Joseph Krist

Publisher

PORT OF LOS ANGELES

The first tangible evidence of the impact of tariffs on international trade comes in the form of operating data from America’s busiest port. The Port of Los Angeles processed 716,619 Twenty-Foot Equivalent Units (TEUs) in May, 5% less than last year. After 10 straight months of year-over-year growth, overall cargo volume slowed due to the impact of tariffs on both imports and exports. Imports dropped 19% compared to April. May 2025 loaded imports came in at 355,950 TEUs, 9% less than the previous year. Loaded exports landed at 120,196 TEUs, a 5% drop from 2024. The Port processed 240,472 empty container units, 2% more than last year. After five months in 2025, the Port of Los Angeles has handled 4,063,472 TEUs, 4% more than the same period in 2024.

The Los Angeles Harbor Commission approved a 2025/26 fiscal year (FY) budget of $2.7 billion for the Port of Los Angeles, a 3.1% or $82.5 million increase over the previous fiscal year’s adopted budget. The proposed budget for FY 2025/26 anticipates cargo volumes of 8.2 million TEUs, a decrease of approximately 9.9% over the previous fiscal year’s adopted budget. In the FY 2025/26 budget, operating revenues are forecast at $657.6 million.  Approximately $470.3 million of those revenues are expected to be generated by shipping services at the Port. Operating expenses are estimated at $427.1 million.

The Port of Long Beach experienced a significant 8.2% decline in cargo throughput in May, processing 639,160 TEUs as tariffs continue to impact global trade flows. At Long Beach, imports fell 13.4% to 299,116 TEUs, while exports decreased 18.6% to 82,149 TEUs. The only positive movement came from unused containers being sent back to exporting countries, which saw a modest 3.2% increase to 257,895 TEUs.

Following the Trump administration’s implementation of a 145% tariff on Chinese goods in April, many retailers had suspended or canceled orders. However, activity has resumed after tariffs were reduced to 30% with a 90-day pause extending until August 12. Similar temporary pauses on reciprocal tariffs with other nations will last until July 9. Looking ahead, the National Retail Federation’s Global Port Tracker forecasts a mixed outlook for U.S. containerized imports. While June through August should see increased activity as importers take advantage of the tariff pause, volumes are expected to decline sharply in the latter part of 2025. September imports are projected to fall 21.8% year-over-year, with October showing a 19.8% decrease.

CARBON CAPTURE

The Iowa House approved a request to call a special session to override Governor Kim Reynolds veto of eminent domain legislation. Each house needs a two thirds majority. It seems as though the required two thirds of the Senate may not be achieved.

We have been highlighting the many targets of cutbacks announced by the U.S. Department of Energy in May. The agency cancelled some $3.7 billion of grants to a variety of public and private entities. The latest example is on in Wyoming. There a $49 million grant was made under the Biden administration for a “large-scale” carbon capture pilot project at the Dry Fork Station coal-fired power plant north of Gillette, WY.

It’s not clear whether there is support for private funding for the project. In 2020, the state passed legislation which was designed around the idea of keeping coal-burning power plants open by retrofitting them with carbon capture technologies. Electric utilities Black Hills Energy and Rocky Mountain Power, the only two Wyoming coal plant operators subject to the mandate, have indicated it could cost between $500 million and $1 billion to retrofit just one of several coal units subject to the state law.

They unsurprisingly support recent efforts to repeal the carbon capture mandates.

FLORIDA BUDGET

After one of the more politically contentious budget sessions in many years, the Florida legislature passed a FY 2026 budget totaling $115.1 billion. That is some $500 million less than the governor’s proposed budget, and $3.5 billion less than last year’s adjusted total. A long debate over tax cuts was at the core of the squabbling which forced the legislature into a special session. All of this conducted in front of a backdrop of potential scandal and a looming election for Governor in 2026.

The debate before the special session was mainly over whether to cut property taxes or sales taxes. The approved budget does neither. Instead, it eliminates the state’s business rent tax. The budget also includes tax cuts for several specific interests including casinos, airlines and NASCAR.

The legislature advanced a proposed constitutional amendment that would set aside $750 million a year — or an amount equal to up to 25% of the state’s general revenue, whichever is less — into a reserve fund that lawmakers could only use for emergencies. The measure has to be approved by 60% of Florida voters to be implemented.

On the spending side, lawmakers set aside $4 billion for scholarships for private and religious education, two years after the Legislature expanded the state’s voucher program to make all K-12 students eligible, regardless of family income. Some 2,200 vacant positions are effectively eliminated. At the same time, state workers will receive an across-the-board 2% raise, while state law enforcement officers and firefighters will get a 10% total raise, and a 15% raise if they’ve been on the job for at least five years.

MTA UPGRADE

It may often appear to be all doom and gloom for New York’s MTA but that’s not true when it comes to its debt ratings. Moody’s has upgraded to A2 from A3 the rating on the Metropolitan Transportation Authority, NY’s (MTA) $17.1 billion of outstanding Transportation Revenue Bond (TRB), and revised the outlook to stable from positive. Those are the bonds effectively paid from the farebox. The upgrade comes amidst MTA’s ongoing battles with the federal government over operating and capital support and the effort to halt congestion pricing.

That did force the State legislature to confront the need to fund the ongoing capital needs of the Authority. The results were positive and led to an upgrade. According to Moody’s “The upgrade of MTA’s TRB rating reflects increased political and financial support from New York State (Aa1 stable) and New York City (Aa2 stable) for the system’s substantial operating and capital needs.

The state’s recent payroll mobility tax (PMT) increase for MTA filled a significant gap in the $68.4 billion 2025-2029 capital program which will accelerate asset investment, protect service quality and support future revenue growth. The new PMT increment will generate $1.4 billion annually, is dedicated to capital projects and will allow MTA to borrow $23 billion, in addition to $10 billion supported by the operating budget, with only moderate growth in leverage metrics and fixed costs.”

CBO ON IMMIGRATION

The number of people entering the United States increased sharply starting in 2021 and peaked in 2023 before slowing in 2024. All told, the surge in immigration that started in 2021 added an estimated 4.4 million people to the U.S. resident population in 2023. The surge continued beyond 2023, but it slowed starting in June 2024, when an executive order suspended the entry of most noncitizens at the southern border, and has slowed further in 2025.

This week the Congressional Budget Office released estimates of how the surge in immigration that began in 2021 affected state and local budgets in 2023. The surge led to a direct increase in revenues of $10.1 billion, primarily from sales taxes, and a direct increase in spending of $19.3 billion, chiefly for public elementary and secondary education, shelter and related services, and border security. The result was a direct net cost of $9.2 billion in 2023, amounting to 0.3 percent of state and local spending (net of federal grants-in-aid).

In addition to estimating the direct effects of the surge, CBO calculated an alternative measure that includes the potential broader or longer-term effects and costs that were borne without adding to spending—such as crowding in public schools and public transportation systems. By either measure, the surge imposed a net cost. By that measure, the surge in immigration had the potential to increase revenues by $18.8 billion and spending by $28.6 billion, resulting in a potential net cost to state and local governments of $9.8 billion in 2023.

FLOOD INSURANCE REALITIES

The majority of flood insurance policies are provided by the federal government, through an arm of FEMA called the National Flood Insurance Program, or NFIP. Only 6% of Americans hold it. The experience in the wake of Hurricane Helene has drawn attention again to the need for and cost of flood insurance. Across Western North Carolina counties, only about 6,500 total policies from NFIP were in place.

The NFIP can cover up to $250,000 in home structure losses and $100,000 in home contents losses. Usually, people only have a policy if their mortgage requires it. That’s often because that property has received federal assistance for flood-related damage before. But 43,700 paid losses were associated with Helene, accumulating to $1.8 million total paid out by NFIP. The average paid loss came in at $40,709.

The Heritage Foundation’s Project 2025 calls for the dismantling of the NFIP and advocates for flood insurance to go private. The problem is that the private insurance industry has essentially stopped covering flood risk. During the first Trump administration, he planned a new system which changes the way the NFIP calculated rates, bringing models up to date. This new system would have increased rates, so Trump abandoned it during his bid for reelection. The Biden administration implemented the new rating system, raising flood insurance rates for 75% of flood insurance holders.

IS THERE A DOCTOR IN THE HOUSE?

On May 27, the Trump administration suspended new interview appointments for foreign nationals applying for J-1 visas. The visas, for participants in cultural or educational exchange programs, are used by most medical residents arriving from overseas. They did this just in time to put enormous pressure on hospitals to recruit doctors to begin work on July 1, the traditional staring date for new residents.

One in five U.S. physicians was born and educated overseas, according to the Association of American Medical Colleges. New doctors from other countries account for one in six medical residents and specializing fellows at U.S. teaching hospitals. Many of the 6,653 noncitizen doctors accepted for residency positions in the United States this year this year had already secured visa appointments before May 27. Those from banned countries who are already in the country are able to remain.

Hospitals and clinics in rural areas of the country already rely heavily on international graduates. This year, there were about 40,000 residency positions offered through the national match system, but only 28,000 graduates of U.S. medical schools. It was always a bit risky to go to an emergency room on the Fourth of July weekend given the brand new status of the residents. Now there may not even be enough of them.

NUCLEAR

The Supreme Court rejected Texas’s bid to overrule federal approval of a nuclear waste storage facility. In a 6-3 decision, the court upheld the Nuclear Regulatory Commission’s decision to issue a license to a company that wanted to store nuclear waste off site from a power plant. The opinion said that Texas, as well as private company Fasken Land and Minerals, did not have the right to sue over the license. 

“Under the Hobbs Act, only an aggrieved ‘party’ may obtain judicial review of a Commission licensing decision,”. “Texas and Fasken are not license applicants, and they did not successfully intervene in the licensing proceeding. So, neither was a party eligible to obtain judicial review.” The case in question concerns a license issued in 2021 to Interim Storage Partners (ISP) that would have allowed it to store nuclear waste for 40 years in West Texas.

The question in the underlying case was about whether the Nuclear Regulatory Commission should be allowed to license private off-site nuclear waste storage sites. That question itself was not at issue in the case.

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