Joseph Krist

Publisher

CLIMATE TAXES

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

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

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

CLIMATE LEGISLATION

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

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

WESTERN WATER

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

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

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

BAY AREA TRANSIT LIFELINE

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

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

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

IMMIGRATION AND MUNICIPAL FINANCE

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

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

The letter comes as data begins to slowly emerge regarding the costs of immigration policies in the Biden administration. the Congressional Budget Office estimates how the surge in immigration that began in 2021 affected state and local budgets in 2023. In addition to estimating the direct effects of the surge, CBO calculated an alternative measure that includes the potential broader or longer-term effects and costs that were borne without adding to spending—such as crowding in public schools and public transportation systems. By either measure, the surge imposed a net cost.

The surge led to a direct increase in revenues of $10.1 billion, primarily from sales taxes, and a direct increase in spending of $19.3 billion, chiefly for public elementary and secondary education, shelter and related services, and border security. The result was a direct net cost of $9.2 billion in 2023, amounting to 0.3 percent of state and local spending (net of federal grants-in-aid).

In addition to those direct effects, CBO’s alternative measure accounts for expected increases in property tax revenues, additional tax revenues from greater economic activity, and nonbudgetary costs associated with greater demand for government services. By that measure, the surge in immigration had the potential to increase revenues by $18.8 billion and spending by $28.6 billion, resulting in a potential net cost to state and local governments of $9.8 billion in 2023.

POLICY REALITIES

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

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

TRI STATE CAN’T WIN

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

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

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

NUCLEAR

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

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

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

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

WIND BLOWS AGAIN

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

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

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

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

ARTS AND NEW REALITIES

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

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

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

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

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

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

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

SMALL TOWN LAW ENFORCEMENT RISKS

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

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

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

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

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

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

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

CLIMATE SUPERFUNDS

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

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

HOSPITALS AND LABOR

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

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

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

NUCLEAR

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

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

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

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

Joseph Krist

Publisher

CLIMATE LITIGATION

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

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

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

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

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

HOSPITAL CONUNDRUMS

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

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

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

CALIFORNIA BUDGET

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

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

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

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

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

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

WATER AND AI

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

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

ARIZONA WATER

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

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

COLORADO SPRINGS WANTS ITS COAL PLANT

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

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

IOWA CARBON CAPTURE

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

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

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

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

Joseph Krist

Publisher

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FLORIDA VOUCHER QUESTIONS

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

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

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

COUNTIES AND HEALTH SUBSIDIES

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

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

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

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

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

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

GAS WARS

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

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

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

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

CONGESTION FEES

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

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

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

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

CALIFORNIA WATER

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

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

LONE STAR SOLAR

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

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

NEW YORK NUCLEAR

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

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

SF TRANSIT FUNDING

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

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

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

The proposal would be on the November ballot.

OREGON TRANSIT FUNDING SWITCHES TRACKS

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

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

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

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

Joseph Krist

Publisher

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

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WESTERN WATER

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

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

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

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

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

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

WELCOME MR. MAYOR

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

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

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

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

CHICAGO BUDGET

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

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

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

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

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

COAL IN THE STOCKINGS

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

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

MARYLAND BRIDGES

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

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

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

THE NEW EV ENVIRONMENT

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

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

OREGON TRANSIT TAX HITS ROADBLOCK

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

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

DATA CENTER PUSHBACK

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

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

O, CANADA

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

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

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

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

Joseph Krist

Publisher

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

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

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CHICAGO BUDGET (NEWYORK PREVIEW?)

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

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

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

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

KEY BRIDGE

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

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

COLORADO RIVER

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

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

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

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

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

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

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

NYC

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

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

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

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

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

PUBLIC POWER AND BATTERIES

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

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

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

PHILADELPHIA SCHOOL DISTRICT

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

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

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

SOME QUICK NOTES

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

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

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

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

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

PENNSYLVANIA BUDGET

Gov. Josh Shapiro signed Pennsylvania’s first $50 billion-plus budget Wednesday, ending a 135-day stalemate with a plan that cuts public funding for cyber schools and boosts it for public schools. The $50.09 billion budget raises spending by 4.7% above the budget that expired June 30. The budget does not tap the state Rainy Day Fund, a key sticking point for Republicans, who repeatedly criticized Shapiro for proposing a 2025-2026 budget with $1.8 billion from the $7.5 billion fund.

The final deal leaves the state’s $7.4 billion rainy day fund untouched, but does use almost $4 billion from other reserves. The budget provides $565 million to aid schools that were found to be inadequately funded under a 2023 court ruling. Pennsylvania school districts must pay tuition to charter schools for any students within their borders who opt to attend one. Districts pay online-only cyber charter schools the same rate that it does for brick-and-mortar schools, despite the former’s lower overhead costs.

The budget does not create taxpayer-funded school vouchers — a Republican priority — but it does expand a popular tax credit program that underwrites scholarships for Pennsylvania students to attend private schools. The Educational Improvement Tax Credit, or EITC, will grow by $50 million to a total of $590 million.

The Regional Greenhouse Gas Initiative (RGGI), is a multi-state effort to reduce greenhouse gases and commonly referred to as Reggie. The interstate program caps the amount of carbon that companies are allowed to emit. Then-Gov. Tom Wolf directed the state to join the initiative through an executive order, though lawsuits from Republican lawmakers and energy producers prevented the state from participating in the program.

The budget agreement leads to the withdrawal of the Commonwealth from the RGGI. That was the price to be paid for a settlement of the ongoing budget delay. Litigation against the RGGI had delayed implementation of any of its components. Now, that issue is off the table for future budget negotiations.

GAINESVILLE REGIONAL UTILITIES

The continuing effort to wrest control of the Gainesville Regional Utilities (GRU) continues. The utility service is currently under the control of a five-member authority appointed by Florida Gov. Ron DeSantis. A long-awaited special election on Nov. 4, three-fourths of Gainesville voters chose to return power over Gainesville Regional Utilities from the state to the city. The ballot item was supported by 75% of those voting.

In the summer, the GRU Authority filed a lawsuit against the city. The authority claimed the city was attempting to supersede state power. The courts are blocking any further action until the case is settled, so the authority will remain in control of GRU until a ruling is made. The authority plans to continue to fight to maintain control through the courts.

The election was not open to voters outside Gainesville, although 35% of the utility service’s customers live outside the city limits. Prior to 2023, the Gainesville City Commission had control over GRU. In 2024, Gainesville voters were given a chance to decide whether to return control of the utility to the city. Almost 73% voted in favor of the city. But the election results were thrown out by a circuit judge in April due to a challenge over the ballot language. The judge ruled the referendum’s wording was misleading over whether the general manager of GRU would be elected or appointed. In 2025, the language was changed.

PUBLIC POWER NUCLEAR

The Nebraska Public Power District (NPPD) has operated its Cooper Nuclear Station for 50 years. Now, with energy demand growing, NPPD will request an extension of the operating license for the 835 MW generating plant out through 2054. At the same time, NPPD is undertaking steps to identify a site for a potential new nuclear generator to meet demand.

In 2022, the Nebraska Legislature allocated $1 million to the Department of Economic Development (DED) to provide funds for a feasibility study to assess siting options for new advanced nuclear reactors. DED created the Nuclear Plant Siting Feasibility Study Program to administer the funds, which the state of Nebraska had received from the federal government as part of the American Rescue Plan Act. In January 2023, DED awarded a grant of $863,000 to Nebraska Public Power District (NPPD) to undertake the study.

SAN FRANCISCO TRANSIT FUNDING

Recent press reports have indicated that officials in San Francisco are floating two possible structures for a parcel tax to fund revenue shortfalls facing the Muni transit system. Aimed for the November 2026 election, the tax measure would help fund an estimated $307 million annual budget deficit that could grow to $434 million in five years. The goal is to provide funding to the city’s transit agency to limit service cuts.

Under one proposal, property owners would pay a flat rate of $150 a year for homes smaller than 3,000 square feet. Owners of residential buildings larger than 3,000 square feet would pay the $150 flat rate plus 25 cents for each additional square foot, with a cap at $250,000. Landlords of commercial or industrial buildings, meanwhile, would pay a $600 annual flat rate for property smaller than 3,000 square feet, and $0.675 for each additional square foot, with an upper limit of $400,000.

The second proposal combines a slightly lower flat rate of $99 a year for residences smaller than 3,000 square feet, and a somewhat higher premium for owners of large homes or complexes: 29 cents for each additional square foot. Owners of commercial or industrial property would pay a $600 flat rate for buildings smaller than 3,000 feet, and 73 cents for each additional square foot in larger buildings.

If one proposal makes the ballot, it would be competing with other initiatives to raise regional sales taxes to support several transit agencies across the Bay Area. Should either of the local proposals fail, Muni would have to slash service on a third of its lines, effectively doubling wait times for riders.

CHICAGO TRANSIT FUNDING YIELDS POSITIVE OUTLOOKS

Moody’s has placed the A1 and A2 ratings of the Chicago Transit Authority, IL (CTA) on review for possible upgrade. Moody’s has also placed the Aa3 rating on bonds of the Regional Transportation Authority, IL (RTA) on review for possible upgrade.

Senate Bill 2111 enables an increase in the sales tax levied on the six-county region currently served by the Regional Transportation Authority, IL (RTA), and redirects existing state tax revenue to transit providers. The CTA will receive a share of the new funding and we expect its share will be more than sufficient to close its currently forecasted budget gaps, providing longer term operational stability. The bill enables the future Northern Illinois Transit Authority (NITA) to collect over $1.2 billion of new annual revenue to support transit operations, exceeding the approximately $800 million fiscal 2027 budget gap projected by the RTA’s service boards. Nearly $500 million of this collective budget gap was within the CTA.  

Under the legislation, the RTA would become the Northern Illinois Transit Authority (NITA). The NITA, in addition to having greater responsibility for the oversight of transit services in the Chicago region, will continue to receive all regional sales tax revenue and state funding, and use those sources of revenue to pay its bonds before distributing funds to its service boards, the Chicago Transit Authority (CTA), Metra and Pace. The bill results in a direct and material increase in the revenue available to pay what are currently bonds of the RTA. 

It enables the future NITA to collect over $1.2 billion of new annual revenue to support transit operations, exceeding the approximately $800 million fiscal 2027 budget gap projected by the RTA’s service boards.

BIG BEAUTIFUL LAYOFFS

GM in particular is set to lay off 1,200 workers from its Detroit plant and another 550 from its Ultium Cells plant in Ohio. Meanwhile, another 850 are being temporarily laid off from the Ohio Ultium Cells plant and another 710 being temporarily let go from an Ultium factory in Tennessee. Freudenberg e-Power Systems said this week it would close two EV battery facilities in Michigan, laying off 324 workers.

Qcells, the U.S. solar manufacturing arm of Korea’s Hanwha said it would furlough 1,000 workers at its Georgia factories because shipments of components it needs from overseas are being routinely stalled by U.S. customs officials. The company said some of its shipments of solar cells had been detained at U.S. ports under a 2021 law which bans imports from China’s Xinjiang region due to concerns about forced labor.

Qcells has committed to a $2.5 billion investment to build a complete U.S. solar panel supply chain to compete with China. The company manufactures cells in Malaysia and South Korea that are imported to be assembled into panels. It is also ramping up its U.S. cell manufacturing in Cartersville, Georgia. Qcells has implemented temporary reduced hours and furloughs for about half of its manufacturing employees at plants in Cartersville and Dalton, Georgia.

KENTUCKY COAL

The state ranked fifth in U.S. coal production in 2023. Wyoming leads the country, followed by West Virginia, Pennsylvania, and Illinois. The number of workers employed in Kentucky coal mines fell below 3,800 in the second quarter for the first time on record. The Kentucky Energy and Environment Cabinet has been monitoring coal employment and production data over the last 25 years.

It’s only the fifth time since 2020 that Kentucky coal employment, both east and west, fell below 4,000. In the first quarter of 2000, Kentucky coal mines employed 15,000 workers statewide. It’s also only the fourth time since 2020 that statewide coal production fell below 6 million tons. The total fell below 5 million tons only once, in the second quarter of 2020. Statewide, production declined 9% from the second quarter of 2024. On a regional scale, production fell nearly 19% in eastern Kentucky and less than 2% in western Kentucky. Employment fell 15% statewide in the second quarter this year.

TRI-STATE CAN’T WIN

The Tri-State Generation and Transmission Association revealed that DOE officials have indicated that they will issue a Section 202 order to keep Unit 1 of the electric cooperative’s Craig Station coal plant online past its scheduled closure later this year. Tri-State provides power to member utilities that collectively serve over 1 million customers in rural Colorado, Nebraska, New Mexico, and Wyoming. That puts the cooperative in a bind, given that ​“we do have legal requirements to close that unit, but we also are closing it for economic reasons,”.

At the same time, U.S. Rep. Jeff Hurd, a Republican representing a district in western Colorado, wrote a letter to the DOE last month asking it to delay the planned retirement of Comanche Unit 2, a more than 300-megawatt power plant owned by Xcel Energy. The utility estimated in 2018 that shutting down two Comanche units and building out renewables would save some $231million for its customers. This week, Xcel Energy and state agencies petitioned Colorado regulators to delay the retirement of Comanche Unit 2 until the end of 2026 due to continuous operating failures at the newer Unit 3.

In both Michigan and Colorado, regulators and utilities had previously determined that shutting down the coal plants in question would not compromise grid reliability. The U.S. Energy Information Administration noted that 4.7% of the U.S. coal fleet was scheduled to retire this year as of February. That list includes the 1,800-megawatt Intermountain Power Project in Utah, the 670-megawatt Unit 2 of the TransAlta Centrailia plant in Washington state, and 847 megawatts of generation capacity at the Schahfer plant in Indiana..

Lawsuits against the DOE’s Section 202(c) order for the J.H. Campbell plant are now awaiting review at the federal D.C. Circuit Court of Appeals. 

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

The irony involved in noting that Zohran Mamdani was elected just past 50 years to the day of the Urban Development Corporation default that triggered the 1970’s financial crisis in New York City cannot be lost on anyone. For those who grew up in it or lived through it, the thought of a return to the days of the rebuilding of the City’s finances is unacceptable. It accounts for the post-election hysteria over the City’s short-term future.

Let’s put some things on the table right away. The City is not going to default, the revenues for the GO bonds are segregated, and the City remains at the center of an economy larger than that of all but several countries. At the same time, the agenda proposed by the Mayor-elect is not all under his control. The State Legislature will have much to say about the City’s taxing and spending power. It will be interesting to see how the actual mechanics of free bus service play out. After all, the MTA farebox bonds are based on gross revenues as security. That will require a significant new expenditure for the City.

Notice that the Mayor-elect is not talking about shifting the tax burden away from individuals. The new tax proposals are not designed to replace but to expand the total of revenues available for the new planned spending. The debate will likely be robust and there are strong arguments to be made for a variety of approaches. The Mayor-elect will not get much of what he wants.

What has not helped is the real lack of detail regarding how to finance what would be a massive expansion of government even in NYC. That may be because some of his tactics will be contradictory. There are 4 million apartment dwellers in NYC – 25% of them are in rent stabilized units. That puts some 3 million at risk of seeing a cost shift as landlords deal with general inflation and pressures to maintain all housing stock. The cost of maintaining revenue constrained properties will be shifted to market rate payers.

One puzzlement is given the Mayor-elect’s “equity” platform, why will there not be a means test for free bus service or child care?

ILLINOIS VETO SESSION

The Regional Transportation Authority, Chicago Transit Agency, Metra commuter rail and Pace Suburban Bus collectively face a $230 million funding shortfall in 2026 as pandemic relief money runs out. The funding deficit is projected to grow to $834 million in 2027 and $937 million in 2028. Generating funds for the system as it exists led to extended efforts to achieve structural reform while address the short term issues faced by the transit agencies.

Now, the General Assembly has passed a funding package to address those current needs. The bulk of the funding, $860 million, would come through redirecting sales tax revenue charged on motor fuel purchases to public transportation operations. Another estimated $200 million would come from interest growing in the Road Fund — a state fund that is typically used for road construction projects but can also be used for transportation-related purposes under the state constitution.

The plan calls for raising the existing Regional Transportation Authority sales tax by 0.25 percentage points, to 1% in Lake, McHenry, Kane, DuPage and Will counties and 1.25% in Cook County. That tax hike will generate $478 million.

Drivers of passenger vehicles on northern Illinois’ toll roads will also have to pay 45 cents more per toll as part of a plan to create a new capital program for tollway projects. It will also increase by inflation each year. That will raise up to $1 billion annually. The bill also calls for 25% of the systems’ revenue to come from fares. Historically, half of the funding was generated by the riders, but that requirement became unsustainable after the pandemic.

The controversial statewide taxes on package deliveries, streaming or event tickets that were part of previous bills were not included. That and $129 million annually to downstate transit agencies helped generate support to put the bill over the line.

The bill would create the Northern Illinois Transit Authority, which would be a stronger version of the RTA and would have the ability to establish a universal fare system and coordinate scheduling between the three service agencies. The board would be comprised of 20 members: five appointed by the mayor of Chicago, five by the Cook County Board president, five by the governor and five collectively by Lake, McHenry, DuPage, Kane and Will counties. 

The bill also blocks transit agencies from transferring operating dollars to capital expenses — a controversial move Metra recently proposed in its 2026 budget that raised red flags for several state lawmakers and RTA leaders. The RTA now says it is no longer requiring the CTA, Metra and Pace to implement 10% fare increases next year. The transit bill prohibits fare hikes for the first year after the expected law goes into effect on June 1.

The General Assembly also passed an energy bill that creates grid-battery and geothermal incentives and a virtual-power-plant program. The Clean and Reliable Grid Affordability Act, or CRGA, calls for the procurement of 3 gigawatts of energy storage by 2030. The Illinois Power Agency estimates that developing and operating the storage will cost $9.7 billion over 20 years. That money will be collected from utility customers through a new charge on their electricity bills. 

The bill also, for the first time, makes geothermal eligible for state renewable-energy incentives. And it lifts a decades-old moratorium on the construction of large nuclear plants. The legislature had revised the moratorium in 2023 to allow small modular reactors to be built, though this technology is still nascent.

COAL COSTS

The Trump administration’s emergency order to keep the huge J.H. Campbell coal plant on Lake Michigan operating past its planned retirement date has cost at least $80 million since May, its operator, Consumers Energy, told regulators and investors this week. It will pursue the process laid out in the U.S. Department of Energy’s order for collecting those costs: It will seek payment from ratepayers across the Midwest.

Consumers Energy will have to apply to the Federal Energy Regulatory Commission in order to pass the costs to the ratepayers, and states that oppose such a cost allocation could move to intervene in those proceedings. One issue is that the plant must be maintained. Yet, according to recent Environmental Protection Agency data, two of the three units at the Campbell plant were not operating at all for about 30 days of the 131 days from the start of the DOE order through Sept. 30. The third unit at the plant only ran for 18 days. 

Consumers Energy previously stated goal of achieving net-zero carbon emissions by 2040, had projected that the retirement of the Campbell plant would save its customers $600 million over the next 20 years, or $30 million per year. Instead, running the plant for the past five months has cost close to three times that annual amount.

CHICAGO

In 2019, the City of Chicago had a budget of $8.9 billion, excluding grants from the State of Illinois and the Federal government. By 2025, expenditures had grown to $12.4 billion—a 40% increase. The Chicago budget’s increase of 40% over the period between 2019 and 2025 equates to an average annualized growth rate of 5.8%, compared to an average annualized inflation growth of 3.9% over the same timeframe.

Pensions were the largest driver of the spending, increasing by $1.5 billion over six years. This increase is due in large part to rising obligations from a combination of state-mandated and supplemental payments needed to pay down the City’s massive unfunded pension liabilities. Increased pension costs alone drove 44% of the total increase in spending. Total personnel count has slightly declined by 371, or 1%, but the City still maintained over some 4,000 vacant positions in October of 2025.

The proposed FY2026 budget reduces the supplemental pension payment by more than half, resulting in an overall decrease in pension expenditures from 2025 to 2026. Debt service makes up a considerable part of Chicago’s budget, with the City paying just over $2 billion in 2025 in interest and principal payments on bonds. This represents 16.2% of the total budget. However, debt service has only increased by 5% since 2019.

The City’s expenditures on employee benefits, which include healthcare and other types of insurance, increased significantly between 2019 and 2025. In 2019, benefits spending totaled $461 million, but by 2025 it had grown to $758 million, an increase of $296 million, or 64%. As the number of employees did not grow over that time, this cost increase was driven primarily by more expensive healthcare benefits for City employees,

CORPUS CHRISTI WATER CRISIS

In September, we noted the cancellation of a desalinization project for the City of Corpus Christi, TX. (See MCN, 9/8/25) Now, the potential for water shortages and rationing of supplies has had a credit impact. Moody’s has affirmed the Port of Corpus Christi Authority, TX’s prior lien and senior lien revenue bond ratings of Aa3 and A1, respectively. The rating action affects approximately $262 million of revenue bonds outstanding. The outlook has been revised to stable from positive.

The revision of the Port of Corpus Christi Authority’s (POCCA) outlook to stable from positive considers its regional water supply challenges. A Stage 4 drought mandate, currently forecasted by the city to occur in November 2026, that causes operational shutdowns of key industries would negatively affect port volume and revenue. Almost all of POCCA’s customers obtain their water from the City of Corpus Christi.

The port as the number one crude exporter in the United States, of oil and LNG. Although POCCA is a landlord port, revenues are highly linked to throughput volumes and can be volatile. The city and local industry are currently implementing solutions, including wastewater reuse and additional groundwater acquisition that are likely to be operational in the next 6-12 months.

INTERNATIONAL STUDENTS AND RATINGS

Moody’s revised Illinois Institute of Technology, IL’s (IIT) outlook to negative from stable and affirmed the Ba2 issuer and revenue bond ratings. 

The Ba2 issuer rating reflects Illinois Tech’s sound overall wealth and good regional brand with its STEM focus and urban location. Following several years of significant enrollment progress and growth in net student charges, IIT significantly improved its operating performance and moved to budget surpluses.

However, federal policy shifts have complicated the university’s ability to enroll international students which, until fall 2025, accounted for around 50% of total FTE enrollment. Similar to the higher education sector at large, IIT experienced a significant decline in international enrollment, largely at the graduate level. 

THE POWER OF PUBLIC POWER

A recent analysis from UCLA highlighted another trend—the increasingly unfavorable spread between the rates charged by investor-owned utilities and those of publicly owned electricity providers. That’s happening in many regions of the country, but especially in California, where average rates for the investor-owned utilities Pacific Gas and Electric (PG&E), Southern California Edison (SCE) and San Diego Gas and Electric (SDG&E) rose between 48 and 67 percent during that same recent  four year period. Their rates are over 50 percent higher than average rates for municipal utilities like the Los Angeles Department of Water and Power (LADWP) and the Sacramento Municipal Utility District.

The California Public Utilities Commission (CPUC) voted to set the ground rules for an independent assessment of what it would cost for San Francisco to take over a portion of PG&E’s grid. This has been a goal for many and they have continued to pursue it since the company rejected their $2.5 billion offer in 2019. investor-owned utilities raise money through a mix of higher-interest bonds and borrowing money from shareholders who receive at double digit rates. IOUs also pay taxes on the profits they earn, while municipal utilities are not taxed on revenue (although some, like LADWP, pay into their cities’ general funds to replace the lost tax income). 

Municipal power agencies also don’t pay into the state’s wildfire fund to reimburse damages for utility-caused fires.

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

Joseph Krist

Publisher

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

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NOVEMBER REALITIES

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

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

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

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

NEW ORLEANS

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

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

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

LAYOFFS

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

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

NUCLEAR

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

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

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

HYDROGEN

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

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

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

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

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

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

BATTERIES LOSE TAX POWER

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

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

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

MORE FEMA CUTS

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

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

MUNICIPAL UTILITY SOLAR FEE CHALLENGE

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

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

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

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

ALASKA LOCAL DEBT

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

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

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

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

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

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

Joseph Krist

Publisher

NUCLEAR

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

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

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

PUERTO RICO GRID

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

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

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

FEMA

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

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

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

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

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

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

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

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

WIND

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

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

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

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

FEDERAL R&D CUTS AND NEW YORK CITY

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

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

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

AMAZON CUTS

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

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

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

HARVEY, ILLINOIS

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

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

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

FLORIDA PROPERTY TAX DEBATE

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

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

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

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