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 4, Bulletin 3 -- January 30, 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 FORUM FOCUSES ON CALIFORNIA'S REBOUNDING ECONOMY On Tuesday, the California Institute hosted Steven Levy, the Director of the Center for Continuing Study of the California Economy (CCSCE), to discuss the health and future trends of the California economy. Levy announced that in 1996, California easily out-paced the rest of the nation in growth in jobs, income and population, and will likely continue to do so over the next ten years. Specifically, Levy noted that California's rebound was non-traditional in the sense that the staple sectors of the economy -- aerospace, construction, and retail trade -- did not contribute significantly to California's overall recovery. Rather, Levy notes in his study, the California economic recovery was led by "future high growth sectors." These include foreign trade, high technology, tourism and entertainment, and professional services -- each demonstrating great potential for California in the 21st century. Overall, California added well over 300,000 jobs in 1996 -- a 2.7 percent increase that easily exceeded the national average of 2 percent -- and has regained all the jobs lost between 1990 and 1994. In addition, the CCSCE report predicts that California will continue to experience strong economic and demographic growth. California, Levy noted in his presentation, will add three million jobs, two million households, and six million residents in the decade ahead. Total income will grow by 3.4 percent above the rate of inflation and reach $1.1 trillion (in 1996 dollars) by the year 2005. The avalanche of good economic news is tempered by the state's lack of preparation to handle the influx of people and the rise in business activity. Levy warns that the backlog in school construction, road maintenance and expansion, rising rent and housing costs, and other infrastructure needs of both a growing economy and population, are still nagging at the state -- particularly in the booming Silicon Valley. The CCSCE report also warns that with California's share of federal aid shrinking and with the state budget remaining tight, more tasks and burdens are being handed down to local governments who are ill-prepared to cope with the new responsibilities. A copy of the Executive Summary of the CCSCE report can be obtained from the California Institute (202/546-3700). The full report can be purchased from the Center for Continuing Study of the California Economy (415/321-5451). DELEGATION SENDS LETTERS URGING CALIFORNIA AS SITE FOR NSF EARTHQUAKE RESEARCH CENTER AND COMPUTING CENTER The overwhelming majority of California's representatives have sent two letters to the National Science Foundation urging the selection of California as the site for two National Science Foundation (NSF) research projects. The first letter, signed by 41 members of the delegation, urges support for an NSF grant proposal submitted by the University of California, Berkeley on behalf of a consortium of nine universities -- including several UC campuses, Stanford, USC, the California Institute of Technology, and the University of Washington -- for the national competition for NSF Earthquake Engineering Research Centers. The proposed Center will focus on solving earthquake problems of densely developed, high-seismic regions. The delegation letter states that the Center "will develop a master model for the modern urban environment, develop the engineering technology and policy tools for loss reduction programs, and will implement these programs in a demonstration project on a regional scale." The letter further states that the "extensive expertise and demonstrated capabilities of the personnel and organizations encompassed by the UC Berkeley proposal will lead to real reductions in earthquake losses that far exceed the Center's level of funding." The second letter urges NSF Director Neal Lane to support the grant application recently submitted by a consortium led by the University of California, San Diego (UCSD) for consideration under the National Partnerships for Advanced Computational Infrastructure program. UCSD's advanced computing alliance proposal involves California's leading research universities -- including all nine UC campuses and all 22 CSU campuses -- as well as General Atomics and other leading technology companies, the national Department of Energy laboratories, and a variety of respected research institutions and facilities from around the nation. The letter states that the effort will "lead to advances in computational and networking infrastructure and will spur new developments in many research fields that require leading edge computing and communications capabilities." Representatives Jerry Lewis (Redlands) and George Brown (San Bernardino) spearheaded the letter writing effort and circulated two Dear California Colleague letters to gather support from their delegation colleagues for these projects. LEGISLATIVE ANALYST UNVEILS WELFARE REFORM PROPOSAL THAT DIFFERS SIGNIFICANTLY FROM GOVERNOR'S PLAN The California Legislative Analyst's Office (LAO) released a proposal for implementing the new welfare reform law this past week. The LAO's plan differs in some major respects from that announced by Governor Pete Wilson in his recent State of the State address. Elizabeth Kirsten Hill, who heads the nonpartisan advisory group to the State Legislature, pointed out that the plan had been in the works before Wilson announced his proposal and was not intended as a counter-proposal, but rather to provide the state legislature with guidance as it takes up the implementation process. The LAO plan would allow recipients with children to remain on welfare for two years, and would provide them with job search assistance, and expanded education and employment assistance. After two years, however, the individuals would be required to work at least part-time in a community service job. Governor Wilson's plan, on the other hand, would require recipients to begin at least part time work while receiving benefits, and would limit an individual's time on aid to 12-months at a time, until the maximum two years on aid over five years had been reached. The LAO plan would also allow cash grants to children in families that are no longer eligible for benefits, whereas the Governor's plan would use non- cash state support for the children. Another major difference between the two plans is the treatment of the county- operated General Assistance program. The Governor's plan envisions allowing the counties to reduce or eliminate GA. The LAO's plan, however, would combine GA with the state benefits system. The state would control the program and be primarily responsible for funding it. The counties would administer it and be responsible for delivering employment and health and social services to aid recipients. In the first year, the LAO estimates that its plan would cost $450 million more than current programs, but it projects greater savings in later years, for net savings of $200 million over the first seven years. Although the Governor's plan does not break down the costs and savings associated with it, Governor Wilson has indicated that his plan would free up $288 million in welfare funding during the first year. On a related front, some state Governor's are calling on Congress to lift some of the restrictions imposed in last year's welfare reform bill. Also, President Clinton's budget is expected to include additional welfare funding to protect some legal immigrants and children from being denied Supplemental Security Income payments and food stamps. Many members of the Congressional leadership, however, appear to oppose revisiting the law so soon after enactment. CALIFORNIA TO RECEIVE NEARLY $26.5 MILLION FOR ADDITIONAL POLICE On Wednesday, the Department of Justice announced that they would soon disperse a total of $26,438,001 to various California cities and counties under the Community Oriented Policing Services (COPS) program. The Los Angeles Police Department is the single largest recipient of the COPS grants, receiving $14.6 million. Mayor Riordan announced that the city will use the money -- along with local matching funds -- to hire as many as 219 civilians to perform administrative duties now currently being performed by police officers, thus freeing up the officers to patrol the city's streets. In addition the federal money will go to fund a variety of technical improvements, including the development of a case-tracking system the expansion of the city's 18 crime analysis units, and the purchase of 300 laptop computers. The $14.6 million that the LAPD will receive is in addition to the more than $127 million that the police force has already received since the 1994 Crime Bill created the COPS program. News of the grant came only hours after the LA City Council officially accepted another $53 million federal grant to add 710 police officers to the force. A total of twelve California law enforcement agencies will receive federal COPS grants, including the cities of San Jose, San Diego, and Huntington Beach, and the counties of Sacramento, Santa Barbara and Marin. STATE PANEL ASSESSES FLOOD DAMAGE AND NEEDED GOVERNMENT AID On Wednesday, members of the California State Senate Budget and Fiscal Review Committee held a hearing to assess the physical and financial damage caused by the recent flooding in Northern California. The testimony offered by federal, state and local officials painted a dour picture of financial consequences of the disaster. Although they are still adding up the costs, the floods caused at least $1.6 billion in total damage. Federal Emergency Management Agency (FEMA) representative John Swanson noted that the estimates of flood costs are growing, especially in the agriculture sector where damage estimates have already risen to at least $245 million from an earlier figure of $155 million. FEMA has received approximately 12,000 applications for emergency aid, with $7.2 million in emergency housing grants provided to flood victims. State finance officials believe government costs could top $700 million, including $150 million from the state. In his testimony before the committee, Rep. Vic Fazio (West Sacramento) noted that California lawmakers last week asked President Clinton to propose an emergency appropriation to help finance recovery efforts. He stressed, however, that state and local governments must be willing to make significant financial commitments in order to secure federal dollars for long- term flood protection projects. HILL LEADERS CHALLENGE FUNDING OF BART - SFO EXTENSION PROJECT The $1.2 billion project to extend BART to San Francisco International Airport has encountered a Congressional roadblock, as two Hill leaders publicly caution Congress that the transit extension may violate a federal policy requiring airport revenues to be used only on airport projects. Last week, in a letter to the Federal Aviation Administration (FAA), Senator John McCain (R-Ariz.) claimed that the project agreement between BART and the airport appeared to violate FAA guidelines which state that airport revenues could only be used for the transit project in proportion to the airport-related use of the extension. Specifically, he was concerned that SFO was being asked ``to pay for the entire cost of the on-airport system, even though not all of the BART passengers will be using the airport.'' Additionally, McCain expressed concern with a provision of the agreement between BART and the airport which would allow BART to retain revenues from the planned airport station, even though the transit agency will not be paying rent. In recent letters to the FAA and the Federal Transit Administration, Rep. Frank Wolf ( R-Va.), chairman of the House Subcommittee on Transportation and Related Agencies, raised similar concerns about the legality of the project. A representative from BART insists that the SFO extension project is in compliance with FAA guidelines in this area, because the project would not constitute a diversion of revenue away from airport projects and the expected $200 million contribution from SFO will be spent only on the portions of the extension on airport property. Although BART officials anticipated the agreement would be signed soon after the 60-day Congressional review period ended earlier this week, an immediate resolution to the issue could be delayed. Senator Richard Shelby (R- Ala.), chairman of the Senate transportation subcommittee, has asked for more time to study the matter. An FAA spokesman said the agency was still examining the concerns of McCain and Wolf.