Joseph Krist

Publisher

Late budgets and New York State are not an unusual couple but this year is different since the failure to enact a budget has nothing to do with budgets. It’s not clear how long either side of the issues causing contention – criminal discovery rules and restrictions on the wearing of masks – are willing to hold out to achieve their goals.

As the state process plays out, attention turns to the NYC budget. That process will occur as the mayoral primary process plays out. The Mayor is no longer under indictment or the threat of one. The Council Speaker is challenging the Mayor in the June primary. The federal government keeps up efforts to take money from the City in regard to immigration issues. Recent announcements of actual and anticipated takebacks of federal funding from the City over its sanctuary city policies have grown to nearly $750 billion.

It will be an unsettled period for the City but we do not expect that significant credit issues will arise over that time.

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CONGESTION FEES GET A REPRIEVE

The federal government and New York transit officials have agreed to allow congestion pricing, to continue until at least midsummer, and very likely into the fall. A schedule of hearings has been established that would extend the existing legal proceedings between the MTA and the federal government well into the fall. In its first two months, the program billed about $100 million in tolls. In March, about 2.5 million fewer vehicles entered the congestion pricing zone, compared with the historical average — a 13 percent decline in traffic, according to M.T.A. data. 

The court also spoke to the issue of what it sees as coercion by the Secretary of Transportation to force a halt to congestion pricing. It noted that Secretary Duffy also “appeared to suggest that the Administration may consider improperly withholding federal funds from the State of New York, as the Trump Administration has done in many other recent cases, in order to coerce compliance with its demands.”

The MTA and TBTA specifically asked whether the Secretary is contemplating taking any unilateral action on or after April 20 that might require them to seek expedited injunctive relief. The federal side did not have information to provide, but did state that, at present, they do not intend to seek preliminary injunctive relief themselves.

NEVADA ROAD FUNDING

Clark County, NV has long used fuel revenue indexing — FRI — to adjusts the county’s portion of fuel tax to inflation. The tax has been a major source of funding for roadway projects in Southern Nevada since going into effect in 2014. FRI is currently scheduled to sunset at the end of 2026 unless voters approve an extension next year. RTC currently receives 24.6 cents of the total 75.8 cents per gallon fuel tax

The Regional Transportation Commission of Southern Nevada (RTC) has warned that ending fuel revenue indexing will decrease roadway funding by two thirds — from $300 million to $100 million annually. RTC has proposed legislation which would allow the Clark County Commission, by a two-thirds vote, to extend FRI an additional decade beyond its current sunset date. Continuation beyond 2036 would require voter approval. The practice was first authorized by the Commission for the period 2014-2016.

Voters in 2016 approved a ten year extension. That ballot measure passed with nearly 60% support. A 2023 FRI bill that passed the Legislature with bipartisan support would have allowed the Clark County Commission to extend FRI indefinitely without a direct vote of the people. It was successfully vetoed by the Governor.

PURPLE LINE

The long anticipated, much delayed Purple Line light rail system in Maryland has moved one step closer to actual operation. The Maryland Transit Administration has announced that a Purple Line train is being tested on tracks using the overhead electrical wires that give it power. The plan is to test braking, propulsion, electrical, signaling, and communication systems on a fully fitted out one mile stretch of tracks. The combined design and construction process for the Purple Line is 76% finished. Track installation is 35 percent complete. The target operating date remains December 2027. That is well beyond the 2022 target date originally envisioned.

TOURISM

Recent reports show that foreign arrivals fell over 20% year-over-year at the 10 busiest U.S. airports, based on a seven-day rolling average. A slight recovery was observed, but the numbers were still down 18.4% as of March 28, 2025. Meanwhile, U.S. citizen returns increased by nearly 14% during the same period. The drop in foreign arrivals is reflects uncertainty, trade tensions, political volatility, and concerns over possible detainment or harassment for international travelers. Travel advisories issued by key American allies, including Canada, France, and Germany, have also contributed to the decline.

As of late March, international airlines have reported a softening of demand for U.S. travel, with some routes experiencing cuts. In tourist dependent New York, the Port Authority found that in February that international passenger counts at its network of airports were 1.1% lower than for February, 2024. The number of international flights was lower by some 6.3%. In anticipation of tariffs, international freight tonnage increased in that period.

HOSPITALS ON THE BRINK

The board of the Rhode Island Health and Education Building Corporation approved $165 million in debt to facilitate a sale of Our Lady of Fatima and Roger Williams Hospitals. The two hospitals are set to shut down without a sale to the nonprofit Centurion Foundation. Prospect Medical Holdings, a for profit entity which owns CharterCARE and operates Roger Williams and Fatima hospitals in Rhode Island, filed for bankruptcy in January.

One contentious issue which remains unresolved is that of property tax losses to Providence and North Providence. PILOT agreements to replace some of the lost revenues may yet be executed with the new non-profit owner but the bankruptcy proceedings did not make such an agreement required to close the transaction. North Providence estimates that it could cost the owner of an “average” home between $250 and $420 more each year in property taxes if no PILOT agreement can be reached.

In New York, Mount Sinai was finally allowed to close its east side Manhattan location. The closure had been held up by a variety of legal actions which have appeared to have run their course. Losses related to Beth Israel will decline with the reduction in services that has already occurred and the final closure now approved by the courts. The action coincides with Moody’s action to revise the outlooks for Mount Sinai Hospital’s (MSH) (NY), Icahn School of Medicine at Mount Sinai’s (ISMMS) (NY) and Mount Sinai South Nassau’s (MSSN) (NY) to stable from negative. That keeps the credits in the investment grade category.

WIND

It could likely be the exception rather than the rule over the next four years, but construction of a new offshore wind farm in NY has begun. Empire Wind is an 810-megawatt wind farm effectively breaking ground less than 20 miles from New York City. It is the first U.S. project to start at-sea wind turbine construction under a Trump second term.

On Inauguration Day, the President issued an executive order that effectively froze all offshore wind permitting and leasing pending a federal review. Empire Wind 1 is one of nine projects which had their federal permits in hand before the order. Empire Wind 1 is scheduled to finish construction by 2027. A new Brooklyn-based substation will connect wind-generated electricity to the city’s grid. which is a first. The project is advertised as being adequate to power 500,000 New York homes.

In the Atlantic, four other commercial-scale projects actively under construction are Coastal Virginia Offshore Wind, Massachusetts’ Vineyard Wind 1, New York’s Sunrise Wind, and Revolution Wind, which is shared between Rhode Island and Connecticut.

ILLINOIS COAL

The Chicago suburb of Naperville, Illinois is the largest of the 30 municipalities which purchase power for their distribution utilities from the Illinois Municipal Power Agency. The City’s purchase contract expires in 2035 and IMPA would like very much to extend its agreement with Naperville for twenty more years. IMEA has given the city until April 30 to decide if it wants to extend its contract out to 2055. A majority of IMEA participants have extended contracts.

Some 80% of the energy IMEA delivers to Naperville comes from coal-burning power plants. IMEA owns a 15% stake in the Prairie State Generation Station, a massive coal-fired power plant in southern Illinois that in 2023 released 12.4 million tons of heat-trapping carbon dioxide into the atmosphere. If Naperville chose to determine its own electric supply, it could buy energy directly from the market, contract out for power generation, or possess and operate its own generation assets — or some combination of all three.

CARBON CAPTURE

The Environmental Protection Agency has approved Occidental Petroleum’s application to capture carbon dioxide from the atmosphere and inject it underground. The facility would be the first of its kind to be approved in Texas where the oil/gas industry has great hopes for its success. Located 20 miles southwest of Odessa, the project could start storing 500,000 metric tons of carbon dioxide in deep, non-permeable rock formations 4,400 feet underground as soon as this year. 

The technology for the plant is direct air capture, or DAC. It pulls the carbon dioxide from the atmosphere and separates it from other particles in the air by incinerating them. The equipment then compresses the gas to a brine before transporting and storing it permanently underground. The Texas Railroad Commission, the state agency regulating oil and gas companies, has applied to the EPA for the power to issue similar permits. The EPA is currently accepting public testimony.

Ohio legislators are considering bills that would bar local governments from having a say in permitting projects that capture carbon dioxide emissions and inject them underground. The legislation could even force some landowners to let their property be used for carbon dioxide storage. Carbon capture and storage projects would follow a process similar to what’s used for oil and gas drilling, in which property owners must allow development on or below their land if enough neighbors support it.

Ohio’s House Bill 170 and Senate Bill 136 would give the state Department of Natural Resources ​“sole and exclusive authority to regulate carbon sequestration,” a power the agency also has over oil and gas production via existing law. The Ohio Supreme Court has interpreted the oil and gas law’s language to block local government regulation of drilling, even though general zoning rules that apply to other businesses.

The bills would also authorize a ​“consolidation” process that operators can undertake to force landowners to allow carbon dioxide storage in their property’s subsurface ​“pore space” if owners of 70% of the remaining area for an injection project have signed on. The bills call for compensation, but it’s subject to adjustments for the developer’s expenses. Neither HB 170 nor SB 136 requires any minimum payment to landowners.

The South Dakota Public Utilities Commission voted 3-0 to deny Summit’s request to put its application on hold. The PUC directed Summit Carbon Solutions to present a plan during its next meeting illustrating how the company can move forward — or not — under recently enacted legislation barring its use of eminent domain. It comes as a review shows that Summit brought 232 lawsuits against landowners across South Dakota, North Dakota and Iowa – including lawsuits seeking access to property for surveys. All 156 of the eminent domain actions were brought in South Dakota.

Iowa’s permit, which allows Summit to use eminent domain, is conditioned on the company getting permits to build its pipeline in the other states, including South Dakota.

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