California Capitol Hill Bulletin, 2/4/97 Page 1 THE CALIFORNIA INSTITUTE FOR FEDERAL POLICY RESEARCH 419 New Jersey Avenue, SE, Washington, D.C. 20003 Voice: 202-546-3700 Fax: 202-546-2390 e-mail: ransdell@calinst.org California Capitol Hill Bulletin Volume 3, Bulletin 43 -- December 18, 1996 To expand communications between Washington and California, the California Institute provides periodic faxed bulletins regarding current activity on Capitol Hill which directly impacts our state. Bulletins are published weekly during sessions of Congress, and occasionally during other periods. The e-mail edition is made possible in part by a computer server donation from Sun Microsystems. ADMINISTRATION DISBURSES UNDOCUMENTED IMMIGRANT INCARCERATION FUNDS; CALIFORNIA RECEIVES OVER $252 MILLION The U.S. Justice Department has finally disbursed the funds appropriated by Congress to reimburse immigration-impacted states for the costs of incarcerating undocumented criminal aliens. Of the $495 million released earlier this month, the state of California will receive $252 million and Los Angeles County will receive a separate $12.8 million. Other counties in the state will receive smaller separate awards. With the money appropriated by Congress for Fiscal Years 1996 and 1997, the Justice Department was able to pay eligible states and counties about 60 percent of the $827 million that it cost them to incarcerate illegal alien criminals. Last year, by comparison, Justice only reimbursed about 16 percent of the costs. California, by far, received the highest award, because it also houses the most undocumented felons. The next largest grant, $62.8 million, went to New York State, with an additional $15.5 million to New York City. Texas and Florida received $53.5 million and $17.9 million, respectively. The State of California estimates that it spent $511 million to incarcerate about 200,000 undocumented criminal aliens last year. DELEGATION MEMBERS ASK INS TO UPGRADE SAN JOSE OFFICE Five California delegation members representing Santa Clara, Santa Cruz, San Benito and Monterey Counties have requested that Immigration and Naturalization Service Commissioner Doris Meissner substantially upgrade the INS's office in San Jose to more efficiently handle immigration cases. The letter to Commissioner Meissner was initiated by Rep. Tom Campbell, and was also signed by Reps. Pete Stark, Anna Eshoo, Zoe Lofgren, and Sam Farr. The Members' cited the ever-growing immigrant population in the Silicon Valley area and the delays experienced in processing immigration matters at the San Jose office. They also noted that some area employers have had to lay off workers, not for lack of work, but because the employees' non-immigrant status expired while waiting for their cases to be processed. Because of the growing needs of the area, the Members requested that the INS begin to make several changes at the San Jose office, including upgrading it from a suboffice to full District Office status. They also requested the addition of at least nine new personnel to reduce the delays in processing status adjustment applications, naturalization applications, and other necessary services. The Members specifically requested that the additional personnel should be new hires and not INS employees transferred from the San Francisco District Office. The letter stated that the current backlog on naturalization cases is 180 days and on status adjustment applications 360 days. DELEGATION SEEKS ADMINISTRATION CALIFORNIANS With the departure of top-level Californians from the Clinton Administration, such as Secretaries Christopher, Kantor and Perry and Chief of Staff Leon Panetta, members of the California Congressional delegation have been working publicly and behind the scenes to seek replacements or other assurances that the state will remain in the minds of Administration decision makers. Earlier this month, delegation members sent two letters to the President, one specifically recommending U.C. Berkeley Chancellor Chang-Lin Tien to be Secretary of Energy, and another generally urging the appointment of Californians to top positions. Among those posts still under consideration as of this writing are the Secretary of Labor (where Rep. Esteban Torres of Los Angeles is a leading candidate), Secretary of Housing and Urban Development (where L.A. County Supervisor and former Rep. Yvonne Braithwaite BurkeÕs name has been discussed), and head of the Council of Economic Advisors (where former Berkeley professor Janet Yellen is a prospect). OPTIMISTIC ECONOMIC REPORTS FROM UCLA AND BANK OF AMERICA Recent reports from two respected California sources predict a healthy 1997 for the California economy. On Wednesday, the Anderson/UCLA Business Forecasting Project released its latest forecast summary of the U.S. and California economy and predicted that employment in the state will grow faster than in the rest of the country during the coming year. With about 12 percent of the nationÕs population, California added 14 percent (350,000) of the nationÕs new jobs during the 12 months ending in September 1996. Project associate director Tom Lieser predicted that California will add 950,000 jobs, or more than 15 percent of the national total, over the next three years. He also predicted that the stateÕs unemployment rate will fall from one which now exceeds the U.S. rate by 1.5 points, to within one-half a point of the U.S. rate by 1999 -- a 5.8 percent level. Last week, Howard Roth, Bank of America vice president and director of regional economics, also predicted increased job growth in 1996, and pointed out that the stateÕs unemployment rate at the end of the year is lower than it has been since 1990. He also noted - consumer confidence increased for the region over the past three years, - job growth is especially strong in promising industries such as computer services, biotechnology, film production, electronics, multimedia and telecommunications, - taxable sales rose 7.6 percent in the first half of this year, after growing 5 percent in both 1994 and 1995 (sales started out lower in 1993 than they had been in 1989), - personal income grew 7.6 percent in the first half of 1996 -- up from 6.2 percent growth in 1995, 3.1 percent in 1994 and only 2.4 percent in 1993, - exports of California goods grew 19 percent in 1995, - the state governmentÕs fiscal health is better, and - the aerospace industry is beginning recovery, and commercial work may increase. The Bank of AmericaÕs California Economic & Business Outlook report can be obtained by fax by calling 415-622-6953. FEINSTEIN WARY OF FEDERAL LAND SWAP FOR HEADWATERS Last week Senator Dianne Feinstein stated that she was dissatisfied with the details of a joint federal and state land-swap deal regarding the controversial Headwaters Forest in Humboldt County, a 7,500 acre old-growth redwood forest which could be logged by its owner, the Pacific Lumber Company. Feinstein -- herself a primary player in creating the outline of the compromise -- believes that, as it stands now, the deal is in jeopardy in both the Congress and the State Legislature because the assets that the government has offered in return for the Redwoods are themselves too controversial. Possible exchanges reportedly include San Francisco's Mission Bay and Transbay Terminal, petroleum deposits in Kern County, other forests in Humboldt and Shasta counties, and even a state-owned General Services office building in San Diego. Feinstein is urging the Clinton administration to remove the land assets from the offer and instead make a standard federal cash offer to the Pacific Lumber Company. The 1,000-year-old Headwaters Forest is America's last unprotected expanse of virgin redwoods and has been the subject of an often volatile, decade-long struggle between its owner, Texas financier Charles Hurwitz, and federal and state government officials who want to halt the logging. The original October agreement called not only for the land swap, but also for a combined federal and state financial disbursement of $380 million. The agreement requires both state and federal approval, including votes in the Legislature and Congress for final ratification. BOEING - MCDONNELL MERGER WILL HAVE IMPACT ON CALIFORNIA The world's leading commercial jetliner manufacturer, The Boeing Company of Seattle, announced earlier this week that it intends to purchase the St. Louis-based McDonnell Douglas Corporation, the top builder of military aircraft. The $13.3 billion merger could have a substantial impact on California. McDonnell Douglas' Long Beach operation, Douglas Aircraft Co., has been troubled of late and some industry observers are predicting that the business may continue to deteriorate if jobs are transferred from Southern California to Seattle. Others believe that Boeing will bring much needed long-term stability to Douglas Aircraft -- the largest industrial work force in Long Beach. Douglas has a current backlog of more than 200 orders, more than enough to keep them producing aircraft in California for a number of years, regardless of Boeing's final production and management structure decisions. Many see the merger as an entirely positive move for the Southland economy. Some aerospace analysts believe that Boeing Co. may likely expand operations at the 20,000- person production plant in Long Beach, and possibly expand work at McDonnell's 5,600- person space operation in Huntington Beach. In all, 42,000 of the 200,000 employees of the proposed new Boeing Co., are located in California, making Boeing the largest private industrial employer in the state, a title many think it would be unwilling to compromise. SOFIA AIRBORNE OBSERVATORY PROJECT TO BE BASED IN CALIFORNIA Earlier this week, NASA announced that the Stratospheric Observatory for Infrared Astronomy (SOFIA) project will be based at Ames Research Center and Moffett Field in California. The SOFIA project will replace the Kuiper Airborne Observatory in producing airborne infrared observations of the Milky Way and other galaxies. By mounting an infrared telescope on a Boeing 747, scientists can more effectively study star formation, the composition of comets, the chemistry of the interstellar medium and other features of the galaxy. The prime contractor for the $484 million contract will be Universities Space Research Association (URSA). Although URSA is a Maryland-based organization, other team members include United Airlines of San Francisco, Sterling Software of Redwood City, the University of California at Berkeley and Los Angeles, and an alliance of the Astronomical Alliance of the Pacific and SETI, both located in Mountain View. In addition to the scientific reasons for locating the SOFIA project in California, its placement will have a significant positive impact on the stateÕs economy. SOFIA will bring expenditures of nearly $500 million during its development and $30 million in annual operations costs over the projectÕs twenty-year life. Earlier this year, Rep. Anna Eshoo (Atherton) led a bipartisan group of California members in requesting the President and key space officials to base the project in California. MTA OFFICIALS MEET WITH TRANSPORTATION SECRETARY PENA On Monday, Los Angeles transportation officials met in Washington, D.C. with Transportation Secretary Federico Pena to discuss federal funding of Metropolitan Transportation Authority (MTA) projects. Under discussion was the MTA project to expand the cityÕs subway system to the Eastside and North Hollywood. Given the projected $1 billion shortfall in the countyÕs long range transportation plan, some MTA officials have considered delaying or altering the $5.9 billion project. The federal government is paying for half of the subway extension but Congress has cut its funding over the last two years. In his discussions with MTA officials, Pena expressed support for continuation of the project but stressed that the federal government needed to see a return on its already heavy investments. Federal officials at the meeting asked for five actions from the MTA board members: (1) adopt a Òcode of conductÓ which Ò lays out the appropriate role and behavior of board members as they deal with their oversight responsibility;Ó (2) complete a plan detailing how the MTA will finish a subway segment from Hollywood to the east San Fernando Valley on time and on budget; (3) develop a plan to compensate for delays and to keep down costs for the Eastside expansion; (4) prepare a plan to show how a subway extension to the Mid-City can be built with existing fiscal constraints; and (5) provide a more realistic long range plan. MEXICO RAISES TARIFFS ON AMERICAN WINE Responding to President ClintonÕs adoption of a trade measure to protect the U.S. broom industry, Mexico increased tariffs on American brandy and wines as well as wooden furniture, glass, and notebooks. Of particular interest to California is MexicoÕs decision to impose a 20 percent duty on wine. Accounting for 90 percent of total U.S. production, the California wine industry expects that the move will significantly affect the stateÕs wine sales in Mexico. The issue of liquor tariffs is not a new one. Mexico attempted throughout the NAFTA negotiations to protect its developing brandy industry and Baja CaliforniaÕs fledgling wine manufacturers. MexicoÕs wine industry, which produces less than 10 million cases a year, is grappling to establish markets in Mexico. The Mexican action responds to the PresidentÕs November 28 imposition of a tariff on 40 percent of MexicoÕs straw broom exports.