Joseph Krist

Publisher

THOUGHTS ON GOVERNANCE

Corruption and/or incompetence and/or ideology are all understood to just be something one is likely to have to deal with when politicians are your clients. Nonetheless, the growing list of local officials under indictment in some of the country’s major cities is concerning. This week, the mayor of Jackson, Miss., a City Council member and the local district attorney have been indicted on federal corruption charges. They join New York Mayor Adams in the ranks of the indicted.

Then there is the recall of Oakland’s district attorney as well as its Mayor. They were voted out by substantial margins. The Mayor had been the subject of a federal investigation. Further south in Orange County, a county legislator had to resign over the misuse of federal COVID related funds.

CLIMATE ON THE BALLOT

Washington State did not approve Initiative Measure No. 2117 which would have repealed the Climate Commitment Act (CCA), one of the most progressive climate policies ever passed by state lawmakers. Over 1.5 million of those voters, or 61.7%, voted “No” while over 972,600, or 38.3%, voted “Yes.” The law requires major polluters to pay for the right to do so by buying “allowances.” One allowance equals 1 metric ton of greenhouse gas pollution. Each year the number of allowances available for purchase drops — with the idea of forcing companies to find ways to cut their emissions.

It was not all good news for the climate on the statewide ballot. Initiative 2066 bars cities and counties from prohibiting, penalizing or discouraging the use of gas for heating, appliances and other equipment in buildings. The measure requires utilities and local governments to provide natural gas to eligible customers and prevents approval of utility rate plans that end or restrict access to natural gas, or make it too costly. It overrides state building and energy code requirements designed to get more electric heat pumps – instead of gas furnaces – installed in newly built houses, apartments and commercial buildings.

In California voters approved Proposition 4 authorizing $10 billion of new debt to fund loans and grants to local governments, Native American tribes, not-for-profit organizations, and businesses. Proceeds will be applied for projects including Drought, Flood, and Water Supply ($3.8 Billion); Forest Health and Wildfire Prevention ($1.5 Billion); Sea-Level Rise and Coastal Areas ($1.2 Billion); Land Conservation and Habitat Restoration ($1.2 Billion;. Energy Infrastructure ($850 Million); Parks ($700 Million); Extreme Heat ($450 Million); Farms and Agriculture ($300 Million).

Ann Arbor voterspassed ballot proposal A with 79% of the vote. It authorizes the creation of a municipally-owned sustainable Energy Utility (SEU) which would supply, generate, transmit, distribute and store electricity from renewable sources. It would run as a compliment to the existing DTE system serving the city. Businesses and households can sign up to receive power through the SEU or they can remain DTE customers. Initially, the SEU is expected to offer services including solar and battery storage, efficiency and weatherization programs, and electrification for homes and businesses. In the future, the city hopes the SEU will include the use of microgrids and geothermal energy.  

CANNABIS ON THE BALLOT

A majority of voters supported an amendment to Florida’s constitution to legalize recreational marijuana. The initiative required a 60% super majority so it failed. In South Dakota, voters rejected the latest effort at legalization of recreational cannabis. Voters authorized legalization in 2020 but a successful legal challenge overrode that vote. voters in North Dakota rejected Measure 5 which would have made it legal for adults 21 years old and older to produce, process, sell and use cannabis in North Dakota while establishing a state body to regulate it.

Nebraska voters approved two measures that legalize medical marijuana and regulate the industry. The measures received overwhelming support — nearly 71% voted in favor of legalization, while almost 67% voted in favor of establishing a commission to regulate the industry. It could all be undone by a pending legal challenge to 3,500 signatures on the petition to get the law on the ballot. A judge in Lancaster County, however, has yet to rule on whether some of those signatures were tainted. If the signatures are rejected, the results of the election could be voided. Nebraska’s election results are set to be certified on Dec. 2.

GOING TO THE SUN

The federal government recently released data on the utilization of solar energy. Nevada was ranked in first place. It sources nearly 29 percent of its electric capacity from utility-scale solar. It is pursuing an aggressive renewable portfolio standard which requires that 34 percent of the electricity supplied by the state’s utilities comes from renewables in 2024, 42 percent in 2027, and 50 percent by 2030. 

California came in second with just over 21 percent solar capacity on its grid. It’s very aggressive requiring 60 percent of the state’s electricity to be sourced from zero-carbon sources by 2030 and 100 percent by 2045. Utah is in third place with solar providing nearly 21 percent of its grid capacity. It is pursuing a non-binding target of 20 percent clean energy by 2025. 

At the other end of the spectrum are three states with less than 1% solar generation.

North Dakota, has no utility-scale solar. New Hampshire is second to last, with just 0.05 percent utility-scale solar. Kansas is third from the bottom at 0.2 percent. 

TRANSIT ON THE BALLOT

Davidson County, TN voters approved a plan to fund bus system, sidewalk and traffic signal improvements with a half-cent sales tax hike. Voters approved the plan 65.5% to 34.5%. Nashville is no longer one of just four of the nation’s 50 largest metro areas that do not have dedicated funding for transit. The tax surcharge will end once the debt issued for the plan is paid off and Nashville’s council affirms the tax is no longer needed.

Seattle voters approved Proposition 1, a property tax measure that will spend $1.55 billion over the next eight years on streets, sidewalks, bridges, transit routes and bikeways. The levy passed with 67% of Tuesday’s count.

CHICAGO PUBLIC SCHOOLS

Voters had a rare opportunity to elect ten individuals to the board of the Chicago Public Schools (CPS). The vote occurred as a part of the process of reconstituting the CPS board under the terms of state legislation which ended 30 years of mayoral control. The 10 individuals elected will constitute one component of its membership with the remaining 11 positions filled by mayoral appointment.

The range of ideologies which now sit in the elected seats includes 4 seats supported by the teachers union while 3 seats went to school choice supporters and 3 presented as unaffiliated. The question now is how many of the appointed seats will be seen as choices of the teachers union. The Mayor must announce his appointments by December 16. This puts the schools issue in the spotlight while the Mayor fights what is shaping up to be a real battle over a proposed tax increase for the City and the need to find revenue for CPS to support its plans to keep underutilized schools open.

The Mayor does have to deal with some limits to his appointment power. According to state law, each school board district is divided in two for the purposes of the 2026 election and beyond. The new winners become incumbents in the subdistrict in which they live. The law spells out that between now and Dec. 16, Johnson must appoint school board members who live in the opposite subdistrict of the winning candidate.

This follows the recent machinations at the board which saw 7 members appointed by the Mayor (now six after social media took down one of them). They could in theory be appointed so long as they lived in the right places. This all leaves the already weak CPS credit likely even weaker. Potentially, there could be a new fight over a CEO, a pension bond issuance, school building closures and/or taxes. None of the potential likely results over the next few months are likely to be positive for the credit.

CARBON CAPTURE VOTE

South Dakota voters rejected a proposal that would have made it harder for South Dakota Counties to regulate the location of carbon pipelines. Referred Law 21 was placed on the ballot by the legislature to try to override voter sentiment against the Summit Carbon Solutions pipeline in the state. The law would have exempted “pipelines for the transmission of carbon dioxide” from property taxation and shield them from future tax increases and additional fees.

Pipeline companies and other “transmission facilities” would have needed only obtain a construction permit from the three Public Utilities Commissioners in Pierre to be exempted from all local zoning rules and regulations that other companies doing business in those jurisdictions must follow, including setbacks and other safety protections. It was designed to overcome opposition to the use of eminent domain for acquisition of right of way.

Summit Carbon Solutions will apply for a permit in South Dakota on November 19th. The Iowa Utility Commission has awarded a permit to Summit so it can use eminent domain to seize property from unwilling land owners and build the pipeline, but construction cannot start until Summit gets regulators’ approval in the South Dakota.

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