California Capitol Hill Bulletin, 3/11/97 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 4, Bulletin 5 -- February 13, 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. REPS. FAZIO AND LEWIS ADDRESS CALIFORNIA INSTITUTE'S ADVISORY BOARD Reps. Vic Fazio (Sacramento) and Jerry Lewis (Redlands) spoke at the California Institute's Advisory Board breakfast on Tuesday, February 11. The discussion between the congressmen and the Institute's supporters focused on a number of subjects, including education initiatives recently proposed by the President, deregulation of electric utilities, and transportation issues. Rep. Fazio also highlighted several issues that he would focus on this year. Among them were securing funding for the Bay-Delta restoration program, ensuring that the federal government did not attempt to micromanage the utilities restructuring efforts that have already begun in California and elsewhere, and providing additional money for recent flood damage, as well as improving California's levees and flood control efforts. The breakfast, which was attended by roughly 35 members of the Institute's Advisory Board, was hosted by Barbara Daye of Blue Cross of California and Wellpoint Health System. The Institute also thanks Rep. Lewis, who unselfishly chose to join us despite his suffering from the flu. REPS. MILLER AND RADANOVICH CIRCULATING BAY-DELTA DEAR COLLEAGUE Rep. George Miller (Martinez) and George Radanovich (Mariposa) are circulating a Dear Colleague letter to the California congressional delegation seeking signatures to a letter to Appropriations Chairman Bob Livingston. The letter urges the Chairman to support the $143 million federal payment for the Bay-Delta restoration program. The money, the first of three equal payments for Fiscal Years 1998-2000, was authorized by Congress last year with broad bipartisan support from the delegation. In addition to the federal money, state funding was authorized by California's voters last November when Proposition 204 was approved, authorizing a $995 million bond issue. The San Francisco-Bay Delta Estuary is one of the most important ecosystems in the nation. In addition to the millions of birds and fish that migrate through and live in it, almost 2/3rds of California's population depends on it for their water and livelihoods. Members wishing to sign the letter should contact Steve Lanich with Rep. Miller at x56043, or Tom Pyle with Rep. Radanovich at x54540, by the close of business on Friday. WILSON SEEKS FEDERAL SUPPLEMENTAL APPROPRIATIONS BILL FOR FLOODING Governor Pete Wilson, in a letter to President Clinton today, has requested that the President immediately move forward with executive order actions and a proposed federal supplemental appropriations bill to expedite the state's recovery from the early winter floods and protect the levees and roads from any future floods in 1997. The Governor's requests for executive order assistance include: _ directing the U.S. Army Corps of Engineers to restore damaged flood control facilities to pre-flood full capacity; _ directing the U.S. Fish and Wildlife Service to exercise its authority to implement emergency procedures with respect to mitigating emergency and reconstructive levee repair; _ and directing the Federal Emergency Management Agency (FEMA) to provide federal funds for pumping of floodwaters that are endangering levees that have not yet failed as well as expediting reimbursements to counties that have had to respond to flooding. In addition to the executive order requests outlined above, the Governor has today requested from the President that any requests to Congress in the form of a supplemental appropriations include: _ $300 million for the estimated cost of repairing damages to levees attributable to the January floods; _ a waiver of the $100 million cap under the Emergency Relief program, and instead a disbursement of up to $381 million for required repairs to California's transportation system; _ disbursement of $200 million under FEMA's Public Assistance program to repair public facilities; _ and an unstated amount of USDA funding from the Tree Assistance Program to provide assistance to California's damaged agriculture fields. INSTITUTE CO-SPONSORING FRIDAY BRIEFING ON LABOR MARKET INFORMATION On Friday, February 14, in advance of possible Congressional action, the California Institute, along with the Northeast-Midwest Institute, and the Sunbelt Caucus, will jointly sponsor a briefing on Labor Market Information (LMI) and demonstrate its uses. The briefing and demonstration will be held at 10:00 a.m. in 2257 Rayburn House Building on Friday, February 14th. The session will be an interactive demonstration of the way different states are able to answer jobseekers' questions about where the best jobs are, which occupations are most in demand, and what training is available to job seekers. BAY AREA DELEGATION REQUESTS FEDERAL FUNDS FOR BAIR ISLAND PURCHASE On Tuesday, a group of Bay Area representatives led by Rep. Anna Eshoo (Atherton) sent a delegation letter to Rep. Ralph Regula (Ohio), Chairman of the House Appropriations Subcommittee on the Interior, requesting $10 million from the Land and Water Conservation Fund to acquire Bair Island as an addition to the Don Edwards San Francisco Bay National Wildlife Refuge. This development in the California delegationÕs efforts to secure the land comes in response to a purchase agreement reached last month between the Peninsula Open Space Trust and the owners of the land. In the past, the committee expressed concern in appropriating federal dollars in the absence of a willing seller. The $15 million purchase agreement calls for $5 million to be raised locally and $10 million to be provided through federal dollars. California members signing the letter include: Reps. Tom Campbell, Ron Dellums, Anna Eshoo, Tom Lantos, Zoe Lofgren, George Miller, Pete Stark, and Lynn Woolsey. HOUSE SUBCOMMITTEE BEGINS HEARINGS ON IDEA REAUTHORIZATION The House Early Childhood, Youth and Families Subcommittee commenced hearings last week on the reauthorization of the Individuals with Disabilities Act (IDEA). IDEA currently requires that special education services be provided to all children with disabilities up to and through the age of 22. One of the more notable California related issues on the table was the proposal to change the funding formula which allocates special education money to states. The proposed reform would change the current funding criteria from state-reported counts of disabled students (which can be inflated) to a new objective formula based 85 percent on a state's population and 15 percent on poverty factors. The new formula, if adopted, would be gradually phased in over a period of ten years. The hearing reopens an issue which was considered but not completed during the 104th Congress. While the formula proposed in the new H.R.5 resembles last yearÕs House bill -- which would have raised CaliforniaÕs allocation -- the Senate is likely again to resist attempts to alter the IDEA formula. In another Subcommittee hearing on IDEA, the Chief Deputy Director for the California Department of Corrections testified in support of amending IDEA to exempt from the program's application, individuals aged 18-22 who are incarcerated in state adult correctional facilities. Such an amendment has been urged by Governor Wilson, the California Legislature, and major portions of the special education community. Another potential amendment may allow states to decide whether or not they wish to serve this population. ENCRYPTION EXPORT BILL INTRODUCED IN HOUSE; HOUSE INTERNET CAUCUS MEETS WITH CYBERSPACE COMPANIES Rep. Bob Goodlatte (Va.) introduced the Security and Freedom Through Encryption Act (SAFE) in the House this week. The bill would allow companies to export encryption programs of any strength and would not require a key recovery system be in place. Encryption is the use of computer software to encode and decode information transmitted over the Internet and by other electronic means to prevent it from being accessed by unauthorized third parties. The U.S. strictly controls the export of encryption devices, citing national security interests. Recently, the Administration has ruled that it will allow the export of 56-bit encryption devices, but they must have a key recovery system. Many software and computer companies have argued that such strict U.S. controls put them at a competitive disadvantage because more sophisticated encryption is available in the global marketplace. Sen. Conrad Burns (Mont.) is expected to introduce similar legislation in the Senate in the near future. Encryption export bills introduced in the 104th Congress died without legislative action. On a related front, the Congressional Internet Caucus met this week with company officials representing Internet access providers and others with business interests in the Net. The companies warned the 85 legislators present that overlegislating content and control of the Internet could ruin the industry. The legislators for their part committed to protecting the Internet. Legislative action this year concerning the Net is expected to include encryption policy, privacy rights, copyright protection, and even taxation. At the meeting, John Gage, SunMicrosystem's chief scientist, noted that the companies have a long way to go to educate Congress on the Internet, as only 85 legislators out of 435 House members and 100 Senators are members of the Caucus. Jack Valenti, President of the Motion Picture Association of America, urged the members to pass copyright legislation to protect the intellectual property rights of Hollywood's products. CALIFORNIA ISTEA TASK FORCE HOLDS ÒKICK-OFFÓ EVENT; TRANSPORTATION REFORM PROPOSALS HEARD IN HOUSE COMMITTEE As Congress gears up for the reauthorization of the Intermodal Surface Transportation Efficiency Act (ISTEA), members of CaliforniaÕs Congressional delegation Òkicked-offÓ the California ISTEA Task Force with a Capitol Hill press conference. The Task Force, organized by Rep. Jay Kim, will coordinate the stateÕs delegation in promoting CaliforniaÕs transportation needs in the reauthorization process. Members of the Task Force present at the conference were Reps. Ken Calvert, David Dreier, Bob Filner, Jane Harman, Jay Kim, Jerry Lewis, Juanita Millender-McDonald, Dana Rohrbacher, Loretta Sanchez, and Lynn Woolsey. Rep. Lewis, who chairs the California Republican delegation, commented that the Republican and Democratic members of the California delegation plan to work together on transportation and other issues, and stated that Òthis is just one example of the kind of cooperation we will see from California in the 105th Congress.Ó Rep. Filner too suggested that this statewide effort Òwill show you a California delegation strikingly different from what you have seen in the past.Ó Rep. Kim also expressed thanks for the work of the California Institute, the Governor WilsonÕs office and California Metropolitan Planning Organizations in the efforts to assist the Task Force as it works to further CaliforniaÕs transportation interests. In the new CongressÕ first hearing on ISTEA, the House Transportation and Infrastructure Committee met earlier this week to hear testimony on three funding proposals for federal highway programs. One proposal, supported by Rep. John Kasich (Ohio) and Senator Connie Mack (Florida), would eliminate most federal highway programs, relieve states of federal regulations, lower federal gasoline taxes and give states the flexibility to decide how best to use federal transportation dollars or come up with their own funding mechanism for improving roadways and bridges. Rep. Tom DeLay (Texas) and Gov. George Allen (Virginia) presented the merits of the STEP 21 (Streamlined Transportation Efficiency Program for the 21st Century) proposal. The STEP 21 proposal would reduce the overall number of federal highway program categories, limit federal regulation and transferability restrictions, and create a more equitable balance between a stateÕs contributions to and appropriations from the Highway Trust Fund by increasing a stateÕs minimum allocation to 95% of their share of contributions to the trust fund. New Jersey Gov. Christine Todd Whitman endorsed a plan that would essentially maintain current federal policy and funding formulas with respect to transportation. The proposal is backed by a coalition of Northeastern states that are largely the biggest beneficiaries of current federal transportation spending formulas. Last week, the House Transportation and Infrastructure Committee reported H.R. 4, a bill that would move four federal transportation trust funds (highway, mass transit, aviation, and harbors and inland waterways) Òoff budgetÓ in order to increase funding for infrastructure projects in those areas. Passage of this legislation could result in as much as an additional $3 billion per year being spent on transportation projects. WILSON, INTERIOR CREATE LARGEST PUBLICLY-OWNED WETLANDS RESERVE On Monday, Governor Wilson and the Interior Department announced that they had reached a $90 million agreement for the public acquisition and restoration of nearly 900 acres of coastal wetlands at Bolsa Chica near Huntington Beach. The historic deal involved a number of state, local and federal agencies, the landowner, two oil companies that have been using the land for numerous years, and the ports of Los Angeles and Long Beach. The agreement which is expected to be completed on Friday, calls for the landowner, the Koll Real Estate Group, to be paid a flat-fee of $25 million for the wetlands and an additional $66 million to be used to help restore the fragile land that is currently the home to a broad number of oil wells. Both current and past occupants of the land, Shell Oil's CalResources and the Phillips Petroleum Company, will be responsible for cleaning up remaining contaminants left-over from years of oil field operations. INS RAISES ESTIMATES OF ILLEGAL IMMIGRATION NUMBERS In its first new calculation since 1992, the Immigration and Naturalization Service has substantially increased its estimate of the number of illegal immigrants in the United States. It now calculates that the number of undocumented immigrants residing in the United States currently has grown to 5 million and is rising at a rate of 275,000 individuals per year. INS found that the illegal immigrant population has increased by 28 percent over the last four years, and now accounts for about two percent of the total U.S. population. In its last estimate, INS had calculated that 3.9 million undocumented immigrants lived in the United States as of 1992. Of the 275,000 new illegal immigrants entering the United States each year, INS calculates that about 41 percent, or 2.1 million, entered the United States on legal visas but did not leave when the visas expired. INS continues to estimate that about 40 percent of the total illegal immigrant population resides in California. This translates into 2 million undocumented immigrants currently in California; a growth rate of approximately 100,000 per year since 1992. The next most popular destination, Texas, only accounts for 14.1 percent, or about 700,000, of the U.S. total. Mexico, according to the INS data, is the largest source of undocumented immigration to the U.S., accounting for about 54 percent, or 2.7 million, of the total. PPIC FINDS MANY ILLEGALS RETURN TO HOME COUNTRY WITHIN TWO YEARS While the INS has upgraded its estimate of the number of illegal immigrants in the country over the last four years, a new study released by the Public Policy Institute of California finds that 50 percent of the illegal immigrants sampled from 1980 to 1990 returned to Mexico within two years of entering the United States. The study, Dynamics of Immigration: Return Migration to Western Mexico, analyzes the return migration of a sample of immigrants, both legal and illegal, from western Mexico, which, according to the report, has historically sent the most immigrants to California and the U.S. The study concludes that, in general, those immigrants with the least education and wage-earning ability, as well as undocumented immigrants, are the most likely to return to Mexico. According to the study: "[w]ithin two years, over 50 percent of those with less than an elementary school education, 70 percent of the people employed as agricultural workers, and 50 percent of the undocumented immigrants in the sample return to Mexico. Immigrants who are unemployed also return soon after migration: Nearly 70 percent of them return within the first year after migration." The study also found that women immigrants are more likely to remain in the United States for long periods. The report estimates that 40 percent of the women immigrants remain for over 15 years, whereas only about 20 percent of the male immigrants remain that long. Regarding migration to California, the study concludes that the sampled communities sent about 3.2 million immigrants to the state between 1980 and 1990, almost 65 percent of whom were undocumented. Of the average 326,000 legal and illegal immigrants who entered the state annually, about 29 percent (95,000) remained in California for more than 10 years. But, of the number of undocumented immigrants who entered each year between 1980 and 1990, about 213,000 annually, 63 percent will have returned to Mexico before the end of ten years. The study concludes that return migration patterns, length of immigrant stays in the U.S., and the differences between returnees and long-term settlers must be considered in determining the social and economic effects of immigration. Finally, it contends that because of the high rate of return migration, most immigrants from western Mexico do not stay in the United States long enough to qualify for social services and benefits. The full report is available on PPIC's Internet homepage at www.ppic.org. GAO FAULTS INACTION ON THE 2000 CENSUS On Wednesday, the General Accounting Office (GAO) added the Census BureauÕs 2000 census efforts to its list of "high-risk" programs -- those the GAO considers especially vulnerable to waste, fraud and abuse. The first time inclusion was the result of of potential problems the Bureau may encounter in Congress regarding the Bureau's plan to utilize, in part, statistical sampling in the 2000 census. The Census Bureau has proposed to employ statistical sampling -- the use of modern sampling and statistical methods to supplement the traditional direct enumeration effort -- to better and more accurately depict the actual U.S. population. Statistical sampling would work in the following manner. After counting 90 percent of addresses in a census tract, the Bureau would then sample the remaining, hardest-to-count households to compliment and complete their count. After that is completed, the Census Bureau would then field a large survey to check the quality of the initial count and provide the basis for the adjustment to correct undercounts and overcounts before the final numbers are tallied and published. The GAO's listing stems largely from the fact that Congress has failed to authorize the use of statistical sampling and the Census Bureau has not yet made alternative plans for the decennial census if Congress fails to approve their plans. The GAO report notes that the "longer the delay in securing agreement over design and funding, the more difficult it will be to execute an effective census, and the more likely it will be that the government will have spent billions of dollars and still have demonstrably inaccurate results." Accurate decennial census results are critical to states such as California since the results are used to allocate and apportion the House of Representatives' seats; distribute and allot billions of dollars in federal funding for a myriad number of programs; and guide the plans for decisions of government, business, education, and health institutions in the multi-billion dollar investments that they make. In addition to the direct federal effect of an accurate decennial census, states and municipalities often rely on census data to allocate their own funds for the next ten years. CaliforniaÕs formula program allocations could stand to benefit substantially from the employment of statistical sampling. After the 1990 census was completed and published, the Census Bureau -- by employing non-binding sampling after the fact -- discovered that they had failed to include as many as 834,000 Californians in their final numbers, thus forcing California to provide services to nearly one million more people than had been counted. Unfortunately, then Commerce Secretary Robert Mosbacher overruled his Census director and refused to adjust the data for formula funding purposes. If sampling for the 2000 census is rejected by Congress, California may not even know how many residents might have been overlooked. BOEING, GENCORP AEROJET AWARDED FEDERAL MILITARY CONTRACTS Boeing and GenCorp Aerojet military contract awards announced earlier this week may mean more federal procurement funds finding their way to California production facilities. The Air Force has awarded Boeing a $179 million contract to upgrade offensive avionics computers and software, and install additional weapons delivery capability on B-1B Lancer bombers as part of the B-1B Conventional Mission Upgrade Program. Among the primary locations working on the upgrades are Seal Beach, Palmdale and Edwards Air Force Base in California. In addition, TRW has received a subcontract increase from Boeing Helicopters Division to implement a significant addition to the ongoing TRW avionics program for the U.S. Army Comanche Weapons System. The contract value has been increased by $56 million to a total contract value of almost $93 million. The San Diego-based TRW Avionics System Division is part of TRWÕs Space & Electronics Group which is headquartered in Redondo Beach. Finally, GenCorp Aerojet received an $82 million U.S. Army contract for projection production and for test equipment and tooling for the production of the Sense and Destroy Armor program, developed at AerojetÕs Azuza, California facility. NEW BILATERAL TEXTILE TRADE PACT SIGNED WITH CHINA Earlier this month the U.S. and China signed a bilateral textile trade pact that will assure the U.S. access to China's textile markets. The agreement will also increase slightly China's import quota with the U.S. Under the agreement, China has agreed to ensure that non-tariff trade barriers do not nullify U.S. access and will allow review of China's implementation for compliance. The accord, which runs for four years, has stopped the threat of a potential trade war with China. Last September the U.S. imposed $19 million in penalties on Chinese imports because of textile trade violations by the Asian giant. California has a significant and growing apparel industry which has added to its recent economic successes. According to the recently-released California Economic Growth, prepared by the Center for Continuing Study of the California Economy, apparel manufacturing accounts for 160,000 California jobs, an increase of nearly 27% since 1990. CALIFORNIA EXISTING HOME SALES AT SEVEN-YEAR HIGH; BUILDING ACTIVITY REACHES FIVE-YEAR HIGH According to a California Association of Realtors (CAR) report released Tuesday, California existing home sales rose steadily in 1996, reaching its highest level since 1989. The report noted that statewide, more than 505,000 single-family homes closed escrow during the year, up nearly 19 percent from 1995, while the median price of an existing home, $178,160, remained virtually unchanged over last year. In another indication that California's economy is growing steadily, on Wednesday DataQuick Information Services reported that building activity in California during 1996, reached its highest level since 1991. Last year's $10.7 billion in total construction financing was a dramatic 20 percent increase over the previous yearÕs total of $8.9 billion, and was well ahead of the recent 1993 low of $6.9 billion. NATIONAL JOBLESS CLAIMS DROP; WHILE CALIFORNIA EXPERIENCES INCREASE Despite a significant nationwide reduction trend in claims for new unemployment benefits, California suffered an increase in claims in the week ended February 1. Across the country last week, the number of Americans making first time jobless claims dropped to the lowest level in more than six months. That reduction put the four-week moving average at 327,750 claims, the lowest level since mid-September. The Department of Labor reports that in the week ended February 1 five states, including California, reported increases in initial claims exceeding 1,000. California officials said that its 11,085 additional claims are attributable in part to the return to a five-day workweek after a shorter reporting period the previous week. Layoffs in the construction and food industries and agriculture were also cited as contributing factors. CORRECTION In a January 30th article regarding a California economic health briefing by Steve Levy, Director of the Center for Continuing Study of the California Economy (CCSCE), the Institute provided the wrong telephone number for the CCSCE. The correct number is (415) 321-8550. All inquiries regarding the purchase of the CCSCE's 1996/97 California Economic Growth book should be directed to that number. Copies of briefing materials may still be obtained from the Institute at (202) 546-3700.