Joseph Krist

Publisher

CHICAGO PUBLIC SCHOOLS

CPS projects a budget of $8.43 billion for FY 2026, with $5.8 billion in personnel costs and $2.6 billion for operations and funding charter schools. The district spends $817 million a year in loan repayments alone. Without cuts and revenue boosts, CPS projects a $1.3 billion deficit by 2030.

Three main factors are driving the deficit, according to CPS: Costs to serve students with disabilities, which have grown by $450 million since 2019. Building expenses that include $14 billion for backlogged repairs, and costs for more engineers and maintenance that have boosted spending by $100 million since 2019. Growing pension payments, including the $175 million CPS took over from the city.

CPS must present a balanced budget to the board by Aug. 28.

PENNSYLVANIA BUDGET

Pennsylvania has become a regular when it comes to being unable to make a budget before the start of the fiscal year. Pennsylvania’s 500 school districts face particular fiscal uncertainty. Cash reserves vary from district to district and may be earmarked for capital expenses like new school buildings, rather than operating expenses like staff salaries and utilities.

Pennsylvania’s Department of Education said it would not be able to make payments for adult basic education and the Early Intervention, Pre-K Counts, and Head Start programs on July 21, which is when payments for these programs are made each month. If there’s no deal by July 31, PDE will also miss payments for special education and community colleges. And if there’s no deal come Aug. 28, more substantial payments will be missed, including for basic K-12 education.

The state’s university system announced its first tuition hike in seven years, citing the unfinished budget.  SEPTA, serving Philadelphia and its suburbs, and Pittsburgh Regional Transit, serving Allegheny County — have approved budgets that will reduce service if no deal to raise transit funding comes through. State payments are due in August for county services like child welfare, mental health, and substance use disorder programs.

FIRE

Fire has been on everyone’s mind after the fire disaster in greater Los Angeles to start the year. While the area continues to attempt to recover and/or rebuild, wildfires are becoming a real concern nationally. So far this year, there have been 41,069 wildfires reported in the United States and a total acreage of 2,892,545 has burned. This is higher than the 10-year-average number of fires, but lower than the average number of acres burned. 

As this is written, three new large incidents have been reported for a current total of 83 large incidents nationwide. Nearly half of the active fires are in Alaska which had its first heat advisory ever. California, Colorado, Oregon, and Washington all are the site of six fires.

OREGON TRANSPORTATION FUNDING UPDATE

Gov. Tina Kotek will call lawmakers into a special session in late August to take up the issue of road funding in the state. In the meantime, the Governor will delay nearly 500 layoffs at the Oregon Department of Transportation, ensuring 12 maintenance facilities throughout the state remain operational. Those layoffs were scheduled to take effect July 31. (See MCN 7.14.25). They will instead be delayed 45 days.

The current estimated funding shortfall for ODOT for fiscal 2026 is $354 million. A variety of proposals have been offered ranging from expense cuts to a significant gas tax hike. The process is complicated in that the ODOT budget fixes will be part of the state’s overall transportation funding plan. Any increased revenues from a higher gas tax would be shared with cities, counties, transit agencies, and bicycle group.

A 6-cent hike to the state gas tax is estimated to be enough to forestall ODOT layoffs and send money to city and county road departments that are also strapped for cash.  a 0.1% tax on Oregonians’ paychecks that goes to public transit. Transit agencies have warned that funding shortfalls will lead to future service cuts if that isn’t increased. Democrats proposed increasing the tax to 0.18% during this year’s session.

MILEAGE FEES

The move to use mileage fees as a base source of user funding for roads is about to receive a potential boost politically. In testimony before Congress, the American Trucking Association said “We’re looking seriously at advocating for a registration fee that applies to everybody – trucks, cars, electric vehicles,”. “You already register your vehicle at the state [motor vehicle agencies], you simply pay for what you normally would pay in fuel costs at the pump. You get rid of the gas tax, the tire tax, and put it in a registration fee.”

There is less unanimity in the industry among the small carrier and owner operator segments. Their trade group supports a registration fee to capture electric vehicles while actually advocating for a rise in the federal gas tax.

HE’S NOT DOING THE WIND THING

The Trump administration has canceled a $4.9 billion loan guarantee for the Grain Belt Express. (See 7.7.25 and 7.21.25 MCN). The Energy Department said Wednesday that its Loan Programs Office has terminated a commitment for the first phase of the Grain Belt Express project. The loan was issued by the Biden administration in November 2024.

When it approved the project, the Missouri Public Service Commission found that Grain Belt would save Missourians $17 billion in lower electric bills. The private developer of the project, Invenergy says it has obtained the vast majority of those easements through voluntary negotiations with landowners. For the rest, the project was granted the right of eminent domain. That is what opponents of the project seized upon to stop the project. As is the case with carbon pipelines, eminent domain has emerged as a primary source of opposition.

We find it interesting that the announcement of the cancellation of the loan highlights that it is at the request of Missouri Senator Josh Hawley. Initially, opposition was driven by the fact that so little of the power being transmitted was to be available to Missouri utilities. Overtime, the project has contracted with 39 municipal utilities in Missouri, including Columbia Water and Light. 

PUERTO RICO SOLAR

A private provider has been selected to install and maintain Energy Resilience Hubs in five Puerto Rico communities in 2025. Each site will feature solar generation and battery storage to maintain electricity for essential services during outages caused by natural disasters or grid failure. The 2025 effort is funded through a cooperative agreement with the U.S. Department of Energy and is expected to be completed by September.

For the past two weeks, LUMA Energy, Puerto Rico’s grid operator has relied on tens of thousands of batteries scattered across the island to overcome energy shortfalls and help deliver power. It is the first operational behind-the-meter virtual power plant in Latin America and the Caribbean. In May, Puerto Rico’s Energy Bureau, which regulates utilities, approved an emergency expansion of the “customer battery energy sharing” program in anticipation of a projected generation shortfall during the summer.

The Puerto Rico Energy Public Policy Act of 2019 codified the role of solar and storage in the island’s energy system and set a 100% renewable energy target by 2050. There are about 175,000 households with solar, and at least 160,000 of those also have storage. Puerto Rico’s Republican governor, Jenniffer González Colón

recently expressed support for maintaining the existing net metering system. Unsurprisingly, Puerto Rico Electric Authority opposed that. PREPA is seeking to add a fixed charge to net metering program participants. 

LAND PORTS

There has rightfully been emphasis on levels of activity at the country’s marine ports in the ever changing tariff environment. We don’t know how this will all play out by the latest deadline of August 1. We do know where to look for potential impacts on cross border land traffic between the U.S., Mexico, and Canada.

Detroit, Port Huron, and Buffalo are the top truck ports for U.S. freight flows with Canada, while Laredo, El Paso, and Otay Mesa are the top truck ports with Mexico. Detroit, Port Huron, and International Falls are the top rail connection ports for U.S. freight flows with Canada, while Laredo, Eagle Pass, and El Paso are the top rail connection ports with Mexico.

Chicago, Port Huron, and Minneapolis are the top pipeline connection regions for U.S. energy freight flows with Canada. El Paso, Hidalgo, and Laredo are the top pipeline connection regions with Mexico. Port of Boston, Arthur, and Portland are the top water port connections for U.S. energy flows with Canada. Port of Houston, Arthur, and Texas City are the top water port connections for U.S. energy flows on the Southern border.

REBUILDING L.A.

Some 800 homeowners who lost homes in areas affected by wildfires applied for rebuilding permits as of July 7, according to the Los Angeles Times. Fewer than 200 have received the permits, however. The City of Los Angeles takes about 55 days on average to approve a wildfire rebuild, and the broader Los Angeles County takes even longer.

Insurance companies in California have been dropping some of their customers in high fire-risk areas, leaving them no option besides the FAIR Plan, the state’s high-priced, limited-coverage insurer of last resort. As the result of the scale of the fires, the FAIR Plan had to collect levy additional assessments totaling an additional $1 billion from its member companies, a move that will raise property insurance prices.

The realities of the current situation are that a combination of underinsurance, inflated construction costs, competition for skilled workers and pressure on the general unskilled workforce in the region resulting from the immigration crackdown. All of those factors are driving an increased fear that many victims will move rather than rebuild. 

COAL

The U.S. Energy Information Administration reports that coal-fired power plants will remain relatively well-stocked through the end of next year. Power plants in the United States had 124 million short tons of coal on-site at the end of June for them to consume that coal at a rate of about 1.3 million short tons per day, meaning they had about 93 days’ worth of fuel on-site. 

Days of burn is calculated by dividing coal inventories held at power plants by a seasonal consumption rate. EIA forecasts days of burn will range between about 90 and 120 days between now through the end of 2026, or about a month’s worth of coal more than power plants had on-site between 2019 and 2022. The clear impact of policy changes including the mandated operation of coal generation is showing up.

Coal inventories held at U.S. power plants have fallen since early 2024, coal consumption in the U.S. electric power sector has also fallen since then, so the supply measure of days of burn remains relatively high. Coal shipments to power plants have declined in line with coal consumption in the U.S. electric power sector.

The electric power sector accounted for more than 90% of U.S. coal consumption in 2024. U.S. coal consumption in the first quarter of 2025 was 18% more than in the first quarter of 2024. In its short-term forecast, EIA expects coal’s share of U.S. electricity generation to increase from 16% in 2024 to 17% in 2025 and then decrease to 15% in 2026. It’s clear that the use of coal does correlate with the price of natural gas. As natural gas prices increased in the first quarter of 2025, coal became more competitive driving an estimated 6% increase in 2025 consumption.

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