California Capitol Hill Bulletin Volume 4, Bulletin 1 -- January 9, 1997 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. Institute Sponsors Reception Honoring California Delegation On Wednesday, the California Institute sponsored a reception to honor the new and returning members of the California Congressional Delegation. The Institute wishes to thank Blue Cross of California, IBM, Pacific Telesis Group, and Pillsbury Madison & Sutro for sponsoring the event. Nearly half the California delegation, and almost 200 other guests, attended the reception. Reps. Jerry Lewis and George Brown, deans of the delegation, had graciously sent a Dear Colleague letter to fellow Californians encouraging them to take advantage of the occasion to renew old acquaintances and make new ones. Four of CaliforniaÕs five freshman delegation members attended. FEMA Holds Flood Assistance Briefing for State Delegations This week, while floods and mudslides continued to wreak havoc on Northern and Central California, FEMA coordinated a Congressional briefing for the California, Nevada and Idaho delegations in an effort to assist Congressional offices in responding to constituent relief needs. Speakers representing the federal agencies involved in disaster relief outlined the individual and public assistance programs available to those affected by the disaster. According to one FEMA representative, more than 3,600 Californians had already registered for federal assistance by Monday. Still, the agencies expect that this figure will increase rapidly as individuals and local governments turn from flood response activities to restoration efforts. With nearly $2 billion in damages already estimated for California, it is important that individuals and local governments from the affected areas are fully apprised of the federal relief programs available to them. Responding to the request of Governor Pete Wilson, the President had, as of January 7, made disaster declarations for the following California counties: Alpine, Amador, Butte, Calaveras, Colusa, Contra Costa, Del Norte, El Dorado, Fresno, Glenn, Humboldt, Lake Lassen, Madera, Mariposa, Marin, Mendocino, Modoc, Mono, Monterey, Napa, Nevada, Placer, Plumas, Sacramento, San Benito, San Joaquin, San Mateo, Santa Cruz, Shasta, Sierra, Siskiyou, Solano, Sonoma, Stanislaus, Sutter, Tehama, Trinity, Tulare, Tuolomne, Yolo and Yuba Counties, and the City of Morgan Hill. Individual assistance from the federal government will be available to individuals in these jurisdictions. Additionally, federal agencies will provide limited assistance to State and local governments for debris removal and emergency protective measures in these areas. The FEMA Federal Coordinating Officer for California is John Swanson. According to Governor WilsonÕs Office of Emergency Services, with only 19 counties and one city reporting, the damage estimates for the recent storms was approaching $2 billion, including losses to personal and business property of almost $700 million, and public costs over $900 million. For information on Federal disaster declarations or federal assistance programs, California members can contact Joshua C. Batkin or Cheri Lee Roe of FEMAÕs Office of Congressional and Legislative Affairs at 202-646-4500. Rep. Roybal-Allard To Chair California Democratic Delegation Rep. Lucille Roybal-Allard (Los Angeles) has been elected by the stateÕs 29 congressional Democrats to chair their congressional delegation. Rep. Roybal-Allard is the first woman and the first Latina to chair the California Democratic Congressional Delegation. Recognizing the benefits that bipartisan cohesion brings to the state, Rep. Roybal- Allard stated, ÒCalifornians want their representatives to vote in a manner that promotes the State, not petty partisan interests. State Democrats and Republicans can find common ground on issues of trade, transportation, and job creation for the benefit of Californians.Ó Rep. Roybal-Allard will take the reins from Rep. George Brown (Colton), who will serve as Chair Emeritus, remain active with the delegation, and continue to work closely with the Institute. The California Republican Congressional Delegation elected Congressman Jerry Lewis (Redlands) as their Chairman last November (See, Bulletin, Volume 3, Number 40). New Primer Published To Explain Public Policy Issues Impacting High Tech and Biotech Industries High Tech Survival, a newly available book written by Cliff Jernigan, takes several complex public policy issues affecting the computer electronics and biotechnology industries and provides concise, easily understood explanations of their substance and their importance to those industries. Mr. JerniganÕs career has focused on major tax, trade, and intellectual property issues in the U.S., Europe, and Asia. Each of the bookÕs twelve chapters takes a major public policy area and briefly summarizes several specific legislative or regulatory issues in each area. Among the major areas covered are international and domestic taxes, antitrust and intellectual property, trade, and torts. The book also deals with employee compensation and workplace issues, as well as state and local taxes, and political and charitable contributions. Aimed at middle- and senior-level management who are not directly involved in the public policy arena, the book will also be helpful to those members of Congress and their staff who do not deal with some of these issues on a regular basis, as well as to Washington representatives. In the area of tax, for example, the book provides one to two page explanations of the foreign tax credit and the orphan drug tax credit. Intel CorporationÕs Vice President of Tax, Licensing & Customs has stated that, ÒCliff Jernigan takes complicated tax concepts and puts them in understandable English.Ó The book will be distributed to each member of the California congressional delegation shortly. Copies of the book may be ordered for $24.95, with discounts available for bulk orders, from Olive Hill Lane Press, 2995 Woodside Road, Suite 400, P.O. Box 359, Woodside, CA 94062. The phone number is 1-800-473-1761. Lockheed Martin & McDonnell Douglas Chosen As EELV Finalists; Aerospace Industry Report Shows Signs of Growth Both McDonnell Douglas and Lockheed Martin have each been awarded $60 million contracts to produce definitive design proposals for the U.S. Air Force's Evolved Expendable Launch Vehicle (EELV). In June, the Air Force is expected to announce the winner of the $1.4 billion EELV contract.  The EELV program, targeted for implementation in 2002, will replace the Atlas, Delta, and Titan fleets of military boosters with variants of a common vehicle that will be capable of launching all small, medium, and large rockets. According to the U.S. Air Force, up to 200 military launches will be required by 2020, currently costing an estimated $20 billion. Converting to the multi-purpose EELV could save the Air Force an estimated $5 billion. The recent contracts for final design proposal eliminates both Boeing and Alliant Tech-Systems from the final competition. Last month, Boeing announced plans to purchase McDonell Douglas for $13.3 billion (see Bulletin, Vol. 3, No.43). This all comes as the U.S. aerospace industry showed its first signs of steady growth in five years, most notably in the area of civil aircraft McDonnell Douglas alone delivered 271 aircraft worth close to $19 billion in 1996, and forecasts this figure to rise to 415 aircraft, worth $29 billion in 1997. The proposed Boeing-McDonnell Douglas merger would make Boeing the largest industrial employer in California with approximately 42,000 employees. California House Members Land Subcommittee Assignments As the House of Representatives reconvened this week, numerous Committees began to finalize and announce their subcommittee structure. Included in the early week announcements, were the subcommittee assignments for the powerful Appropriations Committee, where Californians won seats on eleven of the thirteen subcommittees. In the Appropriations Commitee, Jerry Lewis (R-Redlands) will again chair the key VA-HUD Subcommittee, as well as serve on the National Security Subcommittee. Ron Packard (R-Oceanside) will take the chair of the Subcommittee on Military Construction, and also retain seats on both the Transportation and Foreign Operations Subcommittees. Duke Cunningham (R-San Diego) joins the committee and will serve on the National Security, Legislative, and District of Columbia Subcommittees. Packard will be joined on Foreign Operations by Nancy Pelosi (D-San Francisco), who will serve as the Ranking Minority Member for the Subcommittee. Pelosi will also serve as CaliforniaÕs only member of the Labor-HHS-Education Subcommittee. Vic Fazio (D-West Sacramento) will serve as the Ranking Minority Member on the Subcommittee for Energy and Water, as well as serving on the Agriculture and Legislative Subcommittees. Esteban Torres (D- La Puente) will serve on both the Foreign Operations Subcommittee and the Transportation Subcommittee. Last, Julian Dixon (D-Culver City) will serve on three subcommittees: Commerce and Justice; the District of Columbia; and National Security. Jay C. Kim (R-Diamond Bar) will assume the chair of the Transportation Committee's Subcommittee on Public Buildings and Economic Development. Richard Pombo (R-Tracy) will chair the Livestock, Dairy and Poultry Subcommittee in Agriculture. Elton Gallegly (R-Simi Valley) announced Thursday that he has been appointed to the House Judiciary CommitteeÕs Courts and Intellectual Property Subcommittee, and has been asked by the Speaker to take the lead on entertainment industry issues. On Wednesday, Xavier Becerra (D-Los Angeles) was selected as the chair of the House Hispanic Caucus. California Members Establish ISTEA Task Force; Hold First Briefing In an effort to promote CaliforniaÕs interests during this yearÕs ISTEA reauthorization, a bipartisan coalition of California Members and staff have created the California ISTEA Task Force. According to the Task ForceÕs creator Rep. Jay Kim, the primary purpose of the Task Force Òis to organize the delegation into a cohesive voting bloc that can ensure that ISTEA reflects statewide transportation priorities.Ó In a recent letter to their colleagues, founding Task Force members Reps. Kim, Brown, Lewis, Filner, Horn, Drier, Millender-McDonald and Riggs encouraged each member of the California delegation to become a member of the Task Force. More than a score of California members have already joined. In addition to acting as a forum through which California members can work together to establish common ISTEA priorities, the Task force is sponsoring a series of briefings to educate delegation Members and their staff on reauthorization issues crucial to California transportation. The first of these hearings, entitled ÒAn ISTEA Overview,Ó was held Thursday. Speaking to California transportation staff were John Fischer, a transportation specialist with the Congressional Research Service and Roger Nober with the House Surface Transportation Subcommittee staff. Following a brief description of the evolution of the national transportation program and a summary of ISTEAÕs provisions, Mr. Fischer discussed the key issues expected to take center stage during the reauthorization battle. Mr. Nober focused his remarks on the methodology used in identifying donor states, the three major comprehensive ISTEA reform proposals, and the committeeÕs anticipated schedule for ISTEA reauthorization. Future briefings will provide more in-depth information about ISTEA, such as funding allocation formulas, trade corridors and other California specific topics. For more information on the California ISTEA Task Force contact Dan Mathews or Bryan Peebler at Congressman KimÕs office, 202-225-3201. Ninth Circuit Dismisses CaliforniaÕs Suit For Reimbursement of Undocumented Immigrant Costs On January 7, the U.S. Court of Appeals for the Ninth Circuit dismissed the state of CaliforniaÕs 1994 lawsuit seeking federal reimbursement for the costs incurred by the state for providing emergency medical services and education to undocumented immigrants, and for the costs associated with incarcerating undocumented criminal immigrants. The court simultaneously rejected ArizonaÕs companion suit. CaliforniaÕs suit had made three major arguments: one, that the federal governmentÕs requirement that California educate illegal immigrants and cover half of their emergency medical expenses infringed on the rights reserved to the state under the 10th Amendment; two, the 1986 immigration reform act required the federal government to pay for the costs associated with incarcerating illegal criminal immigrants; and, three, the federal government had violated its constitutional obligation to protect the state from foreign invasions by failing to halt illegal immigration. The three-judge panel rejected all of these claims. Judge Robert Merhige, writing for the court, ruled that they raised political questions Òbeyond the authority of the judicial branch.Ó Governor Pete Wilson issued a statement announcing that the state would appeal. ÒThis is a ground breaking case that raises novel legal issues which we knew would have to be decided by the United States Supreme Court,Ó he said. The state was seeking at least $2.4 billion in federal money to reimburse it for the costs associated with illegal immigrants. Similar suits brought by Florida, New York, and New Jersey have also been disposed of in favor of the government. A Texas case is still pending. DOE Officially Chooses Lawrence Livermore Lab as NIF Site A much anticipated decision was made final in late December, when the U.S. Department of Energy selected Lawrence Livermore National Laboratory as the site for the National Ignition Facility (NIF), a stadium-sized $1.1 billion laser. The NIF lasers will be used to produce energy output similar to that in stars and nuclear weapons, in an effort to aid in managing the existing nuclear stockpile without violating the test ban. Livermore estimates that two-thirds of vendors currently supporting LivermoreÕs inertial confinement fusion projects are located in California, and that the NIF will create 2,800 mostly high-tech manufacturing jobs in the Bay Area, and more than 6,000 nationwide. In March, DOE is expected to allow for construction and procurement contracts and clear the way for groundbreaking. Software Piracy Cost Industry $13.1 Billion, New Report Says Computer software companies lost $13.1 billion in 1995 revenues because of piracy, according to a December report issued by the Software Publishers Association and the Business Software Alliance. The President of the Business Software Alliance, Robert Holleyman, noted in a statement accompanying the report that: ÒGlobal piracy losses -- more than $13 billion -- exceed the combined revenues of the 10 largest personal computer software companies.Ó The two trade associations based their estimate on a survey of their members which determined the number of personal computers and the amount of software sold in each country globally. They then used a formula to determine the amount of software that would have been sold but for piracy, and contrasted it to actual sales worldwide, to determine piracy rates and dollar losses for individual countries. The report found that although the United States had the lowest piracy rate, at 26 percent, it has so many personal computers that the companiesÕ $2.9 billion loss to piracy was greater than any other individual country. Vietnam, according to the report, had the highest software piracy rate of 99 percent. China, El Salvador, Oman, and Russia were next in line with rates of at least 94 percent. Details Of WilsonÕs Welfare Plan Are Taking Shape Beginning with the State of the State address on January 7, details are taking shape on Governor Pete WilsonÕs plan to implement welfare reform in the state. A major cornerstone of his proposal is to limit new welfare recipients to one year of assistance if they do not find jobs. This restriction would cut in half the time allowed for benefits under the federal welfare reform law passed last year. Current recipients would be allowed to receive benefits for two years, before they had to find jobs. Both new and current recipients, under WilsonÕs plan, would be allowed to return to the welfare rolls after one year, until the federal lifetime limit of five years of benefits is reached. In addition, Sandra Smolley, CaliforniaÕs Secretary of Health and Welfare, confirmed Wednesday that the Governor also planned to ask the legislature to repeal the requirement that counties provide General Assistance to poor individuals who are ineligible for welfare benefits. If approved, the proposal would allow CaliforniaÕs counties to reduce or eliminate altogether their General Assistance cash payments. About 156,000 of CaliforniaÕs poor currently receive GA payments; half of them reside in Los Angeles County. WilsonÕs welfare proposal is also expected to contain some type of voucher system that would provide non-cash necessities to poor children after the adults in the household have been dropped from the welfare rolls. Additionally, the proposal is also expected to provide some assistance to welfare recipients who take low wage jobs, so that they can attend community colleges to improve their wage earning skills. Recipients who find jobs would continue to receive child-care, MediCal, and educational assistance as long as they keep their jobs. Full details of the GovernorÕs welfare proposal are expected to be released this week with the 1997-98 state budget proposal. On a related issue, on January 7, Los Angeles County was awarded $27.4 million in state and federal funding for its GAIN (Greater Avenues for Independence) program. The program provides job preparedness and skills training to unemployed county residents. Transportation Dept Creates Maglev Advisory Committee In December, the U.S. Department of Transportation established a Maglev Study Advisory Committee to oversee a study by the Federal Railroad Administration evaluating Ònear-term applications of magnetic levitation technology in the U.S.Ó The Advisory CommitteeÕs first meeting was held Thursday, January 9, in Washington D.C. Among the routes to be considered may be several within or connecting to California sites. In addition to reviewing existing studies on the economies of high speed ground transportation as they relate to magnetic levitation, the report will identify and analyze specific magnetic levitation projects. Based on this analysis, the researchers will determine whether any of the projects merit federal funding for the immediate application of Maglev technology. The Institute will continue to monitor the issue. Among the eight members appointed to the Committee by the Secretary are three individuals with California ties. Mr. Kenneth Kevorkian has been a member of the California-Nevada Super Speed Train Commission and is president of United Vulcanizing Corp. in Los Angeles. Ms. Audrey Rice Oliver of San Ramon is a businesswoman and member of the California Intercity High Speed Rail Commission. Mr. Daniel Flanagan, a transportation consultant in the Washington area, is a California native and former member of the California InstituteÕs Board of Directors. California Ranked Second to Last in Retention of Companies and Jobs Over Last Four Years, But Recent Jobs Figures Look Stronger A Dun & Bradstreet study released Tuesday showed California ranked 52nd of 53 states and territories in overall ability to retain companies and jobs between 1991 and 1995, with only New York ranking behind California. The results look particuarly pessimistic because they cover data for years during which California was deeply mired in recession. California suffered a loss of 3,159 companies and nearly 80,000 jobs in the five year period that Dun & Bradstreet studied, with 1991 being the worst single year overall. Regional differences in cost structure and labor characteristics were the primary causes for California's company and job lossess. Georgia, Texas, Tennessee, and Colorado were the states that benefited most from California's out-migration of jobs. The good news, however, is that California's economy has rebounded of late and a recent Anderson/UCLA Business Forecasting Project report estimated that California will outpace the rest of the country in job growth in the next year, possibly adding as many as 950,000 jobs in the next three years. And Stephen Levy, Director of the Center for Continuing Study of the California Economy and Vice Chair of the InstituteÕs Economic Advisory Council as early as last fall estimated that California might create as many as 350,000 new jobs in 1996.