall due to its Department of Education paying out funding for 23,000 vouchers to students with unclear enrollment status, either public or private. While there is support for the voucher expansion, legislation will be introduced to make changes in the program to prevent the accumulation of unused vouchers.

COUNTIES AND HEALTH SUBSIDIES

So much of focus, rightly so, has been on the individual stories of beneficiaries of subsidies for the cost of their health insurance under the Affordable Care Act. The potential impact on hospitals also raises concerns. One of the impacts of the diminishment of subsidies that is starting to get more attention is the impact of higher uninsured patients on counties.

A recent paper from the Kaiser Family Foundation highlights the potential impact. County health officials across the country are bracing for an estimated 10 million newly uninsured patients over the next decade in the wake of the

One Big Beautiful Bill Act. The act, which President Donald Trump signed into law this past summer, is also expected to reduce Medicaid spending by an estimated $900 billion over that period.

In California and New Mexico, counties are legally required to help their poorest residents through what are known as indigent care programs. Both states have counties which are largely rural and historically below average in income. In those areas, the expansion of Medicaid under the ACA was key to driving demand and revenues and reduced significantly the number of uninsured patients. Idaho and Colorado abandoned laws that required counties to be providers of last resort for their residents.

State officials have said California could lose $30 billion a year in federal funding for Medi-Cal under the new law, as much as 15% of the state program’s entire budget. There is no detailed data to document how many people are currently enrolled in California’s county indigent programs, because the state doesn’t track enrollment and utilization. But enrollment in county health safety net programs dropped dramatically in the first full year of ACA implementation, going from about 858,000 people statewide in 2013 to roughly 176,000 by the end of 2014, according to a survey at the time by Health Access California.

New Mexico will use state funds to shield residents from health insurance premium increases after Congress failed to extend Affordable Care Act tax credits that expired Dec. 31. The state’s Health Care Affordability Fund will provide $17.3 million to reduce premiums and cost-sharing through June 30 for New Mexicans enrolled in BeWell, the state’s health insurance marketplace. That funding was enacted in anticipation of a failure to extend in October. Gov. Lujan Grisham’s budget proposal for fiscal years 2026-2027 seeks additional funding to extend the assistance beyond June if Congress does not act.

GAS WARS

The Trump administration sued two California cities on Monday, seeking to block local laws that restrict natural gas infrastructure and appliances in new construction. In the complaint filed in U.S. District Court in the Northern District of California, Justice Department attorneys alleged that ordinances passed by the San Francisco-area cities of Morgan Hill and Petaluma since 2019 violated a 1975 law that prevents states and cities from regulating the “energy use” of products subject to federal standards.

It’s obviously political as the courts have already ruled on the legality of gas bans and a federal appeals court in 2023 ruled that the city of Berkeley, California, could not enforce its 2019 natural gas ban. Morgan Hill adopted its natural gas prohibition in late 2019, effective for all new building permit applications starting in March 2020. Petaluma followed suit in May 2021 by adopting an all-electric ordinance that expanded the ban to include “substantial building alterations.”

Both cities left specific exceptions for the use of portable propane appliances in outdoor cooking and heating areas. Despite some carve-outs, U.S. attorneys argued that these local ordinances violate a 1975 law granting the federal government the sole authority to set “energy use” standards for products such as stoves and water heaters. Morgan Hill has complied with federal standards as interpreted by recent court decisions and has not denied permits based on the 2019 ordinance since the Berkeley ruling.

The federal case relies on the 1975 law, the U.S. Energy Policy and Conservation Act, to argue that a building code prohibiting gas pipes is effectively a ban on the appliances themselves. This builds on the Berkeley ruling, which established that cities cannot indirectly block the use of gas appliances by cutting off the infrastructure needed for them to function.

CONGESTION FEES

Chicago established its first scheme to establish congestion zones where rideshare providers would have to charge an extra fee for fares picked up dropped off in the zone in 2020. The first zone unsurprisingly covered the prime downtown area. Since then, other zones have been established. This week, the city increased its rideshare tax to $1.50. In addition, it expanded its congestion surcharge zone from downtown to cover most of the North Side and Hyde Park.

Riders getting picked up or dropped off in the zone — now spanning generally from Foster Avenue to 31st Street to Western Avenue, as well as a second zone covering Hyde Park — will now pay an added $1.50 per ride, in addition to the city’s flat $1.13 tax on rideshares. For shared rides, the weekday congestion zone fee is 60 cents, covering the same expanded zones. The city did not change its $5 rideshare tax on rides coming or going to McCormick Place, Navy Pier and the city’s airports.

In New York, the one year anniversary of the implementation of congestion fees in Manhattan was this past week. The fees have raised an estimated $550 million in revenue for the MTA through year end. Traffic speeds have increased in the congestion zone as well. The fees seem not to have had the negative economic impact that many had feared as retail sales and foot traffic in the zone have also increased. It has changed the mix of that activity in terms of the fact that visits from near suburbs to things like Broadway shows and other entertainment venues in the zone are seeing fewer visitors from the suburbs.

The tolls are scheduled to rise up to $12 in 2028, and $15 in 2031.

CALIFORNIA WATER

The California Department of Water Resources (DWR) opened the main spillway at Lake Oroville this week as a flood-control measure following another round of storms that drenched Northern California over the weekend. DWR has been steadily increasing releases from the Oroville-Thermalito Complex into the Feather River to create space in the reservoir for incoming runoff. Inflows into Lake Oroville are projected to reach between 50,000 and 70,000 cubic feet per second this week, prompting the use of the dam’s spillway to manage rising water levels.

Recent atmospheric river storms have rapidly boosted reservoir levels following a dry start to December. Lake Oroville’s surface elevation climbed roughly 58 feet between December 12 and December 31 and now sits at 826 feet, about 70% of its total capacity. As of Monday, total releases to the Feather River are around 15,000 cubic feet per second, with flows potentially increasing to 25,000 cubic feet per second.

LONE STAR SOLAR

For the first time, Texas’ main power system (ERCOT) generated more power from solar farms than coal plants during a calendar year in 2025. Greater installed solar capacity in Texas this year – up 24% compared to 2024’s levels, has allowed solar power output in Texas to surge by 42% so far this year from a year earlier. ERCOT solar production has set new monthly records every month so far in 2025 and averaged 44% growth from the same months in 2024 from January through November.

Texas’ solar outperformance of coal generation has occurred even as ERCOT output from coal-fired power plants posted a 10% rise from the same months in 2024. ERCOT gas-fired power supplies have dropped by around 4% from a year earlier to 7.74 million MWh so far this year. From January to November, solar farms accounted for a record 14% share of the ERCOT generation mix, compared with a 13% share for the state’s coal plants.

NEW YORK NUCLEAR

The New York Power Authority (NYPA) announced that it had received responses to solicitations issued in October 2025 seeking potential host communities and development partners as part of an initiative to develop advanced nuclear power. Through a Request for Information (RFI), NYPA solicited information from Upstate New York communities interested in hosting an advanced nuclear project. NYPA received 23 responses from potential developers or partners, and eight responses from Upstate New York communities.

In a second RFI, NYPA sought information from potential development partners regarding viable project concepts that included technology recommendations, siting considerations, cost and timeline assumptions, ownership structures and partnership models.

SF TRANSIT FUNDING

The San Francisco Municipal Transit Authority (SFMTA) faces a more than $300 million deficit after the pandemic took a toll on ridership and other funding sources. Now the City faces the reality that additional outside funds are not coming. To address the deficit, a proposal is being made to ask voters to approve tax revenues to fill the gap.

If voters approve it, this is how the tax charges would work: Owners of a single-family home up to 3,000 square feet would pay $129 per year. Multifamily homes would pay $249 a year up to 5,000 square feet. Non-residential property owners would be charged $799 up to 5,000 square feet. Residents could face higher fees if their homes and buildings are bigger than those listed maximums.

There are also caps on how much some residents will pay. The total cap for a multifamily parcel will be 50,000 square feet. Renters will not necessarily escape this tax. Owners of rent-controlled properties can pass on up to 50% of the parcel tax on a unit. The cap is $65 a year.

The proposal would be on the November ballot.

OREGON TRANSIT FUNDING SWITCHES TRACKS

We have been following the very contentious process which the Oregon legislature has conducted to fund the Oregon Department of Transportation. A threat of serious layoffs and reduced services went only so far to move the legislature to accept any plan with new taxes. Even when legislation was passed, opponents turned to the courts to force the legislation on to the ballot this November. While litigation plays out, the additional funding expected to result from the legislation is on hold.

It is expected that a ballot item would fail. So now, the Governor is proposing a whole new scheme to address the real funding shortfalls plaguing ODOT. The new proposal would require passing a bill to free up money within ODOT’s budget that is currently dedicated to specific projects. That money could instead go toward basic road maintenance. State funding for public transit would not be touched.

That would require asking lawmakers to pass a bill scrapping the entirety of the bill she muscled through in a special session over the summer. That move would render moot a vote, scheduled for November, on whether tax increases in the bill can move forward. But it would also do away with other changes in the bill, like a long-sought shift in how freight haulers are taxed.

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.

Muni Credit News December 22, 2025

Joseph Krist

Publisher

Merry Christmas and Happy New Year! Our next issue will be dated January 5, 2026. We will highlight what we expect to see in 2026 as the impacts of current economic policies, especially tariffs begin to come into sharper focus.

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WESTERN WATER

Westlands Water District has long been the poster child for agricultural water interests and their efforts to continue to rely on water shipped from the north. It has long been politically conservative and has been a leading voice in the battle between agricultural and domestic water users. It employs well connected lobbyists and is considered a major Trump supporter. Nevertheless, the so-called Valley Clean Infrastructure Plan remains a “survival strategy” as growers deal with increased restrictions on groundwater pumping.

Case in point: Six of the nine Westlands board members have already signed preliminary agreements to put panels on their own land. This year, Westlands growers fallowed 215,000 of the district’s 614,700 acres, despite two relatively wet back-to-back seasons that saw the federal government deliver 55 percent of its promised supplies.

The approval of the plan’s environmental review Tuesday paves the way for the company working with Westlands, Golden State Clean Energy, to start developing and then selling off the individual solar installations — as many as 20 gigawatts in all — that will fit into the region’s existing patchwork of fields and orchards.

Construction wouldn’t begin until 2028 at the earliest and continue for around a decade — meaning the solar installations are too far in the future to benefit from the federal tax credits that Congress and Trump decided to sunset.

Water flows into Lake Powell — which account for the lion’s share of the river’s inflows — were just 56 percent of average this year, according to a Bureau of Reclamation. state negotiators have been focusing on a short-term, “phase 1” deal that would cover only five years, in order to give states more time to adjust to a first round of water cuts. That plan would require the lower river states of Arizona, California and Nevada to make good on their offer to reduce their water use by 1.5 million acre-feet. Meanwhile, the upstream states of Colorado, Utah, New Mexico and Wyoming would launch a water conservation program.

Water flows into Lake Powell — which account for the lion’s share of the river’s inflows — were just 56 percent of average this year, according to a Bureau of Reclamation. State negotiators have been focusing on a short-term, “phase 1” deal that would cover only five years, in order to give states more time to adjust to a first round of water cuts. That plan would require the lower basin states of Arizona, California and Nevada to make good on their offer to reduce their water use by 1.5 million acre-feet. Meanwhile, the upper basin states of Colorado, Utah, New Mexico and Wyoming would launch a water conservation program.

WELCOME MR. MAYOR

The New York City Independent Budget Office (IBO) by law is required to conduct an independent analysis of what the Mayoral Administration presents. The November Plan outlines the City’s fiscal condition in anticipation for the Preliminary Budget in January. IBO’s 2026 revenue forecast is higher than what the Adams administration presented, as IBO updated its forecast to recognize a more stable economy than the City faced—both nationally and locally—in May.

IBO estimates that the City of New York will end the current fiscal year with a deficit of $380 million. Unlike past years, there is no fiscal cushion to help cover expenses beginning in the 2027 budget. New York City is required by law to have a balanced budget, which means the Preliminary Budget released in January will see this shortfall closed. IBO projects a budget gap of $6.5 billion for 2027 followed by larger gaps: $8.4 billion for 2028 and $8.2 billion for 2029. These amounts represent around 8%-10% of projected City revenues for each of those three years. The Adams administration is forecasting smaller gaps of $4.7 billion in 2027 and $6.3 billion annually from 2028 through 2029.

Some areas of the City’s budget must be fully funded, such as debt service, pensions, retiree health benefits, homeless shelters, and certain educational services. Policy and program areas that are not mandated are open to budget reorganization in the event of a shortfall in planned federal or State funding. Over time, operating surplus as a percent of tax revenues has decreased. Pre-pandemic, the City’s surplus hovered around 7-8% of City tax revenue.

In contrast to past analyses, IBO projects a deficit of $377 million for this year, using the City’s reserves to come to a balanced budget. Deficits for future years ranging from $6.5 billion in 2027 to more than $8.0 billion in 2028 and 2029 will present a challenge for the Mamdani administration, which will need to present a balanced budget for 2027 shortly after taking office. In this last budget put forth by the Adams administration, the City’s full-time workforce headcount was increased by over 1,000 for 2026, and adds 5,000 additional police officers by 2029. This increase, if implemented, would tie the hands of the incoming Mamdani administration, which will face a tighter budget than in recent years.

CHICAGO BUDGET

The Chicago City Council passed a budget by a vote of 30 to 18. The plan falls short of the 34 votes need to block a mayoral veto. In lieu of the head tax that the Mayor was holding out for, the budget passed by the City Council relies on new revenue by increasing the plastic bag tax and liquor taxes, and by adding advertising on city property.

The Civic Federation weighed in on the process this week. The Mayor’s budget was structurally imbalanced, and so is the Council’s alternative. The Council’s budget continues to rely heavily on borrowing for operating costs and one-time revenues, increasing future costs and fiscal risk. The largest one-time revenue source is a massive, destabilizing surplus declaration and sweep of Tax Increment Financing (TIF) accounts.

In Illinois, TIF districts like others across the country capture growth in property tax revenue to fund economic development within designated areas. State law requires that excess, uncommitted funds be released each year and redistributed to local governments. Under the Mayor’s initial proposal, Chicago would receive $232.6 million, while Chicago Public Schools would receive more than $550 million.

The unprecedented surplus reflects two primary drivers: rapidly growing revenue from aging TIF districts nearing the end of their life cycles, and a 2025 policy change that freed up previously held project funds. But these conditions are temporary. Beginning in the coming years, and accelerating after 2030, dozens of TIFs will expire, shrinking the annual surplus and eliminating a revenue source that has increasingly been used to support operating budgets.

The Federation is critical of the fact that neither the Mayor’s initial proposal nor the budget now advancing from the Council reflects meaningful burden sharing across stakeholders: non-union employees and senior executives will receive raises, and no concessions were even sought from labor unions in a heavily unionized city where labor is the largest expenditure category.

COAL IN THE STOCKINGS

The U.S. Department of Energy issued an emergency order requiring Unit 2 of the TransAlta Centrailia Generation plant power plant to keep running for the next 90 days. (Unit 1 was shut down in 2020.) Power plant owner TransAlta had planned to shutter Unit 2 this month, as part of an agreement in place since 2011 with Washington state. State law prohibits utilities from burning coal starting next year. Less than a week ago, TransAlta announced an agreement with utility Puget Sound Energy to convert Unit 2 to gas by late 2028 at a cost of about $600 million. The DOE order claims that “an emergency exists” in the Western U.S. grid that justifies this action under Section 202(c) of the Federal Power Act.

About 27 gigawatts’ worth of coal-fired capacity is scheduled for retirement in the U.S. from now until the end of 2028, according to U.S. Energy Information Administration data, equal to roughly 15% of the nation’s fleet of coal generation.

MARYLAND BRIDGES

The Maryland Transportation Authority Board voted to approve a proposal that would result in the construction of two new bridges to carry traffic over the Chesapeake Bay and remove the current spans. The approved plan would provide for the construction of two four-lane bridges over the bay, essentially doubling the capacity of the current spans. It would also provide for the widening of U.S. 50/301 to eight lanes to support traffic transitions to the new crossing.

The new bridges would have wider lanes and full shoulders, which could be used by emergency vehicles in the event of a crash. Whenever a new bridge is constructed, there is clamor for bicycle and pedestrian pathways and this plan was no exception. Officials estimated that path would add approximately $1 billion to the total cost. The project is estimated to cost between $15 billion and $17 billion. If all goes as planned, design of the project could begin in 2028 with construction potentially starting in the summer of 2032.

A new bay bridge would have 230 feet vertical clearance over the water, matching that of the Key Bridge when it’s completed.

THE NEW EV ENVIRONMENT

Ford Motor Co. will lay off about 1,500 workers in Kentucky as it converts a plant in Hardin County from making batteries for electric vehicles to making batteries for a new energy storage business. Ford plans to produce LFP prismatic cells, battery energy storage system modules and 20-foot DC container systems at this facility.

Ford said production of a previously announced electric truck and universal electric vehicle platform to be built in Louisville continues to progress with production set to start in 2027. the terms of the state’s incentive agreement with Ford were being renegotiated. Kentucky had offered $250 million in public funding for the BlueOval SK operation.

OREGON TRANSIT TAX HITS ROADBLOCK

Increases to Oregon’s gas tax, vehicle registration fees and a transit-oriented payroll tax will not go into effect as scheduled next month. These main revenue-raising pieces of the overall bill which passed this Fall would increase the state’s 40-cent-per-gallon gas tax by 6 cents, temporarily double a payroll tax that funds public transit, double registration fees for most vehicles, and nearly triple titling fees.

Opponents of those changes submitted nearly 200,000 signatures to state elections officials in Salem, more than double the roughly 78,000 needed to refer the tax hikes to the November 2026 ballot. State elections officials have until Jan. 29 to determine whether the petition has enough valid signatures. ODOT is still facing a funding shortfall. Nearly 300 ODOT employees quit from July to the beginning of December, according to Communications Director Kevin Glenn, and ODOT has more than 600 vacant full-time positions.

DATA CENTER PUSHBACK

A bipartisan bill introduced Tuesday in the Michigan Legislature would repeal the state’s data center tax incentive laws, which, since their late 2024 approval, have helped attract over a dozen data center proposals. The existing data center laws provide sales and use tax exemptions for big tech companies like Google, Microsoft, Oracle and others that are behind many centers.

Under an earlier version of the incentive, eligible data centers built between 2020 and 2024 avoided paying about $13 million in taxes, the the Detroit News reported.

O, CANADA

Total crossings on the Ogdensburg International Bridge are currently down by roughly 25%, and revenue from tolls is down about one third, according to traffic figures discussed at the November meeting of the Ogdensburg Bridge and Port Authority. Traffic numbers remain below average, and revenues from bridge tolls have fallen short of budgeted projections as a consequence. Most recently, October crossing totals fell below numbers from Oct. 2024. There were 39,540 total crossings in October, and noted “that’s down 24% from the same month last year.”

Current numbers fall nearly 33% short of pre-pandemic crossing figures, which board members have regularly described as the most recent “normal” year for bridge traffic. Out of the total Oct. 2025 crossings, 34,588 were automobiles crossings, while 4,952 were trucks and buses, which Lawrence said represents “both falling about quarter year-over-year.” Bridge toll revenue for the month was $88,699, which he said represents a 33% decline from Oct. 2024.

Out of the total Oct. 2025 crossings, 34,588 were automobiles crossings, while 4,952 were trucks and buses, which Lawrence said represents “both falling about quarter year-over-year.” Bridge toll revenue for the month was $88,699, which represents a 33% decline from Oct. 2024.

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.

Muni Credit News November 24, 2025

Joseph Krist

Publisher

A Happy Thanksgiving to one and all. This most unique holiday in America – not based on a religious holiday or to recognize one ethnic group over another – allows everyone to share in the day and experience a common cultural phenomenon. Not even Christmas or Easter can manage that. So, enjoy the day and those you’re with.

The MCN takes this week off. The next issue will be dated December 8. Travel safely.

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CHICAGO BUDGET (NEWYORK PREVIEW?)

One of the issues which has held back significant budget improvement for the City of Chicago is the Mayor’s ideological approach. It’s not that it has been a surprise given his campaign and his sources of support but, it has nonetheless made annual budget negotiations and politics all the more difficult. The latest manifestation of this is the current budget process.

This week, the Chicago City Council’s Finance Committee has rejected Mayor Brandon Johnson’s proposed head tax. The vote was 25 to 10. Mayor Johnson is asking City Council to recess until the first week of December as negotiations continue. The City Council has until Dec. 31 to pass a spending plan which closes a projected $1.9 billion budget gap.. The mayor needs 26 votes to get his budget passed.

Johnson first proposed requiring companies with more than 100 employees to pay $21 per month per employee – a head tax. The resulting lack of support for that plan lead to revision of the idea to target companies with more than 200 employees. His administration estimates the plan would generate $82 million for violence prevention programs. Johnson’s $16 billion spending plan avoids a property tax hike. It relies on expansion of the revenue base by expanding the rideshare surcharge zone, adding a social media tax, increasing the cloud tax and borrowing nearly $2 billion for infrastructure projects.

We see parallels in the upcoming administration of Zohran Mamdani in New York. The attitude towards corporate taxation, the belief in government as a cure all, an elected school board, government grocery stores are virtually the same as those held by Mayor Johnson. It will be interesting to see how the New York situation unfolds given the lack of success in Chicago.

KEY BRIDGE

In a news release, the Maryland Transportation Authority said the cost will likely be anywhere from $4.3 billion to $5.2 billion. The change marks a stark contrast after the Associated Press reported in May 2024 that the initial cost was estimated to be between $1.7 billion and $1.9 billion. After initially saying the new bridge should be reopened by fall 2028, officials revised the estimated opening date to be in late 2030. “The Francis Scott Key Bridge and the Port of Baltimore are critically important to our nation’s economy. Preliminary cost and project time estimates were made less than two weeks after the initial crash and before any engineering or design studies were conducted.”

In August 2024, the Maryland Transportation Authority Board approved a $73 million contract for the first of two phases of the rebuilding process. In December 2024, Congress passed a government spending bill that included full funding for the rebuild.

COLORADO RIVER

This week, the deadline for an agreement among the seven states in the Colorado River basin on how to distribute the river’s dwindling flows of water passed with no settlement. Current guidelines are expiring and a new finalized agreement must be put in place by October 2026, the start of the 2027 water year. Final details are due by February 2026.

Interior, the Bureau of Reclamation and the states — Arizona, California, Colorado, New Mexico, Nevada, Utah and Wyoming — issued a joint statement saying “Collective progress has been made that warrants continued efforts to define and approve details for a finalized agreement,”. Neither Interior nor Reclamation responded to questions about how much additional time states will be granted to continue their negotiations.

The Trump administration had previously threatened that if the seven states that share the river did not come to a deal, the Interior Department could step in to decide how to impose cuts to water use. State officials explained that they were coalescing around the concept known as supply-driven planning, or just “natural flow.” Under a natural flow system, the states would rely on a supply-driven calculation of how much water would be in the Colorado River were it not diverted to farms, stored in massive reservoirs or otherwise used by humans.

The acting chair of the Upper Colorado River Commission explains that “the concept under discussion is that (Lake) Powell would release a certain percentage or volume of the average of the last few years of natural flow, as measured at Lee Ferry.” The Bureau of Reclamation already studies the natural flow of the Colorado River, providing annual estimates drawn from data at 29 points on the waterway and its tributaries.

Reclamation examines the flow of water in the Upper Basin’s river system while also adding back in any water diverted for use in cities and farms. That data is used to calculate how much water would be found in a hypothetically free-flowing river at Lees Ferry, Arizona, a point south of the Glen Canyon Dam.

The process of calculating natural flow will intensify the already bright spotlight on the conflict between agricultural and human water consumers. Water used for agriculture can account for 70 percent of the water used in the four Upper Basin states, and how much of that is consumed, rather than returned to the river system, is an important data point. The states are weighing an agreement that would rely on the average of the three most recent years of flows.

Reclamation reports show that the Upper Basin consumed 4.7 million acre-feet in 2023, the most recent data available. That same year, the Lower Basin reported using 5.8 million acre-feet. By comparison, in 2021, the Upper Basin used 3.9 million acre-feet while the Lower Basin used nearly 7.1 million acre-feet.

NYC

Mayor Adams released his last Financial Plan Update. The plan update brings the Fiscal Year (FY) 2026 budget to $118.2 billion. The FY 2027 budget gap is now $4.7 billion, a reduction of $353 million, or nearly 7 percent, driven by pension and labor savings. The FY 2028 and FY 2029 gaps are both now $6.3 billion.

The Financial Control Board provides an excellent overview of the conditions facing the City for the Mayor-elect. The majority of new jobs were in lower wage sectors, such as health care (average annual wage of $67,893), social assistance ($39,440), and food services and drinking places ($40,493). In contrast, high paying sectors like finance, professional and business services, and information experienced job losses.

The Financial Control Board’s (FCB) risk analysis of the Plan shows a gap of $515 million in FY 2025, and larger gaps of $5.7 billion in FY 2026, $6.7 billion in FY 2027 and $8.2 billion in FY 2028. The larger gaps stem from higher expenditure estimates in each year, which exceed the Plan by $1.3 billion in FY 2025, $1.9 billion in FY 2026, $2.6 billion in FY 2027, and $3.3 billion in FY 2028.

Partially offsetting these higher expenditures estimates is the FCB’s more optimistic tax revenue forecast which exceeds the Plan forecast in each year, resulting in net risks to the budget of $515 million in FY 2025, $216 million in FY 2026, $1.1 billion in FY 2027, and $1.9 billion in FY 2028.

The economic outlook is mixed. Manhattan’s office vacancy rate in the third quarter of 2024 reached 23.5 percent, a negligible improvement from the record-high 23.6 percent in the previous quarter. The demand for office space is expected to remain relatively low as hybrid work has become the norm.

PUBLIC POWER AND BATTERIES

EPB of Chattanooga, originally was known as the Electric Power Board of Chattanooga. It is an electric power distribution and telecommunication company owned by the city of Chattanooga, Tennessee. EPB serves some 500,000 people across 600 square miles. The public power company currently has a 45-megawatt fleet of batteries, almost all of which were built this year. The battery building was stimulated by a December 2022 blackout. Chattanooga had already used batteries to expand and backup electric supplies to the Chattanooga airport.

That airport experience encouraged more development of batteries for the entire electric system. Until now, they had been employed as supplemental power for the City’s system. Recently, the potential for batteries to reduce blackouts or facilitate repairs to the local grid was demonstrated. An outage on a service line serving some 400 homes was damaged in a storm. While the damage was assessed and repaired, a local battery installation recently installed was able to provide power to the impacted homes. It was the first use of batteries to offset a loss of capability on another system component while repairs were made.

Away from any climate considerations, the battery plan makes economic sense. When EPB buys power from TVA, it pays a demand charge for the hour of highest consumption each month. By discharging the batteries when it looks like a peak hour is approaching, EPB can shave its monthly charge. That lowers the rates it pays to TVA with the savings going to retail. So, it improves redundancy, increases reliability, and lowers costs.

PHILADELPHIA SCHOOL DISTRICT

Philadelphia School District is coterminous with the City of Philadelphia and is the largest public school district in Pennsylvania. The district operates more than 200 schools with enrollment of 120,148 as of the 2024-2025 school year. Moody’s upgraded Philadelphia School District, PA’s issuer, general obligation unlimited tax (GOULT) and non-contingent lease backed by GOULT ratings to Baa1 from Baa2.

The upgrade reflects the fruits of efforts over many years to maintain the District’s finances while facing real competition in addition to the pressure the COVID epidemic imposed. Moody’s referenced the district’s materially improved reserve position after the receipt of extraordinary federal coronavirus aid. While the district will draw down reserves over the next three years, its financial position will remain stronger than historical levels. Available fund balance reached a historic high of 27% of revenue in fiscal 2024. structural balance is expected to be achieved by fiscal 2029.

The District faces significant pressures. Charter schools have been long-term competitors to the traditional models and now cyber learning is growing. Significant charter and cyber school tuition costs now account for approximately 35% of the district’s annual budget. Nonetheless, the longstanding trend of enrollment loss has ceased. Enrollment have grown by a compound 0.5% annually, on average, over the last three years.

SOME QUICK NOTES

AFTER THE FIRE – The Palisades and Eaton fires destroyed 13,000 homes. More than 2,500 property owners have filed full rebuilding applications in Los Angeles County and the city of Los Angeles, the two largest jurisdictions affected, with 1,100 permits approved. A two-bedroom, 630-square-foot accessory dwelling unit in Altadena received a certificate of occupancy on Monday, Los Angeles County records show. This makes that unit the first to be built in the wake of the fire.

THREE MILE ISLAND – The Energy Department announced that it would make a $1 billion loan to help restart Three Mile Island Unit 1, which shut down in 2019. The other unit at the site near Harrisburg, Pa., shut down in 1979 after its well documented operating disaster. Last year, Microsoft and Constellation, Unit 1’s owner, announced a deal to restart the plant. Under the deal to revive the plant, Microsoft would buy as much power as it can from the plant for 20 years in an effort to add carbon-free electricity to the grids that power its operations.

TARIFFS AND PORTS – The Port of Los Angeles processed 848,431 Twenty-Foot Equivalent Units (TEUs) in October. October 2025 loaded imports came in at 429,283 TEUs, 7% less than last year. Loaded exports landed at 123,768 TEUs, 1% more than 2024. The Port handled 295,380 empty container units, 8% less than last year. The numbers reflect the impact of tariffs and highlight that the decline in imports isn’t being offset by export growth.

PUBLIC TRANSIT – Two USDOT funding proposals recently sent to the White House budget office would eliminate the Mass Transit Account of the Highway Trust Fund and prohibit States from using their highway funds for public transit.

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