Joseph Krist

Publisher

AFTER THE FIRE

The Los Angeles County Assessor’s Office has released its FY 2027 assessment roll. It provides an opportunity to view the impact of the January 2025 fires on the tax base. Under California’s Misfortune and Calamity program, damaged properties can receive temporary assessment cuts that lower tax bills during reconstruction, with values restored after rebuilding is finished.

Through that relief, more than $9 billion in taxable value was reduced for owners whose homes were destroyed in the fires. Redevelopment is occurring albeit at a relatively slow pace. As of May 19, 2026, 49 homes in Altadena were complete, and more than 1,400 were under construction. By that same date, the county had received more than 3,300 permit applications and issued more than 2,300 residential permits in the fire zones.

In spite of the impact of the fires and recovery, The Los Angeles County Assessor reported that the roll totaled $2.272 trillion in net taxable value, up $96 billion, or 4.42%, from the 2025 roll and marking the county’s 16th consecutive year of growth. Growth reflected property transfers added $49 billion, the largest increase of any category. The Proposition 13 inflation factor contributed another $43 billion, and new construction added more than $12 billion.

CORPUS CHRISTI WATER

In Corpus Christi. The City Council has ordered that a public referendum be held on a citizen-led petition that would sharply increase the price of water for industrial facilities during drought. The Fair Water Amendment would implement a 70 percent water rate increase for Corpus Christi’s largest industrial water users when reservoirs dip below 30 percent capacity. It would implement an increase of 140 percent when reservoirs dip below 20 percent, and a 280 percent increase if the city declares a water emergency. 

The region’s main reservoirs fell from 30 percent full in March of 2024 to less than eight percent full in May 2026. Above expectation rains in the spring and summer replenished its main reservoir system, currently 42 percent full. 

CONGESTION PRICING

The NYC Department of Health has released the results of its first study of the environmental impacts of the congestion pricing zone in Manhattan. When the plan was enacted, one of the prime drivers of public comment was the potential for air quality to increase in Manhattan while the Bronx in particular would see negative air quality impacts. That issue has generated some surprises.

Generally, pollution at all locations held steady or improved slightly. This continues the trend of improving air quality in NYC over the past 20 years. Inside the CRZ, pollution decreased slightly or stayed the same in 2025 compared to 2024. Measured pollution levels were not significantly different because of congestion pricing.

At Environmental Justice neighborhood sites, congestion pricing didn’t increase pollution. This is good news. It didn’t worsen air quality near major routes around the CRZ. At one location (BQE) levels of one pollutant didn’t improve as much as would be expected in comparison to changes at the control site.

Traffic in the CRZ was lower. Entries to the CRZ, the FDR Dr, and the West Side Highway were 11% fewer in 2025 than before tolling began. In New York City, traffic produces only 10 percent of fine particulate matter. The report did not measure greenhouse gas emissions, which drive global warming. Buildings are responsible for about 70 percent of the city’s greenhouse gas emissions.

There are at least two pending research studies on the subject from non-City sources. One also found that congestion pricing had had “little effect on air quality.” Another relying on data from 19 sensors across the South Bronx, detected an overall increase of 2 per cent in fine particulate matter between 2024 and 2025. To address these issues, the City will apply some $105 million out of its slice of $330 million of congestion pricing revenues.

PUERTO RICO POWER ISSUES

On Aug. 5 the Puerto Rico Supreme Court accepted Puerto Rico government lawsuits (from a lower court) regarding annulment of the contract with the private energy distributor LUMA and granted a 30-day period for the submission of arguments for the annulment. In addition, the Puerto Rico Oversight Board revoked its approval, provisionally granted in early June, for a contract to three
private companies to provide temporary power generation units for 10 years. The parent company of one of the three private companies said it hadn’t given its OK to the subsidiary to agree to the contract and on this basis the board said the contract was no longer valid. The contract was for over $5 billion over 10 years.

In mid-July the Puerto Rico Energy Bureau ordered PREPA to transfer $100 million to LUMA and the private generating entity Genera. But PREPA didn’t do it, saying in late July it didn’t have the money and was getting perilously low on cash.

It’s hard to see how the bankruptcy can be resolved without resolution of the contract issue with LUMA. How do you develop a reasonable plan to emerge from bankruptcy? How is it credible given LUMA’s operational track record on the island? Given all of the operational hurdles, cash
pressures should not be surprising.

As for other pressures, it is pretty clear that the current structure isn’t working. Reliability, repair, maintenance all seem to be beyond LUMA. A long-term solution to electric service in PR needs a serious
private partner, a viable customer base and investor capital. Those aren’t present right now. And the lack of reliability will continue and increase without investment.

COLORADO RIVER

The U.S. Bureau of Reclamation released its plan to address declining water volumes in the Colorado River. Under the Bureau’s plan, California, Nevada and Arizona will collectively reduce water use by 1.25 million acre-feet (about 1.54 billion cubic meters) annually during that period, with the possibility of larger cuts depending on conditions. Arizona will see the biggest cuts. Meanwhile neighboring Mexico will reduce its intake by 250,000 acre-feet (about 310 million cubic meters) under a U.S.-Mexico treaty.

The biggest initial impact will be on the Central Arizona Project. Congress funded construction of the aqueduct in 1968. Funding for the project was contingent on the willingness of the Project to accept subordinate water rights. In times of severe drought, CAP facilities would receive lower volumes to allow California to maintain its usage levels. Phoenix gets about 40 percent of its water from the canal which began distributions in 1985.

In 2022, the canal project cut off most of its deliveries to the region’s nontribal agricultural fields, which have lower priority rights than cities. Those reductions would continue under the proposed federal framework.

The states upstream — Colorado, Utah, Wyoming and New Mexico — do not face any for now.

FLORIDA TOURISM AND CANADA

Tourism numbers in Florida declined for a second consecutive quarter in 2026. The drop reflects lingering domestic inflationary conditions and a backlash from Canadian visitors over President Trump’s’s rhetoric and trade policies. An estimated 34.01 million second quarter visitors visited Florida in the spring, bringing the number of tourists over the first half of the year to 73.5 million, according to numbers posted by the state’s tourism marketing arm.

Domestic, overseas and Canadian travel into the state was all slightly down in the April through June period, compared to the same period a year earlier. The overall domestic and Canadian numbers for the first half of the year were also lower than in the same period of 2025. An estimated 721,000 Canadians traveled to Florida in the second quarter, 4.2% fewer than in the same period of 2025.

For the first six months of the year, there were 1.68 million Canadian travelers, a 13.9% drop from the same time in 2025. In 2019, second quarter numbers of Canadian travelers were 848,000, and for the first half of the year it was 2.29 million.

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

Joseph Krist

Publisher

REALITY BITES

The Center for New York City Affairs, a nonpartisan research organization affiliated with the New School, recently estimated that the Mayor’s proposed free child care system for all New York City children under 5 would cost about $9 billion annually. That represents an average cost per child of around $27,000. The city currently offers free pre-K for 3-year-olds and 4-year-olds, with limited seats for 2-year-olds starting this fall. That program had an FY 2025 cost of $5 billion.

When originally proposed, the Mayor gave a cost estimate of $6 billion. New York State has given the Mamdani administration $1.2 billion to jump-start its program for 2-year-olds in some neighborhoods. City Hall currently has no plan to fund the expansion after next year, besides asking the state for more money. At the same time, the center’s report points out that it could be simpler and less expensive to incorporate child care vouchers for low-income families, which are already funded mostly by the state and federal government.

The report happens to coincide with the announcement that a deadline to appeal the applicability of the new pied a terre tax to many properties. That’s the tax which was supposed to fund programs like this.

TRANSIT ON THE BALLOT

Seattle is another jurisdiction which is asking voters to approve extensions and increases in the rate of taxes to support mass transit. Seattle voters will be asked in November whether they want to double the city’s current sales tax in exchange for more bus service. The proposal from Seattle Mayor Katie Wilson would renew the Seattle Transit Measure, raising the transit-dedicated sales tax from 0.15 percent to 0.3 percent. The proposal to enact a 0.3 percent tax for ten years is the maximum amount allowed under Washington state law.

The measure would allow the city to purchase more bus service from King County Metro, the regional public transit authority, and offer more free transit passes to low-income residents. According to the city, the measure would add 100,000 bus trips and 12,000 free passes per year. That would be in addition to the 180,000 bus trips and 10,000 passes funded by the existing measure, which voters approved in 2020. If the sales tax were to remain at the current rate, the city would actually end up having to cut service because of rising costs.

It is an example of a focused approached based on locally generated funding. It is very likely to pass given the city’s history of widespread support for tax-based transit funding.

CLIMATE LITIGATION

In Michigan, a new provision in the state’s 2027 budget prevents the state attorney general from “joining a multistate lawsuit or taking part of a lawsuit against the federal government or an oil or gas entity” without legislative approval. The budget language would also block Michigan’s attorney general from participating in lawsuits against the federal government. Two immediate predecessors sued the federal government without the Legislature’s permission so it is not clear what the actual impact of the language might be.

Michigan initiated a lawsuit earlier this year which accuses four of the largest producers and the American Petroleum Institute of breaking federal and state antitrust laws by acting as a “cartel” to restrict the development of renewable energy and electric vehicles. The Trump administration earlier this year unsuccessfully sued to block Michigan from filing its case.

FLORIDA PROPERTY TAX AMENDMENT SPEED BUMP

The proposed property tax amendment that is supposed to go before voters in November is misleading, A Florida state judge ruled that the proposed property tax amendment that is supposed to go before voters in November is misleading. The judge ordered the Florida attorney general to rewrite the ballot measure. The judge cited the use of multiple “political taglines” that do more to make the amendment appealing for voters than actually tell them what the amendment will do.

The judge identified several specific instances where the “descriptive” language actually contradicts the actual language of the amendment. The Attorney General has to submit any revised ballot language to the Florida Department of State within 10 days. Anyone challenging the new ballot language has 10 days to do so once it’s submitted to the Dept. of State. At least 60% of voters must approve the amendment on the November ballot for it to pass.

CHICAGO GOVERNANCE

The Mayor has less than one year until the end of his term. The City budget process begins in earnest after Labor Day. That means the focus should be on developing an executive budget which might have a chance of passage. So, it is not a good sign for Mayor Johnson’s final budget that the two primary fiscal officers of the City – the CFO and the Budget Director – have both resigned in the last week.

It is not clear who now speaks for the City to market participants. An annual presentation to institutional investors will now be conducted by, who knows, which will worsen an already poor perception of the City’s credit. Mayor Johnson said his team remains prepared to introduce a 2027 budget proposal in October. The most recent negotiations that led to a budget being passed over the mayor’s objections for the first time in 40 years.

One issue for the next budget fight already: how much of a tax increment financing surplus Johnson will declare. That question has been pushed to the forefront as the hybrid Chicago Public Schools board voted to approve a budget that assumed $150 million in additional revenue from Springfield. That money would have to be approved by the legislature during its fall session.

Should state leaders not heed the mayor’s and the Chicago Teachers Union’s calls for the funding, the city will likely either need to find additional money or risk painful midyear cuts at the district. CPS is already counting on the city to pull $285 million from the special property tax districts to help balance this school year’s budget.

MISSOURI AND BALLOT INITIATIVES

Missouri voters rejected an attempt by the Republican-controlled Legislature to make it harder to pass citizen-sponsored amendments to the state’s constitution. The measure would have amended the state’s constitution to require a majority in each of the state’s eight congressional districts, rather than a simple majority statewide, to pass citizen-sponsored amendments. Those requirements would have been the most restrictive against voter initiatives of any of the 18 states which permit them.

The Legislature had been upset because voters approved citizen-sponsored amendments that expanded Medicaid, legalized marijuana and sports betting, established a right to abortion, raised the minimum wage and required paid sick leave. All of these issues had been rejected by the Legislature. This measure would have amended the state’s constitution to require a majority in each of the state’s eight congressional districts, rather than a simple majority statewide, to pass citizen-sponsored amendments. None of the four amendments Missouri voters have passed since 2020 have won in all congressional districts.

INDIANA GAS TAX SHUFFLE

When we last reported on gas tax suspensions it appeared that the most recent such action in Indiana was the last authorized by law. In fact, Gov. Mike Braun was the one who said that he didn’t have the power to extend the tax break without the Legislature coming into special session and authorizing another extension. The emergency conditions attributed to the war in Iran no longer applied. That caused the need for new legislation. Or did it?

This week, the Governor said he was declaring a new emergency under the state’s energy emergency law. Rather than the U.S. war with Iran, the emergency is disruptions to global oil shipping lanes from the four-year-is old Russian invasion of Ukraine. He also pointed to troubles the Canadian wildfires have caused in the Alberta Oil Sands Region – blame Canada!

The Braun administration projected a revenue decrease of $533 million from the initial four months of the tax suspension. State officials began the process last month of reimbursing local governments from the State Highway Fund for their lost revenue.

TEXAS DATA CENTER COST FOLLOW UP

Last week we commented on the rising total of revenues being given up annually in Texas through tax incentives for data centers. While legislation will not be taken up in the Texas legislature until next year, action can be taken elsewhere. This week, Gov. Greg Abbott on announced a moratorium on the approval of data centers until regulatory agencies can audit proposed data centers seeking connection to the state’s electric grid. 

Those audits will require significant amounts of data. Gov. Abbott is directing the Public Utility Commission of Texas and the Electric Reliability Council of Texas to ensure data center developers provide information on tax breaks they will receive; power use and generation; water use and cooling operations; efforts to reduce impacts on local communities; and ownership of the facility.

Abbott’s letter to the PUCT and ERCOT directs them to conduct the audit on all data centers advancing through ERCOT’s interconnection queue, or the line for energy intensive projects seeking connection to the electric grid. ERCOT is currently tracking more than 1,800 projects in the queue, representing over 474 gigawatts of electricity, or more than five times the grid’s record for peak demand, according to ERCOT. Approximately 90% of the new power requests are data centers, Abbott said. 

PUERTO RICO UTILITY NEWS

The U.S. Department of Energy’s (DOE) Office of Energy Dominance Financing (EDF) announced it has closed a $489.4 million loan to Amanecer Puerto Rico LLC, a subsidiary of Pattern Energy. The loan is intended to fund 220 megawatts of battery energy storage systems in Arecibo and Santa Isabel using American-manufactured battery technology and secure domestic supply chains. Battery storage capable of providing backup electricity for more than 100,000 customers during power shortages and helping avoid approximately 13 million customer interruption hours based on 2025 operating data.

On the negative side, the Commonwealth’s water utility (PRASA) is facing serious operational issues. For the past year, the San Juan region has been affected by the outages. That impacts some 1 million residents. Reliability is poor as evidenced by increased water interruptions and issues with low water pressure. In June, more than 120,000 clients of the Puerto Rico Aqueduct and Sewer Authority (PRASA) had their taps run dry after three major ruptures were found in a key pipeline. 

Gov. Jenniffer González-Colón declared a state of emergency on July 31 and activated the National Guard to help distribute and transport water – the second time the Guard was activated this summer due to water issues. Reservoir levels are so low that water rations are in place for the San Juan region beginning as we go to press.

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

Joseph Krist

Publisher

EXECUTION MATTERS

The state and city budgets have been adopted for FY 2027 and the big events in NYC (World Cup, Pride Parade, America 250) are over. Now people can focus on what is actually being done. Rents have been frozen, the buses are not free, school class sizes are not being reduced after all and the Mayor has stepped away from several of his campaign policy pledges. There is already a realization that this year’s budget was not a blue print for achieving structural balance.

Less than a month into FY 2027, the Mayor has already asked agencies to find expense reductions of 2.5%. At the same time efforts to achieve pay raises for school employees have raised budget questions with implications for other agency employees. These are the sort of issues which require some skill at governance. That is especially true when the ideology or policy being executed face significant opposition.

That is what makes the rollout of the pied a terre tax so disappointing. The Mayor sold the tax as something that would impact some 30,000 properties which were clearly not primary residences. You can understand the outcry that has occurred over the fact that the rollout includes the release of name and address information of the owners of some 1 million properties. You can support the policy of the tax but the clumsy rollout of the collection process and needless release of information does not generate the trust needed to support some of the Mayor’s other initiatives.

In the meantime, the mundane day to day details of city governance continue to get in the way. The efforts to convert office space to housing are being slowed by issues with repair inspections and structural soundness. The recent federal housing legislation did not provide any funding for new public housing. That will leave the City on its own to fund truly affordable housing. The bill for maintaining the current NYCHA stock is $40 billion and growing.

Amidst all of the debate, Moody’s reaffirmed its negative outlook on the City’s credit at mid-month. The negative outlook reflects New York City’s updated spending projections, which give rise to larger multi-year budget gaps than previously forecast. That the city projects large and persistent imbalances under still-favorable economic and revenue conditions highlights the extent of its underlying structural budget challenges. Over the next 12 months, the outlook will be influenced by the city’s ability to narrow projected gaps through recurring measures and demonstrate progress toward restoring structural balance.

BRIGHTLINE

Fitch Ratings has downgraded Brightline Trains Florida LLC’s (Brightline/OpCo) $2.219 billion senior secured private activity bonds (PABs) to ‘CC’ from ‘CCC’. Fitch has also affirmed Brightline East LLC’s (BLE) $1.119 billion senior secured taxable notes rated ‘CC’. Fitch has removed both the OpCo and BLE from Rating Watch Negative.

The rating reflects a very high probability that both issuers will be unable to fully fund the next debt service payments due on or before Jan. 1, 2027. The OpCo and BLE reserve accounts were both substantially depleted to meet the July 1, 2026, interest payments. Despite the upward ridership and revenue trends that continue through the first half of 2026, the ramp-up profile remains slow, and cashflows on a net income basis are at or near breakeven. Therefore, Fitch expects the OpCo to have insufficient funds to fully service its debt obligations.

CHESTER BANKRUPTCY

The U.S. Court of Appeals for the Third Circuit ruled that the bankrupt City of Chester, Pennsylvania can retain control of revenue streams tied to a local casino and a waste-to-energy plant, finding that creditor liens on those revenues did not survive the city’s 2022 Chapter 9 filing. The decision affirms a 2023 bankruptcy court ruling and hands Chester continued access to funds it says are essential to exiting bankruptcy, while also sending part of the dispute back for further review.

It determined that the liens were not “statutory liens,” and did not survive the bankruptcy filing. The creditors argued their liens arose automatically from two city ordinances authorizing the debt, and therefore counted as statutory liens, a category of lien that can survive a bankruptcy filing without further action. The Third Circuit disagreed, finding that the liens only took legal effect because of language in a separate contribution agreement and trust indenture, not the ordinances themselves. Because the liens depended on contract language rather than arising purely “by force of a statute,” they didn’t qualify for statutory-lien protection.

Casino revenue is a “fee,” not a tax, and doesn’t qualify as protected special revenue. The creditors also argued the gaming revenue pledged to their bonds counted as a “special excise tax,” a category of revenue that can remain pledged to bondholders even in municipal bankruptcy. The court rejected this too, holding that fees tied to a specific licensed activity (operating slot machines and table games) function differently than a broadly imposed tax, and therefore don’t carry the same protected status.

VIRGIN ISLANDS

HUD is suspending funding to the Virgin Islands Housing Finance Authority, claiming that the agency misused disaster relief funds that were supposed to be used to rebuild housing and other infrastructure damaged by two major hurricanes in 2017. HUD allocated $1.9 billion to VIHFA to help rebuild following Hurricanes Irma and Maria.

VIHFA was slated to bring 1,643 multifamily facilities online via rehabilitation and new construction as part of its direct recovery efforts using some of the disaster relief funds. However, only 319, or 19%, have been completed in that time, and none of the single-family and multifamily housing that was supposed to be built as part of its mitigation effort has been built.

As for the economy, “The Trump administration would like to see refineries across the country reopen, especially the St. Croix refinery as it is in a strategic location and was built particularly to refine Venezuelan crude,”. Before Venezuela under Hugo Chavez managed to ruin a perfectly good relationship with the US oil industry, Venezuelan crude was refined at St. Croix. Now, the Administration is seeking foreign investors to fund refurbishment and operation of the old refinery.

The St. Croix refinery operated from 1966 until 2012 and briefly again in 2021. In 2021, just months after the plant reopened, EPA under the Biden administration ordered it shut down after a series of flaring accidents rocked the plant, leading to sprays of oily mist on nearby residents and triggering large releases of hydrogen sulfide and sulfur dioxide.

UTILITY RATINGS

Two significant utility debt issuers received positive rating news this week.

Moody’s has affirmed Long Island Power Authority’s (NY) (LIPA) A2 senior lien revenue bonds rating. The rating outlook for LIPA has been revised to positive from stable. The revision of the outlook to positive from stable reflects expectations for continued improvements in LIPA’s key financial metrics driven in part by the company’s stated policy goal of achieving 70% debt ratio by 2030. The outlook, however, could be revised to stable should the utility encounter material operational difficulties, including reconnecting customers in a timely manner after a major storm-induced outage.

LIPA is the retail supplier of electric service in most of Nassau and Suffolk Counties and the Rockaway Peninsula of Queens. Its assets currently consist of a transmission and distribution system that is used to serve approximately 1.2 million customers in an approximately 1,230 square mile service territory. This provides a diverse and relatively wealthy base to support revenues.

Moody’s also affirmed South Carolina Public Service Authority’s (Santee Cooper) A3 rated revenue bonds. The outlook has been revised to positive from stable. The change in Santee Cooper’s outlook to positive considers the expected improvement to the utility’s liquidity post bond issuance and its proposed retail rate increases for 2027 and 2028. 

Some of the credit’s sturdier supports remain. The affirmation of Santee Cooper’s A3 rating considers the return to traditional rate setting practices following the expiration of the rate freeze in January 2025, its broad service area directly or indirectly serving approximately 2 million people in South Carolina, ownership by the state of South Carolina (Aaa stable), and competitive rates.

The risks to the utility’s rating are those associated with the potential for political influence weighs on Santee Cooper’s operations including its rate setting, if new major disputes arise with Central, or if the utility undertakes any material risks associated with any resumption of construction at the partially completed Summer nuclear plants.

The A3 rating does not consider Santee Cooper’s memorandum of understanding (MOU) with Brookfield Asset Management (Brookfield) regarding the partially built Summer Nuclear Units 2 and 3. If this contemplated transaction were to be executed, it would likely be a substantial credit positive for the utility. That said, the transaction has material uncertainty around its likely execution.

LAUSD ON THE DECLINE

Moody’s has downgraded Los Angeles Unified School District, CA’s issuer rating to A1 from Aa3. The outlook is negative. The district has about $11 billion in long-term debt. Governance is a key rating driver, reflecting delays in reducing expenditures in response to declining enrollment and collective bargaining agreements that will drive significant cost growth.

The expectation is that reserves will decline materially beginning in fiscal 2026 and continue weakening absent meaningful expenditure reductions or additional recurring revenue. Fiscal 2026 projections (year-end June 30) show an operating deficit that will reduce available general fund balance to below 30%, down from 40% in fiscal 2025, largely because enrollment declines were nearly twice the budgeted level. 

On July 2, 2026, the Los Angeles County Office of Education (LACOE) issued a “lack of going concern” determination for the district, noting that the district may be unable to meet its financial obligations in fiscals 2028 and 2029, resulting in an increased level of fiscal oversight. The designation automatically triggers a Fiscal Crisis and Management Assistance Teams (FCMAT) Fiscal Health Risk Analysis (FHRA) to determine the district’s risk level for fiscal insolvency.

TEXAS DATA CENTER COSTS

The Texas Senate Finance Committee held a hearing this week examining the state’s sales tax exemptions for qualifying data centers. Some incentives date back to 2013. In 2013, the Texas Legislature passed House Bill 1223, granting full sales tax exemptions to purchases by data center developers for electricity costs; cooling systems; emergency generators; various types of IT equipment. The demand wasn’t large. In the first two years, the legislature estimated a cost of about $14.6 million. Then in 2015, legislation expanded the program for large data centers. Those projects qualify for the same state sales tax exemptions, but receive them for a longer period and can also qualify for local sales tax exemptions.

Then development exploded. At the end of 2020, 10 data centers were receiving tax breaks in Texas. As of today, 138 data centers have been certified for the exemption, with five more applications pending. That has resulted in a lost revenue total associated with data center exemptions of some $3.3 billion. With the support of the Governor, Texas’ data center tax incentives will likely be a topic of debate when lawmakers return to Austin in 2027.

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

Joseph Krist

Publisher

STATE BUDGETS

We observed some trends resulting from the state’s budget processes away from the pure dollars and cents aspect. While there were expected efforts to lower state income tax rates, we also saw efforts to lower or eliminate property taxes. It’s not clear whether these efforts are purely fiscal in nature or rather a manifestation of the “starve the beast” philosophy championed by conservatives. Those efforts are concentrated in the South.

At the same time, New York passed a second home tax, Washington State’s millionaire’s tax will be on the ballot as will the billionaire’s tax in California. As is the case with the efforts to eliminate property taxes, it’s not clear whether these proposed taxes reflect fiscal concerns or policy concerns. All this is occurring while the Trump administration blatantly targets the budgets of states like Minnesota and California for political purposes.

Overhanging all of this are cutbacks in Medicaid funding and obstacles to enrollment. The impacts of the changes to Medicaid eligibility are only now becoming clear. A significant segment of the patient base will now rely on charity care in emergency rooms which will pressure both providers and states. We see Medicaid as a potential source of credit pressure for states as the health sector will look to the states to fill at least some of the federal gap.

MASS TRANSIT CUTS

Denver’s Regional Transportation District has proposed significant cuts to its budget as it faces an estimated $250 million budget shortfall. Those cuts would include staff reductions and service cutbacks. They would also eliminate some existing fare free service. An RTD spokesperson said, “Operating costs are increasing faster than total revenue, and federal relief funds that supported transit agencies in prior years are no longer available.”

RTD has identified dozens of routes it could eliminate to save up to $62 million. The options include discontinuing the 16th Street FreeRide around downtown. If RTD’s Board of Directors were to enact the full 20% service cut, the agency would save $62 million by eliminating 39 routes. Those routes combined for 5 million boardings last year. 

In Wisconsin, the Milwaukee County Transit System (MCTS) is planning to reduce service by 25% next year to stabilize the system. MCTS is at the edge of a budget cliff and does not have funding to preserve existing service levels. In March, the Office of the Comptroller forecast an MCTS budget deficit of $15.7 million in 2027, growing to $37 million by 2031. The system implemented major service cuts in 2026 to close a $9.3 million budget gap.

Here’s the rub. When MCTS implemented those budget cuts in 2026 they were focused on frequency. Across the system, bus frequency was reduced by 14%, but these changes led to an even greater loss of ridership, which declined 20%, according to MCTS data. 

PORT OF LOS ANGELES

The Port of Los Angeles moved 1,002,734 Twenty-Foot Equivalent Units (TEUs) in June, making it the busiest June in the Port’s 118-year history and the third time monthly cargo volume has ever exceeded 1 million container units. No other port in the Western Hemisphere has ever surpassed the 1 million container mark in a single month. June cargo was 12% higher than a year ago, driven by strong import demand as retailers and manufacturers continued advancing shipments while navigating evolving trade policy, rising fuel costs and global supply chain uncertainty.

Loaded imports reached 530,558 TEUs, an increase of 13% compared with last year and the Port’s third-highest import month on record. Loaded exports totaled 126,365 TEUs, unchanged from a year ago. Empty containers came in at 345,811 TEUs, up 17% year over year as equipment returned to Asia to support continued demand. During the first six months of 2026, the Port handled 5,122,603 TEUs, 3% ahead of the same period last year.

MILLIONAIRE TAX ON THE BALLOT

Washington Secretary of State Steve Hobbs confirmed that Initiative 645, which would repeal the high-earner income tax, received enough signatures to be placed on the Nov. 3 ballot. Initiative 645 would repeal a 9.9 percent income tax on households earning more than $1 million annually that was signed into law earlier this year. The tax is slated to take effect on income earned by Washington state residents beginning in 2028, with the first payments due the following year. State officials projected it could generate more than $3 billion in tax revenue per year.

WESTERN WATER DEAL

The Metropolitan Water District of Southern California’s board of directors approved an agreement in which the U.S. Bureau of Reclamation will pay the agency to leave up to 200,000 acre-feet of water from the Colorado River in Lake Mead. By December, MWD’s deal will add three feet of water to the reservoir, according to MWD. Per the terms, the federal agency will pay MWD up to $65 million for the water, or $325 per acre-foot. Each acre-foot is about 326,000 gallons. 

MWD also approved agreements that will allow federal officials to pay the Quechan Tribe and Bard Water District to send up to 19,000 acre-feet of conserved agricultural water to the lake in 2027 and 2028. It is all part of an effort by the Lower Basin states – California, Arizona and Nevada – to achieve some 700,000-acre feet of increased water in Lake Mead. The lake sat at close to 1,043 feet above sea level this week, or only two feet above the record low set recorded in 2022.

Lake Mead has already cut Hoover Dam’s generating capacity by an estimated 5% to 8.5%. 

In the Upper Basin, the situation is more advanced. The Wayne N. Aspinall Unit, Colorado’s only stake in a federal hydropower system that sells power across the West, is on pace to generate nearly 30% less electricity than its historical average dating to 1978, according to the Bureau of Reclamation. The unit’s three dams on the Gunnison River — including Blue Mesa, Morrow Point and Crystal — make up Colorado’s only piece of the Colorado River Storage Project.

This Depression-era network of federal dams sells power to municipalities, cooperatives, tribes and irrigation districts across the West. Blue Mesa Reservoir, the largest body of water entirely within Colorado, is expected to end the year at just 17% of its live storage capacity. At its current elevation of about 7,446 feet, the reservoir’s generating capacity is approximately 18% below the amount for which it was designed. Electricity generation stops entirely at 7,393 feet, Blue Mesa’s minimum power pool.

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

Joseph Krist

Publisher

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ROADS AND TAXES

Gov. Mike Braun has extended Indiana’s gas tax holiday for the fourth time. It’s the final 30-day extension Braun can order without approval from the legislature. Each month that the gas and excise tax are paused costs the state roughly $140 million, according to Braun. The governor also announced Tuesday that the state will ensure local governments still receive their portion of the gas and excise taxes as if they were being collected.

The proposal will still need to be approved by the State Board of Finance in late July. Local governments will see the reimbursement by November if approved. Between the localities and the state, the total foregone revenue loss is over $500 million.

In New Hampshire, the governor vetoed a measure which would have helped provide for more funding for the state’s highways by raising the price of tolls for all those without a New Hampshire EZ-Pass.

Georgia saw its gas tax holiday end in June after three months. It is estimated that it cost the state some $220 million in revenues.

I-81 VIADUCT

It’s the kind of project the current federal administration hates as it involves removing highway. At the same time, to have lived through the early years of the project is to understand the long term toll the existence of the viaduct placed on the local community. Efforts to have the viaduct removed – similar to other projects – have been long standing. Once a plan was adopted to do so, the only concern was sustained financing.

Now that the project is at the stage of demolition, funding has been announced. The I-81 Viaduct Project is the largest project ever undertaken by the New York State Department of Transportation. The project will remove a 1.4-mile stretch of elevated highway that has divided the City of Syracuse for decades. I-81 will now go around Syracuse rather than right through the heart of it. That work has been completed.  

QUIET RESURGENCES

Two cities with major roles in their state economies but perennially weak financial operations have recently seen improvement in their situations worth noting. Moody’s has affirmed the Baa3 issuer rating for the City of Hartford, CT. The rating acknowledges the city achieved material financial improvement and stability under state oversight over the past decade. The City’s Board of Education remains a financial problem as a significant projected deficit within the Board of Education (BOE) for fiscal 2026 presents a challenge to the city’s overall financial position. 

The current bond issuance is the city’s first in nearly a decade as it was precluded from issuing debt as part of the terms of it submitting to the oversight of the state’s Municipal Accountability Review Board (MARB). The role of the state in terms of both oversight and funding support is a key foundation supporting the investment grade rating.

Moody’s assigned a stable outlook to the rating. Oversight and funding assistance will continue to play a significant role in maintaining the city’s financial position going forward. The relationship between state and city is seen as collaborative. Without the intervention of the state, much greater negative pressure would have been applied to the rating.

That is not the case with the City of New Orleans. A new mayor took office in January and has implemented management and budget changes which are reported to have halved the anticipated deficit facing the city. While acknowledging improvement the City also knows that additional cuts must be made while the search for new revenues continues.

When the City elected a new mayor last fall, the result was a more business friendly and likely more efficient administration. It seemed that the pieces might be in place to support better collaboration between the state and the city. So, it has been disappointing to see that in spite of the improvement, the political vitriol being directed at the city continues and even increases.

The difference in approaches to financial issues in the two states largest cities is striking. While it has been difficult, Hartford has been supported. The opposite is true with New Orleans.

NUCLEAR

Holtec International announced that it completed all major renovations for its reconstruction of the Palisades plant’s single 800-megawatt reactor in Michigan. Under the Biden administration, the Department of Energy’s Loan Programs Office awarded Holtec a $1.52 billion loan to finance the renovations needed to relicense Palisades’ 54-year-old reactor, previously the oldest in operation in the U.S. fleet. Those loans were continued under the current administration.

It is not clear when actual operations at Palisades will be underway. When completed and operational, Holtec hopes to also develop small modular reactors (SMR) at the site. The company plans to build two of its SMR-300s, 300-megawatt pressurized-water reactors at Palisades. The effort to reopen decommissioned nuclear plants also includes Constellation Energy Generation’s Crane nuclear plant, (aka Three-Mile Island) in Pennsylvania and the Duane Arnold plant in Iowa. Microsoft is financing the Three-Mile Island rehab while Google is financing the effort in Iowa.

ONE MORE WESTERN WATER FIGHT

The U.S. Supreme Court has agreed to hear Nebraska’s lawsuit against Colorado over a proposed canal that would take water out of the South Platte River in Colorado and send it to a reservoir in Nebraska. The Perkins Canal would divert water from the South Platte River near Ovid. It is agreed that Nebraska has the right to do so. 

The South Platte River Compact, ratified by both states and Congress in 1923 authorizes Nebraska to build the canal and grants the right to use the power of eminent domain to acquire land on which to build it. The dispute focuses attention of the complexities of water management especially in Colorado. Already facing issues over use of Colorado River waters, the State of Colorado is fighting to hold onto Platte River water to offset other regional losses.

Nebraska contends that the very system regulating water use in Colorado is itself an obstruction of the Compact. That and actions to support Colorado landholders against eminent domain claims have driven the suit.

OHIO PUBLIC LAND FRACKING

It was a controversial decision to say the least but the State of Ohio decided to allow private energy development firms to lease land in state parks and other state landholdings. The first financial returns are in. Ohio’s new business of leasing about 22,000 acres of its publicly owned lands to the oil and gas industry has generated $314 million. The vast majority of that money comes from one-time provisions in state law such as signing bonuses paid to acquire the leases.

To date, several leases have been awarded but only one is producing revenues. That one producing facility has paid $11.3 million from 20% of royalties on gross production between the first payments in October 2025 and the most recent data from May 2026, according to the Ohio Department of Natural Resources. That’s about $1.4 million per month. By law, at least 30% of the money must go toward capital improvements at the park – things like campsites, lodges and bathrooms. 

It’s important to note that while the initial numbers are impressive, the longer term benefits to the public in general are much less clear. As has been the case for many other fracking projects, the long term economic benefits often underwhelm especially in terms of jobs and local economic growth. The income from many projects go to out of state entities whose interest in local economic development just isn’t there.  

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

Joseph Krist

Publisher

IDEOLOGY AND ORLANDO UTILITIES

The U.S. Department of Energy, ordered Orlando Utilities Commission to continue running its 465-MW, coal-fired Stanton Unit 1 instead of placing it in “cold shutdown” to address what the department deems to be an energy emergency in Florida. That puts OUC in the position of being the first municipal electric utility to be impacted by President Trump’s ideological approach to electric utilities. OUC plans to fully comply with the order and will delay placing its Stanton Unit 1 in cold shutdown. No cost estimates of either operation or fuel procurement were provided by OUC.

One of the whole points of public versus investor owned electric utility credits is the freedom from regulation especially of rates. While we don’t see this phenomenon ultimately diminishing ability to pay, it is a troubling one nonetheless. The continued use of coal for generation is increasingly difficult to justify especially in light of the increasing non-competitiveness of coal generation.

ILLINOIS BUDGET

The Illinois legislature passed an FY 2027 budget. The $55.9 billion budget does not increase state income taxes or sales tax. The spending plan included an $830 million supplemental current-year spending plan, meaning the upcoming fiscal year 2027 budget is essentially flat. The measure freezes corporate net operating loss and enacts taxes on social media companies, digital assets, fantasy sports, tobacco and sports betting on prediction market websites. There is also a sales tax holiday on school supplies when families go back-to-school shopping in August, and pauses a previously planned increase to the state gas tax.

Now the State can turn its attention to the truly pressing issue facing the State and its largest city – getting the Bears to stay in Illinois.

MEDICAID WORK RULES PRESSURE STATES

Regulations issued June 1 by the Centers for Medicare & Medicaid Services dictate many granular details about how the new work requirements mandated to roll out under the OBBBA will play out. They cover how states should check whether Medicaid enrollees are following the rules, and how people can claim an exemption so that their health benefits don’t hinge on work, community service, or going to school. The rules take effect beginning July 1.

The impact is to cause states to have to spend much more on certification as these functions are largely carried out by private vendors. The first example of the problem is Nebraska. Nebraska launched its Medicaid work requirement on May 1. Nebraska handles decisions on medical frailty differently than the Trump administration does. It’s not for lack of effort that this conservative state administration has tried to comply.

State officials had already released an extensive 300-odd page list of medical conditions that qualify as exemptions, such as types of cancer, dementia, autism, epilepsy, HIV, and Parkinson’s disease. The state currently relies on government workers to check Medicaid eligibility, and doesn’t require a person to prove how sick they are. That is not atypical for states. But under Trump’s rules, people will have to show their qualifying illness is impeding their ability to work.

ACA CREDITS AND INSURANCE 

Another source of uncertainty facing states is the ultimate impact of the end of federal tax credits which offset ACA premiums. The concern was that the end of the credits would make ACA coverage too expensive. This would lead to people dropping coverage which would ultimately put pressure on states to increase financial support for indigent care.

A study from Georgetown University has shown the initial effect of the changes. Federal regulators have so far released data on initial sign-ups during open enrollment, which include people whose coverage was automatically renewed at the end of 2025. However, enrollment is not complete until the first month’s premium is paid.

Unprecedented net premium hikes in 2026 have prompted some people who signed up for coverage to drop it. This year, sign-ups during open enrollment declined by an estimated 1.2 million, a 5 percent drop from the prior year, the largest decline in any year since the marketplaces opened in 2014. Sign-ups dropped in 41 states, declining by 1 percent to 22 percent. 

Several state-based marketplaces have released early data indicating that plan cancellations rose sharply between January and March this year — up 24 percent above last year. Maryland, for instance, saw a 13 percent drop between January and April, compared with 3 percent last year. Arkansas saw a 16 percent decrease, double the amount from 2025. Massachusetts experienced a 14 percent decline, compared with 6.7 percent last year, while New Mexico experienced a more than 8 percent decrease, compared with just 0.5 percent in 2025. 

GAS TAXES

In Illinois, the gas tax increases on July 1. On July 1, 2026, the tax was set to increase by 1.3 cents, but that increase will be paused for six months under the State’s budget agreement. Each year, the gas tax increases at the beginning of the fiscal year to provide funding for transportation and infrastructure projects around the state. This year’s increase will be paused for six months.

In April, Indiana Gov. Mike Braun suspended both its fuel tax and its sales tax on gasoline purchases, a move he said has saved residents nearly $0.60 per gallon in fuel taxes. Kentucky Gov. Andy Beshear has extended an executive order that reduced the state’s gas tax by 10 cents. The order was extended to 33 cities and counties that requested an extension.

Georgia is moving in the other direction. It reinstated the state’s gas tax as of this week. The suspension was giving motorists a tax break of 33 cent a gallon on gasoline and 37.3 cents on diesel. Governor Kemp’s initial suspension took effect in March and was set to last 60 days, but the outgoing governor extended it last month.

PROPERTY VS. SALES TAXES

In the Southeast, a major effort to reduce or eliminate property taxes has been underway in the region’s state legislatures. The latest comes from Georgia. SB 33 was designed to enact enacts broad property tax reform by establishing a new Local Homestead Option Sales Tax aimed at providing homeowner tax relief and improving local fiscal management according to sponsors. Many are concerned at the shift from a property to a sales tax base will increase the regressive nature of a non-income tax base.

HB 463 lowers Georgia’s state income tax rate from 5.19% to 4.99%, beginning Jan. 1, 2026. It includes provisions for further annual reductions of the state income tax rate as well as increases of the standard deduction. It raises the retirement income exclusion to $70,000 beginning in 2027 and introduces temporary tax exclusions for qualified overtime compensation and cash tips through 2028. It also repeals some tax credits and sales and use tax exemptions.

DATA CENTER BANS

The threat many see posed by the development of vacant land for data centers continues to generate intense opposition at their development at the local level. In many communities, local legislators have enacted moratoria against the issuance of permits and/or licensing for new data center developments. They are an effort to hold developers and their litigation at bay while regulations can be developed and appropriate legislation be enacted. Unsurprisingly, several wealthy southern California communities are among them.

For several months, the City of Monterey Park was among them. In January, the Monterey Park City Council passed a 45-day moratorium on data centers. The city unanimously extended its moratorium for 10.5 months in March. Residents there weren’t satisfied with a temporary limit. So, the city’s voters approved a ballot initiative which effectively bans data centers in the city. It was approved with over 70%of the vote. It is the first city to do so in California.

New York became the first state to enact a statewide moratorium on data centers. The Responsible Data Center Development Act would create a one-year pause on certain new permits for large data centers, defined as facilities with a peak demand of 20 megawatts or more. The moratorium would not apply to previously issued approvals or projects that began construction before the law takes effect.

The measure would also require large data center operators to hold at least one in-person public hearing in a host community at least three months before receiving state approval. Residents would have to receive at least 30 days’ notice, including information on the project’s location, expected energy use, water and wastewater impacts, and any state or local incentives sought or awarded.  Electric, gas, water and municipal systems would have to create separate service classifications for large data centers, assigning costs such as infrastructure upgrades and commodity price increases to those facilities.

Even in Texas, Gov. Abbot released regulatory recommendations on data centers for the Legislature to pass in the 2027 session. It is an extensive list – requiring new facilities to add power generation to the state’s power grid; requiring data centers pay for their own grid interconnection and infrastructure costs; mandating the use of “closed-loop” water systems, which draw a large amount of water at the start but reuse it over some period of years; require annual reporting by all data centers on electricity and water use; establishing best-practice standards to address community concerns like noise; repealing data center sales tax exemptions and “other outdated or unnecessary incentives for data centers”.

A Republican in the Pennsylvania House introduces a bill that would require data center developers to build or buy their own power supply to keep them from racking up charges for residential customers. Democratic Delaware state legislators are working on similar legislation that would mandate data center developers supply their own power and pay for necessary transmission upgrades. 

DALLAS

Moody’s has revised the outlook to stable from negative for the City of Dallas, TX issuer rating. The rating was affirmed at A1. The revision of the outlook to stable reflects Moody’s expectation that the city will make increases in pension contributions to its Police and Fire Pension System (DPFP) and Employees’ Retirement Fund (ERF) plans in line with its updated funding plan while maintaining structural balance. 

The city has begun to make annual pension increases to its DPFP and ERF plans in order to amortize the unfunded liability within 30 years, as mandated by state law. Dallas was one of several Texas cities which faced significant funding shortfalls in pensions for both uniformed and non-uniformed employees in the prior decade. Given Dallas’ economic strength, the issue of pension funding has become central to support for the City’s ratings.

It was made clear that weakening of the uniformed or non-uniformed plans’ non-investment cash flow on an actual or projected basis, and/or a decline in the funded status of either plan would put the ratings on a negative path. Multi-year execution of pension funding plan resulting in improved pension risk indicators, combined with balanced operations would put the credit on a positive path.

HOSPITAL MERGER

West Virginia University Health System (WVUHS) and Independence Health System (IHS) announced they signed a definitive agreement for Independence to join WVUHS and are currently awaiting regulatory approvals. The two systems currently are planning for approval sometime this fall.  Independence Health’s five hospitals would become part of WVUHS’s now 25-hospital system. The usual benefits of consolidation in healthcare are cited in support of this one. It does raise the overall level of care available to patients of IHS.

From a credit perspective, the merger is projected by Moody’s to only generate a benefit for the IHS credit while not hurting WVUHS’s rating.

ELECTRIC ECONOMY

Georgia has been at the center of the debate surrounding electric vehicles as the industry has found it to be hospitable to their industry. Several proposed manufacturing facilities designed to produce both batteries and vehicles hoped to operate there. As the Trump administration has undertaken its efforts to undercut electric vehicle production, it raised questions about the state’s approach to the emerging electric economy.

So, it was a piece of good news to see new manufacturing emerge in Georgia supporting clean energy. Qcells has officially begun commercial production of silicon solar cells at its factory in Cartersville, Georgia. The factory is the largest of its kind in the country. Qcells will be able to manufacture 3.3 gigawatts at its cell factory, which would more than double the current operational U.S. solar-cell capacity. It joins an existing facility in the state.

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

Joseph Krist

Publisher

WESTERN WATER

According to Arizona state water officials, the federal government has proposed a plan for the drought stricken Colorado River that could cut up to 40% of current supplies to Arizona, California and Nevada. Under the 10-year plan, which will be finalized in June, the annual amount of water delivered to Arizona, California and Nevada could be reduced by as much as 3m acre-feet.

The actual level of water cuts across the three lower-basin states would be based on the “priority of the law of the river”. That law, the 1922 Colorado River Compact, gives California the highest priority for water use. Two weeks ago, California, Arizona and Nevada announced their own proposal for voluntary water reductions up to 3.25m acre-feet through 2028. Under their offer, Arizona’s water flow would be slashed by 760 acre-feet, California by 440 acre-feet and Nevada by 50 acre-feet.

Hoover Dam is receiving approximately $52 million for investments in critical infrastructure. A significant portion of the funding will be used to purchase and replace up to three older turbines with wide-head turbines, which are designed to operate at lake elevations below 1035’. These turbines are expected to restore at least 160 megawatts of hydropower capacity and will help mitigate impacts caused by the ongoing drought. Due to the unprecedented drought, generation has decreased by about 30 percent.

The impacts of the drought are not only impacting human demand for water. In order to preserve endangered fish populations downstream, Glen Canyon Dam in northern Arizona is proposing to do what is known as a “cool mix flow,” where cold water is released from deep in its reservoir to cool the river downstream. If the cool water release is approved, it would likely happen from June to October through jet tubes, bypassing the turbines near the warmer surface.

Significant power generation is lost during the cooling process. During the cool water releases in 2024, nearly 900,000 acre-feet of water bypassed the generators, costing $19 million in replacement energy costs, according to the Bureau of Reclamation. Those costs are spread among a customer base of some 155 electric utilities across the Southwest and California.

ALASKA TAX PROPOSAL

In Alaska. a special legislative session is underway to consider tax incentives for a long-proposed pipeline to carry natural gas from the North Slope to Gulf of Alaska ports. The governor has called lawmakers into a special session to pass a bill imposing major changes in the property tax system that has been the main source of revenue for several Alaska local governments.

Under his proposal — which lawmakers took up but failed to approve before the end of the just-concluded regular session — the state and local governments would eliminate 90% of the property tax that would be levied on pipeline-related infrastructure. In exchange, the bill would replace state and local petroleum property taxes with an “alternative volumetric tax” on natural gas that would eventually flow through the pipeline.

The proposal is being driven by one corporate interest – a pipeline developer. The project is presented as being a quite profitable venture but that is only if the project does not have to pay the taxes. The claim is that potential investors would not be attracted if the project had to pay property taxes. What is glossed over is the shift of risk to the local governments in that if the tax is paid based on flow volumes and there is no flow, there are no revenues. It replaces a level of certainty with real risk to the governments.

DATA CENTERS

In 2024, a state sales tax exemption for data centers cost Ohio about $555 million in revenue. For facilities that cost $100 million or more to build, the exemption allows developers to avoid up to 100% of Ohio’s 5.75% sales tax for up to 15 years. It had been previously estimated that the amount of revenue foregone would be $136 million. Now, data centers are multiplying across the state. In 2025, the exemption cost $1.6 billion. That is according to the state Department of Taxation.

In the most recent budget legislation, lawmakers voted to end the data center tax break to help finance another round of income tax cuts. Gov. Mike DeWine vetoed the proposal, insisting the tax exemption is needed to lure data center developers to the state.  After the veto, the Governor suspended the tax exemption for new data centers. He directed the chair of the Ohio Tax Credit Authority to temporarily halt consideration of new data center tax exemption requests while the Ohio General Assembly “studies the growth” of data centers in the state.

Use of the exemption started in 2016. It was in a period when states thought they were taking care of the problem. Unfortunately, development at this scale and volume was not anticipated. Local sales taxes – another $166.8 million in lost revenue in 2024 – are a direct hit to host localities. Many states facing efforts to limit these tax breaks fall into that category or to declare a moratorium on new data center approvals.

BAY AREA TAX BALLOT

A proposed regional sales tax measure for public transit collected 305,895 signatures across five Bay Area counties. That is well in excess of the 186,000 required to place it on this year’s ballot. Voters in the counties of Alameda, Contra Costa, San Mateo, San Francisco, and Santa Clara will vote this November on the sales tax measure Senate Bill 63 — more commonly known as the Connect Bay Area Act.

In California, a voter-approved regional measure for a new sales tax would normally require a two-thirds majority approval if the Legislature directly places it on a ballot. Transit advocates, however, chose to collect signatures to make the sales tax a citizen-initiated ballot measure that would lower the threshold to a simple majority of votes cast.  

FLORIDA PROPERTY TAXES

The Florida legislature has been considering a series of bills to limit, if not lower, local property taxes. Final legislation has been difficult to enact so now the Governor is asking for a special legislative session to consider his proposals to lower property taxes. As proposed by Governor DeSantis, the Save Our Homes proposal includes five major components to provide immediate and permanent relief.

The plan exempts the first $250,000 of a homestead’s value from taxation and requiring, through law, a schedule for full elimination; requires local governments to use remaining property taxes solely for core public needs including public safety, education and schools, infrastructure, and natural resources.

It also limits future property tax assessments on businesses and creates a more stable tax environment for local businesses; requires any person who establishes Florida residency after January 1, 2027, to maintain Florida residency for up to five years prior to receiving the increased homestead exemption; establishes a trust fund to provide grants to local governments to assist with the continuation of core local services.

DETROIT

S&P Global Ratings raised its long-term rating to ‘BBB+’ from ‘BBB’ on Detroit’s previously issued unlimited tax general obligation bonds. The outlook is stable. The stable outlook reflects a view that Detroit’s strong fiscal discipline and robust planning efforts, coupled with its strong budget position, capacity to cut costs, and substantial reserves, will help sustain the city’s credit conditions in line with the ‘BBB+’ rating against a backdrop of an uncertain federal policy and geopolitical environment that could lead to weaker economic trends over the outlook period.

Moody’s has upgraded the City of Detroit, MI’s issuer and general obligation unlimited tax ratings to A3 from Baa1. The outlook was maintained at stable. They said the upgrade to A3 reflects the city’s strengthened financial resilience on par with A3 peers, supported by consistently solid operating performance, strong reserves, low leverage and good governance practices. These characteristics will provide financial flexibility amid slow revenue growth in fiscal 2026 and heightened economic uncertainty.

Both ratings also acknowledge the continuing trend of population declines and high levels of poverty. They also cite concerns about the auto industry. Those have been highlighted by the federal efforts to slow if not halt electric vehicle production. Nevertheless, the improvement in the City’s financial condition continues.

NEW YORK STATE BUDGET

Some 57 days into the 2027 New York State fiscal year, a budget has finally been enacted. It includes record spending of some $269 billion. The budget includes a tax on second homes in NYC with values in excess of $1 million market value. It also includes pension funding changes which will cost NYC more in the future than is saved currently. It effectively reverses pension reforms enacted some 15 years ago.

It is clearly a budget which reflects the reality that 2026 is a particularly contentious election year in NY. Lawmakers set aside $1 billion to send relief checks to New Yorkers in order to help residents cope with the state’s high gas and electric bills this past winter. They also eliminated the income tax on tipped wages and created a 100 percent property tax exemption for disabled veterans.  

Lawmakers agreed to scale back some of the state’s climate mandates under the Climate Leadership and Community Protection Act. It comes after the State’s difficult winter where substantially lower daily temperatures drove spikes in customer bills. A bill would eliminate regulatory mandates related to New York’s 2030 emissions goal and it would push previously set deadlines to enact additional clean energy requirements.

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

Joseph Krist

Publisher

NYC BUDGET – THE GAMES BEGIN

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

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

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

PUBLIC POWER SOLAR

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

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

Responses are due by June 5, 2026.

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

ILLINOIS BUDGET

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

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

BIG BEAUTIFUL MEDICAID

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

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

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

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

BRIGHTLINE’S CLOUDY OUTLOOK

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

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

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

HOSPITAL M & A

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

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

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

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

Joseph Krist

Publisher

PUERTO RICO ELECTRIC

A new electricity rate structure has been approved by the Puerto Rico Energy Bureau (PREB). The new structure includes an increase in the fixed charge—which will initially double from $4 to $8 per month for residential customers and continue to rise in subsequent years—along with a reduction in consumption charges, thus redistributing the cost of the electricity bill.

PREB determined that contributions to the pensions of retirees from the Puerto Rico Electric Power Authority (PREPA) will be included in the base electricity rate starting July 1 and will continue until 2028. The changes come as the electric market has diversified in the wake of Hurricane Maria in 2017. The base rate has not been reviewed since 2017, while labor, parts, and other costs have increased by 30%. Demand has fallen by 17% due to the integration of solar energy.

NYC PENSIONS

The Mamdani administration is looking to reduce the annual pension payments required to keep the City is compliance with the goal of fully funding the City’s pension liability by 2032. Those plans have been in effect since 2013. The higher required payments under that plan reflect the reduction in estimates of annual returns from 8% to 7%. The Mayor hopes any savings derived from a pension funding maneuver will help fund his social appending agenda. He estimates that the move would save some $1 billion.

The city’s total obligation to the five municipal pension systems for existing benefits, through 2032, amounts to $38.9 billion, according to data from the Citizens Budget Commission. Pension funding has long been a strong point supporting the City’s credit. Unlike Chicago, the City has not used pension funding lapses to fund current operating expenses. Like Chicago, it does not control all of its revenues. That puts enormous pressure on the Mayor to control spending. The problem in New York is that this Mayor does not appear able to make real cuts. His initial efforts produced about 15% of the cuts he claimed were easily available.

He is already pulling back from many of his promises. No free buses. He is asking that class size reductions mandated under state law be relaxed. A proposed tax on second homes worth $5 million or more is being considered. The threats of property tax increases and potential reserve withdrawals still overhang negotiations with the State.

All in all, it’s a package of bad tactics if you want to maintain the City’s credit. Chicago shows where the ideological path leads to. That path has consequences.

DATA CENTER VETO

Legislation was passed in the Maine legislature which provided for a moratorium on new data centers in the state until November 2027. The moratorium would have made Maine the first state in the nation to create such a hurdle. Now, the Governor (and US Senate candidate) has vetoed the bill. It isn’t because a moratorium isn’t popular and it isn’t because she is against a moratorium. Her problem is that the law would hold up the development of a data center in her hometown Jay, ME.

She did sign legislation prohibiting data center projects from participating in certain state tax incentive programs. The mill in Jay had been severely damaged by an explosion in 2020. A plan to repurpose the site for a board manufacturing business failed when new tariffs set by the Trump administration drove up the cost of needed equipment.

TEXAS AND ICE

Gov. Greg Abbott of Texas gave the leaders of Houston, Dallas and Austin until Wednesday to amend many of their local policies and law. Those laws restrict cooperation by local law enforcement with ICE. The Governor supports cooperation. He is threatening some $150 million total in public safety funding, including millions dedicated to providing security at World Cup matches this summer.

This month, the Houston City Council passed a new ordinance clarifying when its officers could detain people wanted by immigration agents. The Governor then threatened aid to the city. Mr. Abbott expanded the fight to Dallas and Austin after he said both had policies that also broke a contract with the state requiring the police to cooperate with immigration agents in exchange for funding.

The governor has warned, the state would take back about $110 million in World Cup safety spending and other grants from Houston, $32 million in grants from Dallas (plus the city’s portion of another $55 million for World Cup security in the area, with games being played in Arlington), and more than $2 million from Austin.

CALIFORNIA WATER

The California Supreme Court has denied review of a landmark opinion issued by the Court of Appeal. The Court’s opinion, first issued on December 31, 2025 and finalized with minor modifications when rehearing was denied the next month, unanimously affirmed a trial court decision holding that the State Department of Water Resources (DWR) exceeded its authority when it approved bond resolutions to finance DWR’s proposed Delta tunnel.

In 2020, DWR unsuccessfully sought to validate detailed bond resolutions and pledges to collect revenue from water contractors, which would charge ratepayers for an uncapped amount of additional debt to meant to finance DWR’s proposed Delta tunnel – the Delta Conveyance Project (DCP). The DCP, if built, would divert up to half of the average flow of freshwater from the Sacramento River with massive new intakes near the town of Hood in the Sacramento-San Joaquin Delta, for export chiefly to portions of the South San Joaquin Valley and Southern California.

DRAMA AT THE OPERA

We have documented the ongoing financial problems which are pressuring the credit of the Metropolitan Opera. Now, the Opera has suffered a significant blow to its plans for a cash injection. Saudi Arabia has cited damage to the country’s economy caused by the war in Iran and the blockading of oil passing through the Strait of Hormuz as the reason for cancelling its plans to provide some $200 million to the Opera.

The Saudis were to have provided the Met with as much as $200 million over the next eight years. In return, the Met would hold a residency in Saudi Arabia for three weeks each February at the Royal Diriyah Opera House on the outskirts of Riyadh. With the collapse of the deal, Gelb said, the Met faces a $30 million shortfall that it needs to fill by the end of this fiscal year, on July 31.

A previously announced plan to sell the naming rights to the Metropolitan Opera House was moving ahead. Art in the lobby remains on sale. The Met hopes to strike a residency deal in another location. The Met has a $62 million line of credit that is due in February 2027 and its endowment is now valued at $216 million, down from $340 million in 2022.

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

Joseph Krist

Publisher

SOUTH CAROLINA NUCLEAR

Santee Cooper reached an initial agreement in December with Brookfield Asset Management for the purchase of the two partially built nuclear reactors at the V.C. Summer nuclear plant in Fairfield County. The utility company hopes to know by the first half of 2028 whether the $2.7 billion deal to revive the state’s failed nuclear expansion will officially go through. Santee Cooper will maintain an ownership interest in the reactors of up to 25%. Santee Cooper’s share of the debt associated with the plant was $3.6 billion, which customers so far continue to pay for on their monthly bills. The Brookfield deal could erase all but $1 billion of that.

KEY BRIDGE SETTLEMENT

The State of Maryland has reached a settlement in principle with Grace Ocean Private Limited and Synergy Marine Pte Ltd., the owner and operator of the M/V Dali, resolving a portion of the State’s claims arising from the cargo ship’s March 26, 2024 collision with the Francis Scott Key Bridge. The State’s claims, filed in U.S. District Court for the District of Maryland in September 2024, alleged that the disaster was the result of negligence, mismanagement, and the reckless operation of a vessel that was not seaworthy and should never have left port.

The State sought damages on behalf of its agencies for the destruction of the bridge, harm to the Patapsco River and surrounding environment, lost revenues, and the wide-ranging economic losses sustained by Maryland and its residents. This settlement does not resolve any claims the State may have against the shipbuilder, Hyundai.

WESTERN WATER

The US Bureau of Reclamation will release extra water from Flaming Gorge Reservoir — potentially 1 million acre feet, which is more than a quarter of its storage capacity of 3.8 million acre feet. An initial release from Flaming Gorge, which will begin on or before May 1, is a certainty, according to Wyoming water officials. Among four storage reservoirs in the upper basin, Flaming Gorge has the most — and the most legally unrestricted – water to send downstream to Lake Powell. Colorado River authorities released an extra volume of some 465,000 acre feet of water from Flaming Gorge in 2023.

MTA FUNDING

The federal government agreed to release nearly $60 million in withheld funding for New York City’s Second Avenue subway extension. The U.S. Department of Transportation had told the Metropolitan Transportation Authority (M.T.A.) that the funding had been held up because of a review of the authority’s race- and sex-based criteria for working with disadvantaged businesses. MTA sued for breach of contract over the delayed reimbursements. The Trump administration suspended the funds in October, at the same time that Mr. Trump was pressuring Chuck Schumer, the Senate minority leader and a New York Democrat, to end a government shutdown.

DATA CENTER TAX BREAKS

Last week we noted moves in Texas to reexamine the state’s policies supporting tax incentives to the data center industry. The latest state to look at the issue is North Carolina. Gov. Josh Stein is asking a state energy policy task force to recommend overhauling or repealing a data center sales tax exemption. Under North Carolina state law, data centers that invest at least $75 million within five years are eligible for exemptions from sales and use tax. 

As is the case in many of the states, laws enacted in the 2010s were not designed in anticipation of the speedy expansion of these facilities. This tax break was enacted in 2010 and then expanded in 2015. When the incentives were created and then overhauled, the state did not require recipients to track what they would have otherwise paid in taxes. There are 37 data centers that have received the incentive in North Carolina since lawmakers re-crafted the sales tax exemption in 2015.

The N.C. Department of Commerce used publicly available date to estimate that existing data centers aren’t paying between $45 and $57 million in sales taxes annually. That includes between $25 and $37 million for equipment and about $20 million for electricity. If all of the expected data center expansions in NC be completed, North Carolina would not receive between $1.5 and $2.3 billion in sales taxes during the construction process. Once those data centers are operating, North Carolina would not receive sales and use taxes of about $450 million.

CLIMATE LITIGATION

In a unanimous decision, the US Supreme Court ruled that energy companies facing lawsuits over environmental damage to Louisiana’s coast from oil and gas production can move the challenges from state courts into friendlier federal venues. The 8-0 decision (Justice Alito recused) found that the oil company had sufficiently cleared the requirements to move the case into federal court because the lawsuit dealt with oil production in Louisiana dating back to World War II, when Chevron refined crude oil into aviation gasoline for the U.S. military.

The decision found that Chevron had shown that its wartime production of crude oil related to its wartime aviation-gasoline refining for the military, a federal priority. On that basis, the companies were found to acting as “authorized federal agents” when they produced products pursuant to the war effort. The federal officer removal statute authorizes lawsuits against federal officers or people “acting under” them “for or relating to” the officers’ official duties to be moved from state to federal court.

Earlier in the week, a U.S. District Judge dismissed a Trump administration lawsuit seeking to stop Hawaii from ​suing fossil fuel companies in state court over ‌climate change, citing a “longstanding” policy against federal intervention in state court processes. The Justice Department sued both ​Hawaii and Michigan in April of 2025, seeking to stop them from ‌filing ⁠planned lawsuits against major oil companies over climate change, cases the administration said would imperil domestic energy production.

A different federal judge in January dismissed a similar suit ​that sought to block the state of Michigan from suing major oil companies. The judge in Hawaii ruled that the Justice Department lacked standing ​to ⁠sue Hawaii because its case was too speculative. The Justice Department’s “attempt to predict the outcome of a yet-to-be-filed lawsuit ⁠and ​how it could possibly injure the ​federal government in the future is not a concrete injury-in-fact,”.

Now, a state court judge in California has temporarily stayed proceedings in cases being brought by the State of California and many other governments in the state against the fossil fuel industry. The pendency of SCOTUS review of issues in the case of Suncor Energy (U.S.A.) Inc. v. County Commissioners of Boulder County, et al. was cited as a basis for a stay. The state judge noted that on February 23, 2026, the Supreme Court granted the petition for a writ of certiorari in Boulder. Its order specified that in addition to the question presented by the petition (quoted above), the parties are directed to brief and argue the following question: “Whether this Court has statutory and Article III jurisdiction to hear this case.”

KC STADIUM

The city of Kansas City has proposed a $600 million plan to build a new downtown stadium for the Royals baseball team. The plan includes development in the area around Washington Square Park and Crown Center modeled after successful baseball district developments in St. Louis and Atlanta. A proposed implementing ordinance would set the ground rules for the stadium, offices, and infrastructure, committing the city to issuing bonds and seeking substantial state funding. The overall project cost including public investment is projected at $1.9 billion.

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.