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.

Joseph Krist

Publisher

TRANSIT FUNDING

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

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

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

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

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

NEW YORK BUDGET REALITIES VS.  RHETORIC

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

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

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

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

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

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

NOT OVER UNTIL IT’S OVER

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

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

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

CHICAGO BUDGET

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

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

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

PORT OF LOS ANGELES

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

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

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

Joseph Krist

Publisher

HOSPITAL MERGER

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

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

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

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

ILLINOIS AND FEDERAL CUTS

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

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

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

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

OREGON TRANSPORTATION FUNDING

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

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

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

CLIMATE AND ENERGY

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

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

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

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

Nebraska does not require state approval for CO2 pipelines. 

COAL

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

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

SALT RIVER PROJECT

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

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

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

Joseph Krist

Publisher

RESILIENCE AND A NEW REALITY

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

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

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

MEDICAID WORK RULE REALITIES

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

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

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

STATES

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

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

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

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

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

SHUTDOWN COSTS

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

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

NEBRASKA CLIMATE REPORTS

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

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

PENNSYLVANIA MASS TRANSIT FUNDING CRISIS

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

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

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

ELECTRIC VEHICLES

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

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

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

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

NEW ORLEANS

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

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

SHELBY COUNTY

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

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

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

BRIGHTLINE WEST COST UPDATE

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

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

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

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

Joseph Krist

Publisher

WIND

A federal judge ruled that Orsted could restart work on Revolution Wind, a large wind farm off the coast of Rhode Island. The $6.2 billion Revolution Wind project was 80 percent completed when the Interior Department ordered construction to stop. The Interior Department cited unspecified national security concerns and argued that the project failed to comply with some conditions of its permit, including coordinating with the U.S. Navy to avoid risks to military operations.

The judge found that Revolution Wind “has demonstrated likelihood of success” on its claims, and said the company would suffer “irreparable harm” if the Trump administration order to stop work remained in place. That meets the test for rejecting efforts to dismiss the suits. A loss for the Administration would be seen as positive for the Vineyard Wind project in Massachusetts and the proposed project off the Maryland coast.

It’s just another step in what has become a confusing process if you are trying to see trends in the wind sector. The same administration that is fighting the Massachusetts and Maryland projects is supporting other projects in court. On Sept. 8, the Interior Department’s Bureau of Ocean Energy Management filed a letter which indicated that it wants to dismiss a lawsuit brought by the anti-wind group Protect Our Coast NJ that challenges New York’s Empire Wind.

The judge noted that ​“mandating the immediate pause to construction of a project whose approval the Bureau continues to defend in other cases is the height of arbitrary and capricious.” Coastal Virginia Offshore Wind the only offshore wind farm currently being built in a Republican-led state. There is also a gubernatorial and legislative election in Virginia this November. So, there is an interest in letting the project continue at least through the election.

BRIGHTLINE SAFETY FUNDING

The Trump administration announced it is committing $42 million to address safety concerns along the Brightline route, as officials respond to the train’s record as the deadliest major passenger railroad in the nation based on deaths per million miles traveled. More than 180 people have been struck and killed by Brightline trains. Some 104 of those incidents were in the three years ending August 31 of this year. The company has not been found liable for any fatalities. Just over 40% of the incidents were suicides.

The USDOT is releasing funding for four grants that had first been announced under the Biden administration but were lacking finalized agreements. Some $25 million in federal funds are dedicated to 33 miles of protective fencing and landscaping at trespassing hotspots, warning markings at rail crossings and 168 crisis-support signs meant to address people who are suicidal. The Florida Department of Transportation and Brightline have each committed an additional $10 million for the measures. Construction is expected in 2026.

RENEWABLES

According to the US Energy Information Administration, batteries are expected to account for roughly a quarter of all installations to the grid this year. According to the American Clean Power Association, in the second quarter of this year battery installations were 63 percent higher than the same period last year. At the same time, the Trump administration’s continuing efforts to eliminate renewable power continue unabated.

The market is clearly sending a different signal than does the President. The One Big Beautiful Bill Act includes  “foreign entities of concern” (FEOC) provisions set to take effect in in January aiming to prohibit imports of components from primarily China. The impact is clear given how China is the leading producer of battery components.  In 2026, storage projects will need to spend 55 percent of costs on non-FEOC components, a percentage that increases to 75 percent by decade’s end.

LNG TERMINALS

Louisiana’s four operating LNG export facilities are the most of any state in the country, and by themselves represent more than 60% of all LNG exports from the U.S. So, it is not a surprise that Woodside Energy’s $17.5 billion production and export facility broke ground in Calcasieu Parish. It is the first LNG plant to receive approval after President Trump declared a domestic energy emergency. The plant is expected to begin operations in 2029. It will add 16.5 million metric tons per year of LNG, and could grow to produce and export another 11 million.

The project is projected to support more than 4,400 jobs at the site during construction, a majority of which will be American workers. It expects another 15,000 direct jobs on the project once complete. The project is also being constructed within a designated foreign trade zone, which offers some relief on taxes and customs duties. Woodside – an Australian firm – took over the Louisiana LNG project in its billion-dollar acquisition of the Houston-based Tellurian in 2024.

TRANSPORTATION FUNDING

The realities of the current economy combined with efforts to reduce federal financial support for transportation continue to show up as one indicator of a less rosy outlook for state finances. Efforts to resolve the Commonwealth of Pennsylvania’s FY 2026 budget continue to drag on. Funding for mass transit is being held back as legislators battle over to raise new funds or reallocate existing funds.

In Oregon and Vermont, shortfalls in transportation revenues are leading to job cuts. In Oregon, a proposed agreement to fund transportation has been repeatedly postponed due to a legislator’s health issue. The transit agency for the Portland, Ore., area, Tri-Met, announced it would eliminate up to eight bus lines as well as reduce the frequency of service on other lines as soon as November without a funding package.

Vermont’s Department of Transportation is laying off 16 employees and cutting a dozen more vacant positions. The cuts are designed to offset losses of revenue. Beyond laying off workers, the plan will save $2 million by delaying the planned replacement and expansion of a vehicle garage, save $500,000 by putting off a plan to improve the platform at the Amtrak station in Rutland, cutting back equipment acquisition.  

HOSPITALS

The Westchester County Health Care Corporation (WCHCC), operates the Westchester Medical Center including operations at the Valhalla campus and the MidHudson Regional Hospital in Poughkeepsie, New York. The system will assume full ownership and operational control (previously 60% owned) of Bon Secours Charity Health System with hospitals in Rockland and Orange Counties.  It is the sole member of HealthAlliance’s hospitals in Ulster and Delaware Counties. The Valhalla campus is leased from Westchester County, although WCHCC has not been required to pay rent under the conditions of the lease agreement.

WCHCC is the only tertiary and quaternary care provider between New York City and Albany. Often a provider of regional trauma care, it is highly dependent on Medicaid for revenues so it is at risk for changes going forward as the impacts of the OBBBA roll out over the sector. As it faces these pressures, WCHCC has received a boost in its ratings outlook.

Moody’s) has revised the outlook for Westchester County Health Care Corporation (WCHCC) (NY) and Charity Health System (CHS) (NY) to positive from negative. The Caa1 revenue bond ratings were affirmed. The outlook revision to positive from negative reflects stabilizing liquidity as new bond proceeds will cover CHS’ November bullet payment, vendor obligations, and provide working capital. As these issues are addressed, the expectation is that additional outside liquidity support would be available.

One of the constraining factors on the credit is the low level of liquidity on the balance sheet. Some of that reflects the construction of a new building which is expected to generate higher more profitable demand beginning next year.

Owensboro Health, Inc. (OHI) is a three hospital system with the flagship hospital located in Daviess County in western Kentucky. The hospital is designated as both a sole community provider and a rural referral center. That puts it at the center of the debate over the federal role in funding these safety net facilities. A heavy reliance on government payors and the risks to Medicaid funding posed by recent legislation create challenges for a system which already was supported by state Medicaid supplemental funding.

Nonetheless, Moody’s revised OHI’s rating outlook to positive from stable and affirmed its Baa2 revenue rating. It cited a lack of new debt and sufficient cash flow to service debt. The plan is to reduce leverage and build cash to debt over 80% next year. 

CHICAGO

The Chicago City Council members approved an agreement to pay $90 million to 180 people who said they were victims of a unit with corrupt police officers who fabricated evidence, charged drug dealers a “street tax” and falsely arrested people at a public housing complex in the early 2000s. The settlement is expected to be paid next year which means it should be accounted for in the city budget which is due for submission to the Council in mid-October. It is no secret that the City faces the next stage of an ever-worsening fiscal crisis, with a projected deficit of $1.15 billion for the next year.

The Civic Federation has weighed in on the approval of a balanced budget by the Chicago Public Schools (CPS). “The District continues to face projected structural deficits of over $500 million annually, carries pension obligations and debt burdens that constrain its flexibility, and oversees aging facilities with an estimated $14 billion in backlogged maintenance.” The plan represents a political defeat for the Mayor in that it does not include a $175 million pension contribution from CPS.

FEDERAL HOUSING POLICIES

The New York City Housing Authority provides affordable housing for nearly 521,000 New Yorkers through buildings it owns and operates, as well as through rental subsidy vouchers that enable low-income tenants to afford to rent units in the private market. NYCHA carries out federal housing programs largely relying on federal funding, with smaller revenue streams from tenant rents and City and State sources. The current estimate to bring NYCHA’s apartment real estate portfolio into a state of good repair is estimated to top $78 billion over 20 years. Nevertheless, NYCHA now faces federal proposals to substantially reduce funding for public housing and vouchers.

NYCHA owns and operates about 157,000 apartments in 251 housing developments serving more than 312,000 residents across all five boroughs. NYCHA is by far the largest Public Housing Authority (PHA) in the United States. For context, the locations with the next largest PHAs are Puerto Rico (54,000 apartments), Chicago (20,000 apartments), and Philadelphia (13,000 apartments).3 Over 300,000 New Yorkers live in NYCHA public housing. There are currently over 241,000 families on NYCHA’s waitlist.

The median household income is about $26,000 for public housing residents, and the average rent paid by a NYCHA tenant is $628 per month. NYCHA’s operating expense budget for fiscal year 2025 is $5.4 billion. The largest expense is Section 8 payments, inclusive of Tenant-Based and Project-Based Vouchers. Other expenses in NYCHA’s operating budget include staffing, utilities like fuel and water, contracts for maintenance such as plumbing and painting, and fringe benefits to employees.

NYCHA’s operating expense budget for fiscal year 2025 is $5.4 billion. The largest expense in NYCHA’s operating budget is Section 8 payments, inclusive of Tenant-Based and Project-Based Vouchers. Other expenses include staffing, utilities like fuel and water, contracts for maintenance such as plumbing and painting, and fringe benefits to employees.

NYCHA has several revenue sources, but most of these operating expenses are funded by the federal government. In 2025, 67% of NYCHA’s revenue comes from the federal government—43% from Section 8 and 24% in other federal subsidies, mainly HUD’s public housing operating subsidy. Tenant Rents comprise 20% of 2025 revenues. Only 5% of NYCHA’s operating budget is funded by the City.

The proposals from the Trump administration would combine these programs into one backed by block grants. They proposed a two year cap on rental assistance for all “able-bodied adults” to “ensure a majority of rental assistance funding through States goes to the elderly and disabled.” Given the acute shortage of affordable housing in New York City and notably low rents relative to market rate housing, the average tenancy of a NYCHA resident is 25 years and 15 years for a Section 8 voucher holder

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

ZONING EARTHQUAKE

A long term goal of California advocates for denser transit oriented housing is on the edge of achievement as we go to press. Senate Bill 79 would “upzone” neighborhoods immediately surrounding train, light rail and subway stations in many of the state’s most populous metro areas. That means apartment developers will be able to construct residential buildings — some as tall as 75 feet — regardless of what local zoning regulations dictate.

The legislation is meant to create a path for more apartment developments in areas closest to jobs and services. By centering that development around public transit stations, it’s meant to steer more people away from cars and towards buses and trains. SB 79 would also give transit agencies the ability to develop their own land, giving them another potential revenue source.

SB 79 only targets homes within a half mile of train stations, subway stops, “high-frequency” light rail and commuter rail stops and fixed-route “bus rapid transit” lines. Buildings within the nearest quarter mile of Amtrak stations, Bay Area Rapid Transit stops and Los Angeles subway stations can top out at roughly seven stories. The rezoning with the new rules not taking effect until at least 2032. The legislation would only apply to counties with at least 15 passenger rail stations. According to its sponsors, just eight counties fit the bill: Los Angeles, San Diego, Orange, Santa Clara, Alameda, Sacramento, San Francisco and San Mateo.

SOLAR CHARGE PROPOSALS

There are some 9,000 residential solar installations in the Colorado Springs Utilities (CSU) service area. Calculations done by CSU revealed non-solar customers are covering on average $600 annually for solar customers. The utility says the issue stems from timing mismatches between energy production and consumption. It’s the old argument that solar is produced in the daytime but energy demand is highest in the nighttime.

A rate case hearing is scheduled with city council for Oct. 14. If passed by city council, the increased rate would go into effect Jan. 1, 2027. Solar customers with Colorado Springs Utilities could see their monthly bills increase by $50, potentially matching what non-solar customers pay. CSU customers are already seeing a series of five annual general rate increases. The credit is a solid AA so there doesn’t seem to be a financial issue driving the new solar rate.

In Nevada, the Public Utility Commission of Nevada unanimously approved a new rate design for customers in the southern portion of the state. It adds a daily demand charge for residential and small business customers that could add more than $30 to some monthly bills. It is designed to make solar less attractive for small scale sites. Shifts to the net metering program in the utility’s northern service territory, where it will calculate credits for energy returned to the grid every 15 minutes, rather than monthly as it does now are expected to negatively impact solar power users. The net metering changes would reduce annual solar customer compensation by $136

ELECTRIC ECONOMY

The US solar industry installed 7.5 gigawatts (GW) of capacity in Q2 2025, a 24% decline from Q2 2024 and a 28% decrease since Q1 2025. Solar accounted for 56% of all new electricity-generating capacity added to the US grid in the first half of 2025, with a total of 18 GW installed. Combined, solar and storage accounted for 82% of new capacity in the first half of the year. Texas installed the most solar capacity in the first half of 2025 (3.8 GW), followed by California, Indiana, and Arizona.

Every segment saw declining volumes except for commercial solar. Much of that growth was specific to California In Q2 2025, the residential segment installed 1,064 MW of solar capacity, declining 9% year-over-year and 3% quarter-over-quarter. Several bankruptcies of major residential solar companies also contributed to lower installation volumes. Then there are the implications of the OBBBA.

The solar industry will no longer have access to the Section 48E and 45Y tax credits after 2027 or the Section 25D tax credits (for customer-owned residential solar) after 2025. if a solar project starts construction on or before July 4, 2026, it has at least four years to come online to earn tax credits. Otherwise, solar projects that begin construction after that date must be placed in service by the end of 2027 to be eligible for 48E and 45Y credits.

The geopolitical aspect of new regulations could prove to be another hurdle to solar. The share of a project’s costs that cannot be paid to “companies that are headquartered in China or that have ties to China” starts at 40% in 2026 and increases five percentage points a year to 60% in 2030 and beyond. US solar projects rarely source solar panels from China. Many parts of the supply chain are fed by China headquartered companies or include technologies with patents held by Chinese companies.

While all of this is sorted out, Rivian the electric truck manufacturer officially broke ground on its huge manufacturing facility in Georgia. The news comes in the wake of concerns raised by ICE arrests at a Hyundai plant in Georgia. The company currently makes a high-end pickup truck and SUV in Normal, Illinois, as well as delivery vehicles for Amazon and others. Its truck prices start at $71,000.

The Illinois plant will begin making the smaller R2 next year, with prices starting at $45,000. The Georgia factory is projected to be able to make 200,000 vehicles yearly starting in 2028. Rivian plans another 200,000 in capacity in phase two, volume that would spread fixed costs over many more vehicles. the Rivian expects to produce 40,000 to 46,000 vehicles to deliver this year, down from 52,000 last year. The company says it’s limiting production in part to launch 2026 models.

POLITICS AND PORTS

Beginning next month, the new port usage fees will be imposed on Chinese containerships, bulk carriers, and other cargo vessels. The U.S. Trade Representative has claimed that these levies will reduce U.S. demand for Chinese shipping and provide investment incentives to U.S. shipbuilders. U.S. shipyards primarily build naval vessels, with commercial shipbuilding representing a tiny fraction of total output. Building ships in the United States is far more expensive than it is in Asia due to higher labor costs, environmental regulations, and the absence of the economies of scale enjoyed by Chinese, Korean, and Japanese shipyards. 

The U.S. LNG industry will be among the hardest hit by these new port fees. No LNG carriers have been built in the United States since the 1970s. No U.S. shipyard has the infrastructure or technical expertise to build one. Last year Chinese-built ships accounted for an estimated 30% of all visits to U.S. ports. U.S. manufacturers who rely on integrated international supply chains need costs to stay down.

It is estimated that more than half of the value of U.S. imports every year is composed of capital equipment, raw materials, and other intermediate goods – not final goods. Many of those industrial inputs – from electronics and automotive parts to machine tools and chemicals – flow into the United States on Chinese vessels.

This is driving activity at the Port of Los Angeles. We never worry about the Port as a credit but it serves as a good indicator of economic activity and trends. In August, the Port processed 958,355 Twenty-Foot Equivalent Units (TEUs), nearly the same as last year. August 2025 loaded imports came in at 504,514 TEUs, 1% less than last year. Loaded exports landed at 127,379 TEUs, a 5% improvement from 2024. The Port processed 326,462 empty container units, 1% less than last year.

Eight months into 2025, the Port of Los Angeles has handled 6,934,004 TEUs, 4.5% more than the same period in 2024. The Port expects 4Q activity to slow relative to 2024 levels. The Port cited tariff risk as well as economic signals like slowing job growth and lingering inflation to project lower volumes.

CALIFORNIA TRANSIT PACKAGE

Senate Bill 105 was approved unanimously by the California Senate. It amended the state’s FY 2026 budget to provide funding for mass transit in the Bay area. The legislation requires the Department of Finance, with support from the state’s Transportation Agency, to look for “loan or other financing options that might be used to provide sufficient short-term state financial assistance for local transit agencies.” The deadline to complete that process is January 10, 2026.

The proposed loans to the agencies with BART the most prominent among them are designed to provide a bridge until a sustainable funding package can go before voters. A November 2026 ballot measure if voters approve it, will fund transit agencies through a retail tax of .05% to 1%, starting in 2027. Before ridership collapsed during the pandemic and the rise of work from home, 70% of BART funding came from fares. By 2023 that number was had declined to only 25%.. 

FLORIDA’S LESS SUNNY BUDGET

Florida’s Legislative Budget Commission (LBC) approved state economic estimate that projects a surplus of $3.8 billion for the 2026-27 fiscal year, but a $1.5 billion gap and $6.6 gap billion in the following budget years. Some of the projected shortfalls can be attributed to moves to balance the current budget that effectively pushed the risk of budget shortfalls to later fiscal years.

Education and health care make up more than two-thirds of the budget. One item that is not is the cost of Alligator Alcatraz. The State insists that its $200 million of sunk costs will be reimbursed by current court proceedings have found that with no federal money having been spent on the facility, it is not a given that the facility is eligible for reimbursement.

UTILITY TAKEOVER

This summer (MCN 8.4.25) we documented the travails of a small Mississippi electric utility serving the City of Holly Springs. This week, the Mississippi Public Service Commission voted unanimously to place Holly Springs Public Utility (HSPU) in receivership. By going into receivership, a chancery court judge will determine the future of the utility’s operations. Options outlined by the commission included being placed for sale, becoming a cooperative model, or eminent domain.

The utility has not completed an audit in several years. The utility’s attorney explained that HSPU is audited with the city, and Holly Springs has not had one since the early 2020s. It owes its electricity provider, the Tennessee Valley Authority, more than $6 million as well as $3 million to contractors. The report estimates the debt is between $20 to $30 million. The city admitted HSPU is understaffed and lacks qualified managers and that it cannot provide adequate service to its 12,000 customers.

MEDICAID

We have commented on the potentially devastating impact of changes to the federal Medicaid Program. Safety net hospitals are the ones at most risk. Now, a report from the NYC Independent Budget Office (IBO) details potential negative impacts on the nation’s largest public health system. New York City Health and Hospitals Corporation (HHC) is the largest public hospital system in the United States. HHC has over 43,000 employees, an operating budget of $13.5 billion, and serves over one million patients annually.

Over 65% of the system’s adult patients are either uninsured or enrolled in Medicaid.  51% of HHC’s $13.5 billion budget is generated through a combination of public insurance reimbursements and supplemental Medicaid payments. The City of New York provides a need-based subsidy to HHC that totaled 28% of its 2025 operating budget. The OBBBA did not directly adjust Medicaid reimbursement rates.

Federal changes primarily adjusted the populations who will be eligible for Medicaid. Changes in Medicaid eligibility, which may lead to an increase in the number of uninsured patients seeking care at HHC, will result in a reduction in revenues for the system, and a decrease in revenues will result in an increased need for external support.

This comes at a time when hospitals all over are considering cutbacks in the face of uncertainty. Seattle Children’s Hospital plans to lay off 154 employees due to state and federal funding cuts. The hospital, which has an estimated 10,275 employees, said it also is eliminating 350 unfilled positions. The cuts were mostly administrative, but some clinical roles were affected. Memorial Sloan Kettering Cancer Center plans to lay off between 1 and 2% of its staff.  

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

Joseph Krist

Publisher

TRANSIT FUNDING BATTLES

In Pennsylvania, Gov. Josh Shapiro’s administration approved the use of hundreds of millions of dollars in capital project funding for Philadelphia’s public transit agency to help it restore bus, trolley and rail services that it had eliminated to shore up its deficit-riddled finances. The move comes in the face of stubborn resistance to any new revenues to be generated to fund mass transit. The opposition is largely partisan based. It has held up enactment of a FY 2026 budget for the Commonwealth.

The Southeastern Pennsylvania Transportation Authority [SEPTA] serves 800,000 daily riders. SEPTA had made the request to comply with a judge’s order to undo the two-week-old cuts. Those cuts were cited as factors in diminished school attendance in a system which depends on SEPTA for student transit.

The Commonwealth’s next largest city is facing a similar problem. Pittsburgh Regional Transit [PRT] is expected to ask for similar authorization. PRT has been considering service reductions of 35% to help close what it calls a roughly $100 million deficit this year. That could include eliminating 45 bus routes, reducing 54 others and eliminating one of three light rail lines.

In California, Senate Bill 63, a sales tax measure that would fund Bay Area transit was stalled in the Legislature. A state loan is intended as a “bridge” until the tax is enacted, since that funding wouldn’t start flowing until 2027. If SB 63 passes the state Legislature, it would need to go before voters. SB 63 would authorize a half cent regional sales tax in Alameda, Contra Costa, and San Francisco counties and allow Santa Clara and San Mateo and to opt in. Officials said the do-or-die deadline for transit agencies to receive the funding is spring 2026. 

In Texas, Dallas Area Rapid Transit approved plans to reduce or eliminate several bus and rail routes. The changes, set to take effect Jan. 19, 2026, are expected to save the agency $18 million in its first year and $24 million annually in future budgets. The plan includes the elimination of seven bus routes, reduced peak-hour frequency on light rail and many bus lines, and modifications to several on-demand service zones.

TRANSIT EMPLOYMENT

The impact of economics, immigration policies and trade policies is showing up in terms of employment in a sector like transportation. The Bureau of Transportation Statistics released August employment numbers. Seasonally adjusted, employment in the transportation and warehousing sector rose to 6,747,700 in August 2025 — up 0.1% from the previous month and up 1.3% from August 2024. 

The sectors which reflect commercial trade all show slowing patterns. Air transportation fell to 580,100 in August 2025 — down 0.1% from the previous month but up 2.5% from August 2024. Truck transportation fell to 1,523,000 in August 2025 — down 0.1% from the previous month but up 0.4% from August 2024. Warehousing and storage remained virtually unchanged in August 2025 at 1,829,800 from the previous month but down 1.4% from August 2024.

Transit and ground passenger transportation remained virtually unchanged in August 2025 at 484,900 from the previous month but up 3.2% from August 2024. Rail transportation remained virtually unchanged in August 2025 at 152,800 from the previous month but down 1.6% from August 2024.

You can see the rush to get ships to ports in the summer driving water transportation employment. It rose to 71,900 in August 2025 — up 0.1% from the previous month and up 2.6% from August 2024. Energy exports helped pipeline transportation rise to 61,300 in August 2025 — up 0.8% from the previous month and up 10.1% from August 2024. One source of uncertainty is the coming harvest with several crops facing lower or even no export demand. Without export markets there will likely be less shipping demand.

PUBLIC POWER AND DATA CENTERS

Salt River Project (SRP) and Google announced a first-of-its-kind research collaboration to evaluate the real-world performance of emerging non-lithium ion long duration energy storage (LDES) technologies. Google will fund a portion of the costs for LDES pilot projects developed for SRP’s grid. This is not the first time Google and SRP have worked together.

Sonoran Solar Energy Center, a 260 MW solar facility with a 1 gigawatt-hour battery energy storage system, Storey Energy Center, an 88 MW solar and battery energy storage system,and Babbitt RanchEnergy Center, a 161 MW wind farm, all support the energy needs of Google’s future data center in Mesa. Google’s current projections indicate these projects will help its Arizona operations reach at least 80% Carbon Free Energy (CFE) on an hourly basis by 2026.

SRP is a community-based, not-for-profit public power utility and the largest electricity provider in the greater Phoenix metropolitan area, serving about 1.1 million customers. SRP has nearly 1,300 MW of energy storage currently supporting its grid, which includes 1,100 MW of battery storage— spanning eight facilities— and 200 MW of pumped hydro storage. 

MUNICIPAL SOLAR

An Italy-based independent power producer has brought its first U.S. project online. ContourGlobal, headquartered in Milan, on September 4 announced the state of commercial operation for Black Hollow Sun I, the 185-MW first phase of a solar power project in Severance, Colorado. The installation is providing electricity for the Platte River Power Authority, the community-owned utility serving Fort Collins, Loveland, Estes Park, and Longmont, north of Denver.

ContourGlobal also is building the second phase of the project—the 139-MW Black Hollow Sun II—which is expected to come online by year-end 2026. the first two phases of the project, with total capacity of 324 MW, will represent the largest solar photovoltaic installation in Northern Colorado.

California’s Turlock Irrigation District announced that construction is complete at the wide-span section of Project Nexus, and the solar array is now generating electricity. California’s first solar over canals pilot project. Project Nexus combines the wide-span section with a narrow-span portion, completed earlier in March, giving the project a total generation capacity of 1.6 megawatts.

Solar over canals has long been promoted as a mitigant to two of the state’s great shortages – water and renewable energy. Evaporation from aqueduct systems is reduced thereby helping more water to flow towards end users. The idea of covers for the canals as a water conservation technique is long standing. It’s the idea of pairing it with solar that is new. It offers both environmental benefits and eliminates issues like right of way acquisition.

ENERGY SUBSIDIES

We saw them first used to support nuclear power. Energy subsidies have been provided in states like New York, Illinois and Ohio. The carbon-free nature of the generation being preserved allowed many to overcome philosophical objections to them. One had to wonder if other energy providers facing issues with economically inefficient projects might seek similar help.

In Ohio, legislators are looking for ways to subsidize the operation of coal generating facilities in the Buckeye State. There isn’t the climate angle on this issue just a desire on the part of the Ohio Legislature to help generators. The effort to support nuclear plants went so well that the Ohio House Speaker is now doing 20 years in prison.

In California, the State has offered Valero financial help to keep its refining plant in Benicia open. Benicia is home to 26,000 people and its biggest employer is Valero Energy Corporation with about 400 workers. Valero has cited costs of compliance with regulatory issues to decide that the plant is not profitable. Now, the Legislature is considering a package of financial assistance to cover between $80 million and $200 million. 

The state would pay Valero to continue operating its Benicia refinery. The state funds would likely be earmarked for routine maintenance work. The City estimates that the plant closure would have a negative $10 million impact on the City of Benecia’s budget in addition to the hit to local employment and economic activity. The refinery produces 9% of the state’s gas supply. It has been estimated that $8 a gallon gas would soon follow any closure.

GAS BANS IN COURT

Washington’s high court will directly review a lower court ruling invalidating Initiative 2066 that was approved by a narrow majority in 2024. The initiative is intended to slow Washington’s shift from natural gas toward technology like electric heat pumps. It targets changes made to the state’s energy code that offer builders incentives in the permitting process for choosing electric heat pumps – which provide both heating and cooling in the same unit – instead of natural gas furnaces. It seeks to repeal provisions in a year-old state law  intended to accelerate Puget Sound Energy’s transition away from natural gas. It prevents approval of utility rate plans that end or restrict access to natural gas, or make it too costly. 

Upon voter approval, the state’s building associations went to court to challenge the initiative. Initially, King County Superior Court Judge ruled that the initiative is because it runs afoul of a provision limiting citizen initiatives to no more than one subject and requiring them to contain the full text of the portion of state laws they would alter. Supporters of the initiative are the parties which drove the request for direct Supreme Court review.

KEY BRIDGE REPLACEMENT

Rebuilding Baltimore’s Francis Scott Key Bridge could cost more than $5 billion — more than double the $1.9 billion estimate Maryland officials outlined in the immediate aftermath of the collapse. In the final days of former President Joe Biden’s administration, Congress enacted a bill requiring the federal government to fully fund the bridge’s rebuild. Now, the President is threatening to defund the project by withholding federal dollars.

Two representatives have introduced amendments to reduce the federal cost of replacing the bridge. One would provide $1 billion now but with the prospect that that could be the end of funding. Other representatives have suggested that no federal dollars be committed until insurance payments and yet to be litigated payments are tallied. That doesn’t get the bridge rebuilt. It does lengthen the time of the project, raise its costs, likely result in a larger net federal spend than would have been the case.

COLORADO RIVER

Negotiations drag on over disagreements between the seven Colorado River states on how to reallocate ever declining water flows. Current regulations are in effect through the end of 2026. While efforts to reach an agreement continue, the Bureau of Reclamation announced cuts on the river would continue into next year. In 2026, the river will again be in what are known as Tier 1 shortages, with Arizona and Nevada facing cuts. Arizona’s will amount to roughly 18 percent, or 512,000 acre-feet.  The Bureau of Reclamation expects water levels at Lake Powell to only be 27 percent full next year. 

GEORGIA BATTERY DILEMMA

“When you build a factory or install equipment at a factory, you need technicians. But the United States doesn’t have that workforce, and yet they won’t issue visas to let our people stay and do the work,” he said. “If that’s not possible, then establishing a local factory in the United States will either come with severe disadvantages or become very difficult for our companies. They will wonder whether they should even do it.” – South Korean President Lee Jae Myung

There are real concerns about the implications of the raid on a Hyundai battery factory. The factory uses non-American parts and systems and given the difficulties manufacturers face generally in finding employees, the move is problematic. The State of Georgia and the county where the plant is located have pledged some $2-3 billion in tax incentives. Georgia is home to about 100 Korean-owned facilities employing 17,000 people. That includes an SK Battery America EV battery factory, Hanwha Qcells’ solar panel plant, and a Kia EV manufacturing facility. Now, operations will be delayed by three months.

This situation parallels many other factory startups. Modern manufacturing relies on a wide variety of proprietary systems and parts. Often, a company will employ contract workers with particular skills to get plants up and running. As is the case in Georgia, those workers train the ultimate local holders of those jobs. It is a dynamic repeated across the country, the difference is that the needed skills and technology are not available here but from a foreign source.

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.