Joseph Krist
Publisher
MEDICAID WORKRULE REDUX
Georgia has been one of the original holdouts against the expansion of Medicaid eligibility from the enactment of the ACA. This in spite of the fact that some 90% of the cost would be funded by the federal government. Previous efforts by states to impose work requirements on Medicaid recipients have been overturned in the federal courts. The Biden administration did not appeal, allowing the program to take effect. Now, one of the states which tried the tactic is trying again.
Beginning on July 1, Georgia’s Pathways to Coverage program will become the state’s mechanism for judging eligibility for Medicaid. The plan was approved very late in the Trump administration. Georgia was already known for having one of the strictest Medicaid requirements in the country. It will only cover parents earning up to about 30 percent of the federal poverty line (an annual income of no more than $8,000 for a family of three).
The changes in effect on July 1 will partially expand Medicaid coverage to people with incomes up to the federal poverty level: less than $25,000 per year for a family of three. Applicants will need to prove they already meet the 80-hour monthly work requirement in order to apply, and there is no grace period. The rules apply to new applicants. Existing recipients in Georgia are covered under the state’s traditional fee-for-service Medicaid program.
If the work requirements are not met, the state will not remove anyone for failing to comply. (When the federal courts blocked the previous program in 2019, it was estimated that some 18,000 people lost insurance in the first seven months of enforcement.) The state will instead move them from the private insurance used for Arkansas’s expansion to the traditional fee-for-service Medicaid program, which is less generous.
GAINESVILLE REGIONAL UTILITIES
Governor DeSantis signed a law creating a new board to take over the operations of the Gainesville Regional Utilities. GRU serves some 93,000 customers in the city of Gainesville and surrounding areas. Throughout its history, it has been governed by the City Commission, which appoints a general manager to handle the day-to-day operations. Recently, suburban customers of GRU who cannot vote in local Gainesville elections have been complaining about rates and the location of generation facilities.
Those complaints generated the legislation which was enacted this week. The bill takes away the city commission’s control of GRU and gives ultimate authority to an unpaid five-member board appointed by the governor. The board would have the ability to hire and fire GRU’s general manager. That sets up a legal conflict as the city’s charter still says that the role is a “charter officer” position that answers to the City Commission.
Now that a new board will be appointed by the Governor, it is believed that GRU is the next municipal utility in Florida which has been targeted for sale to a for-profit utility like Florida Power and Light. Gainesville voters soundly rejected appointing an independent authority to govern GRU in 2018.
The increasingly partisan approach to the state’s municipal utilities has already led to one colossal failure to privatize the Jacksonville Electric Authority. The moves to privatize JEA led to the indictment of JEA’s chief executive officer and finance chief, who were accused of trying to extract millions out of the city-owned utility before selling it off to a private operator. That process led to federal investigations amid charges of corruption. CEO Aaron Zahn and CFO Ryan Wannemacher are due for trial in October.
A citizen-led nonprofit group, Gainesville Residents United, has said it will file a federal lawsuit in the coming days in response to the bill. No surprise there. In June the city commission authorized the spending of $250,000 from the GRU utility system reserves fund for outside counsel to provide legal advice in connection with analyzing and potentially litigating the impact of the bill on the city. The move to take over GRU is a primarily political act.
ROAD FUNDING
While the debate over how to fund roads – gas taxes or mileage fees – continues, the immediate needs of transportation agencies cannot be ignored. That led to the enactment of a variety of gas tax increases across the country. It also led three states to impose new taxes on the use of charging stations. Here’s where the changes took effect on July 1.
California – The gas tax rises from 53.9 cents to 57.9 cents per gallon. The per-gallon tax on diesel goes from 33 cents to 34.5 cents; on Oct. 1 it will rise again to 50 cents.
Colorado – The existing gas tax includes fuel fees that increase July 1. The fee for a gallon of gas rises by 1 cent; the fee for diesel goes up by 2 cents.
Illinois – The gas tax goes up from 42.3 cents to 45.4 cents per gallon. The tax on diesel rises from 49.8 cents to 52.9 cents per gallon.
Indiana – The gas tax increases from 33 cents to 34 cents per gallon.
Iowa – The per-gallon tax on ethanol and ethanol-gas blends will rise from 24 cents to 24.5 cents per gallon. For higher-grade biodiesel, however, the tax will decrease from 30.1 cents to 29.8 cents per gallon.
Kentucky – The tax on gasoline increases from 26.6 cents to 28.7 cents per gallon.
Maryland – The gas tax goes from 42.7 cents to 47 cents per gallon; for diesel, the tax rises from 43.45 cents to 47.75 cents per gallon.
Missouri – The gas tax increases from 22 cents to 24.5 cents per gallon.
Virginia – The gas tax increases from 28 cents to 29.8 cents per gallon; the tax on diesel goes from 28.9 cents to 30.8 cents per gallon.
Iowa, Montana, and Utah included new electric vehicle taxes.
Iowa – At public and commercial charging stations, there is a new tax of 2.6 cents per kilowatt hour.
Montana – An electric current tax of 3 cents per kilowatt hour takes effect at new vehicle charging stations (those opened after July 1, 2023).
Utah – There is a new 12.5% tax at electric vehicle charging stations but the gas tax rate falls from 36.4 cents to 34.5 cents per gallon.
NUCLEAR RESTART FUNDING
The effort to restart the Palisades nuclear generating plant in Michigan received a boost from the State of Michigan. The budget for the FY beginning on October 1 was passed by the Michigan legislature. It includes some $150 million designated for a portion of the cost of restarting the privately owned plant. Palisades owner Holtec is about $300 million short of what it needs to get the plant operating again. It’s also seeking funds from the U.S. Department of Energy loan office to get Palisades back online.
GATEWAY TUNNEL
The federal government will give $6.88 billion, the most ever awarded to a mass-transit project, for the construction of a second rail tunnel under the Hudson River to New York City. The Gateway Tunnel would relieve strain on the over a century old existing tunnel serving railroads into New York. It has been the subject of debate and has been slowed down by politics. Chris Christie refused to fund New Jersey’s share of the proposed tunnel.
The existing tunnels have been steadily deteriorating since Hurricane Sandy flooded them with salt water in 2012. The federal money will allow the project to formally begin the process of selecting contractors. The estimated $16 billion project is planned for completion in 2035. Amtrak, which owns the tunnels, plans to shut those tracks for repairs, one at a time, once the new tunnel is in use.
CARBON CAPTURE
The efforts by Summit Carbon Solutions to obtain approvals for its proposed pipeline for captured carbon have been controversial. Most of the opposition has been fueled by the potential use of eminent domain to obtain right of way for the pipeline. Those efforts are being litigated in the courts. Now, the effort is taking on a more aggressive turn.
In North Dakota, two counties have passed ordinances governing the establishment and operation of pipelines like the one proposed by Summit. Summit submitted paperwork in June asking the North Dakota PSC to declare the two county ordinances “superceded and preempted” by state and federal law. “Those ordinances, which contain setbacks and other safety-related measures, would frustrate if not outright halt investment in North Dakota’s carbon capture, utilization, and storage industry,” according to Summit.
What do the ordinances say? One of the county ordinances states that a hazardous liquids pipeline cannot be constructed within 10 miles of an electric power generating facility, an electric transmission line, an electric transmission substation, a public drinking water treatment plant, a public wastewater treatment plant or the extraterritorial line of an incorporated city.
Other limits would not allow the pipeline to be built within 4 miles of a church, school, nursing home, long-term care facility or hospital; within 2 miles of a public park, recreation area, occupied structure or animal feeding facility; and within 1 mile of a confined feeding facility or the ordinary high-water mark of the Missouri River. The challenge to a designated agency’s ability to regulate land use is a bold move with potential ramifications beyond those of the pipeline itself.
In South Dakota, the house passed with a two-thirds vote, HB 1133 which would have limited the ability of companies doing carbon sequestration to use eminent domain. The debate there focused on whether sequestered carbon was a commodity in the same way natural gas and electricity are treated for regulatory purposes. The answer will drive the definitions of how to treat captured carbon and then whether the project constitutes public use. The Senate, with its 31-4 Republican majority would not take up the bill.
Summit faces additional review in Iowa where the same property issues have been at the fore of pipeline opponents. They have applied for an extension of existing permits supporting a proposed 31-mile addition to a carbon dioxide pipeline. Summit has said it wants a decision on its first permit by the end of the year. A final evidentiary hearing, which initially was expected to start in October, will instead get underway in August. Summit filed its eminent domain list with the Iowa Utilities Board that shows it has not obtained voluntary land easements for 1,036 parcels. That represents about 30% of the route.
WISCONSIN BUDGET
Governor Tony Evans used his constitutional veto power to reduce an income tax cut included in the budget passed by the state’s Republican-controlled legislature. The veto reduces the total revenue loss to the state from $3.5 billion to $175 million. It eliminated tax cuts for the highest two income brackets entirely. The process using “partial vetoes” or what are line-item vetoes reflect the highly partisan environment which has grown in Wisconsin over the last 15-20 years.
The process can produce some interesting results and this biennium is no exception. The partisan divide is clear with the legislative budget cutting taxes for all income levels vs. the Governor’s plan; the Legislature cut funding for DEI at the University of Wisconsin and the Governor restored all 188 positions in his plan. The Governor’s plan includes provisions designed to provide in future biennia and effectively in perpetuity, school districts with additive per pupil revenue adjustments of $325 every year.
The State’s localities benefit from the budget. 2023 Wisconsin Act 12 created a funding structure that provides a $275 million boost to state aid to localities by funding the supplemental county and municipal aid program. This includes a $68 million increase in aid for counties and a $207 million increase in aid for municipalities in fiscal year 2024-25, representing a 36 percent increase over current county and municipal aid entitlements. The legislation provides additional aid to counties and municipalities in fiscal year 2025-26 and beyond by linking both current and supplemental county and municipal aid to the growth rate in the state sales tax.
SAN FRANCISCO
Moody’s Investors Service has revised the outlook on the City and County of San Francisco, CA’s long-term ratings to negative from stable. Concurrently, Moody’s affirmed the Aaa ratings on the city’s issuer rating and on approximately $2.6 billion in outstanding general obligation (GO) bonds. The revision of the outlook to negative primarily reflects the various near term financial and economic headwinds facing San Francisco.
The city expects draws on reserves in fiscal 2023 and across budget years 2024 and 2025. Prolonged weakness in the city’s commercial real estate market, stubbornly slow to rebound office worker attendance, and low downtown utilization continue to weigh on the broad economic vitality of San Francisco’s core business, retail, and tourism districts.
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