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 6 -- February 20, 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. DELEGATION BRIEFED ON INFORMATION TECHNOLOGY AGREEMENT Reps. Zoe Lofgren (San Jose), Tom Campbell (Stanford), Bob Matsui (Sacramento), and David Dreier (Covina) hosted a briefing on February 20 for the California congressional delegation on the recently negotiated Information Technology Agreement (ITA). The briefing was co-hosted by the American Electronics Association, and participants included representatives of Hewlett- Packard, Digital Equipment Corp., and Semiconductor Equipment and Materials International (SEMI). The ITA is an international technology agreement signed by 28 nations and separate customs territories, including the United States, during the World Trade Organization ministerial meeting in Singapore last December. It calls for the elimination of all tariffs on information technology products by the year 2000. In general, the products covered include computers and peripherals, semiconductors, telecommunications, software, semiconductor manufacturing equipment, and computer-based analytical instruments. It is expected that implementation of the agreement will greatly benefit U.S. exports of information technology products, and reduce prices to consumers worldwide. In 1995, U.S. exports were charged an average $5 billion in import tariffs by other countries. Implementation of the agreement will benefit California's high technology industry, which widely supports it. In 1995, there were 669,349 jobs in California's high tech industry, generating a payroll of $36.9 billion. Additionally, California's high tech exports generated $58.8 billion in revenues in 1995. HERGER/FAZIO CO-HOST CONGRESSIONAL FLOOD FORUM Representatives Wally Herger (Marysville) and Vic Fazio (West Sacramento), in an effort to prepare for upcoming Congressional hearings on the California floods, today co-hosted a Congressional forum in Yuba City to examine federal flood control policies, solicit input from local officials, and allow the public to express their comments and concerns regarding the impact of the recent floods. The winter floods are estimated to have caused over $1.6 billion and 80,000 acres worth of damage to California, the lion's share of those damages occurring along the Sacramento and American rivers in the central valley. In a letter to President Clinton last Thursday, Governor Wilson urged the President to 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 (Bulletin, Vol. 4, No. 5). Any appropriations offered by the President must be approved by Congress. In addition to Representatives Herger and Fazio, representatives from the Federal Emergency Management Agency (FEMA), the United States Army Corps of Engineers, the Bureau of Reclamation and a host of other federal and state agencies participated in the event. BART & AIRLINES CLOSER TO AGREEMENT ON SFO RAIL EXTENSION On Friday, San Francisco Mayor Willie Brown, along with Senator Dianne Feinstein and Representative Nancy Pelosi, hosted a summit to try to end the impasse between BART and the airline industry over how much the airlines should contribute to BART's proposed BART- to-the- airport rail extension (Bulletin, Vol. 4, No. 3). The $1.2 billion rail project would include $750 million in federal funding and would significantly improve access to San Francisco International for the Bay AreaÕs residents and visitors. The dispute stems over the current proposed funding plan calls for the airlines to indirectly contribute $200 million to the extension's construction costs through airport landing fees. The airlines have opposed the spending formula and have instead proposed to pay for the section of the rail that lies within airport property which is estimated to cost only $100 million. The dispute has stalled Congressional approval of $750 million in federal grants for the project. While the two-hour meeting between BART representatives, the president of United Airlines, and a host of others failed to produce a final agreement, representatives of all parties involved agreed that it went a long-way towards reaching a resolution to the dispute. COPYRIGHT PIRACY COST U.S. COMPUTER SOFTWARE AND ENTERTAINMENT FIRMS $10.6 BILLION LAST YEAR Last year, the U.S. computer software and entertainment industries lost $10.6 billion to copyright piracy in more than four dozen countries according to the International Intellectual Property Alliance (IIPA). Given CaliforniaÕs overwhelming stature in these two industries and their role in revitalizing the stateÕs economy, copyright piracy is of particular concern to the state. In 1996, for instance, California technology exports reached over $70 billion. During the same period, the motion picture production industry alone accounted for 133,000 of CaliforniaÕs jobs. In response to this staggering figure, the IIPA has asked U.S. trade officials to put three countries -- Greece, Paraguay and Russia -- on a high priority list for possible trade sanctions if they fail to improve copyright protection. Additionally, the group asked the U.S. Trade Representative to keep close tabs on ChinaÕs efforts to close down piracy operations in that country. It also expressed its concern that Mexico has failed to comply with the intellectual property provisions of the North American Free Trade Agreement. PPIC ISSUES REPORT ON IMPACT OF WELFARE REFORM IN CALIFORNIA The Public Policy Institute of California recently released a report examining the impact of welfare reform on families in California. The study, Who Will Be Affected by Welfare Reform in California, was conducted by Thomas MaCurdy and Margaret O'Brien-Strain. The study found that about one-third of all California families, nearly 4.5 million, receive some form of public assistance. Nevertheless, the typical recipient family only receive about six percent of its annual income from welfare. Welfare programs are defined as Aid to Families with Dependent Children (the new Temporary Assistance for Needy Families (TANF) under the new law), food stamps, Supplemental Security Income (SSI), and Medi-Cal (Medicaid). Of those families receiving public assistance, the study concludes that two groups are most vulnerable under the new federal welfare program: families that are highly dependent on the former AFDC program, and recent immigrants that are receiving benefits. Highly dependent families are defined as those that received at least 50 percent of their two-year (based on the study years of 1993- 94) income from welfare, with at least 25 percent coming from AFDC. Two-thirds of these families were single-parent families, with about 30 percent each of non-Hispanic white, black, and Hispanic ethnicity. Additionally, almost half of the highly dependent single-parent families included teen mothers. The second most vulnerable group, the study found, were recent immigrants, defined as immigrant families were at least one member arrived in the U.S. after 1985. In 1993-94, 501,000 recent immigrant families received welfare. According to the study, eliminating SSI and food stamps (as the new welfare law requires) would have affected 281,000 of those families, but 45,000 would have retained their eligibility because of their refugee status. Of the remaining 236,000 families, about 45 percent, according to the report, had adult family members who would not have lost benefits, and nearly 89 percent had very young children many of whom, the study finds, were likely to become U.S. citizens. Thus, the study concludes that about 26,000 immigrant families would have lost all eligibility had the denial of SSI and food stamps been implemented in 1993-94. The full report is available on PPIC's Internet homepage at www.ppic.org. BRIEFING ON LABOR MARKET INFORMATION Congressional staff and others were given a demonstration of the use of labor market information (LMI) last Friday at a briefing jointly sponsored by the Northeast-Midwest Institute, the Sunbelt Caucus, and the California Institute. Using data produced by the Bureau of Labor Statistics and other sources, state and local employment arms provide a range of services to job seekers, current employers, plant site selectors, and others. The briefing demonstrated the mechanism used by one state, and offered an opportunity for input about potential changes and improvements. One improvement suggestion was to produce consumer price index (CPI) data for a wider geographic area, such as on a state-by-state basis. (Currently, the CPI is calculated only for the nation as a whole and for 29 major metro areas.) Another suggestion was to improve the specificity of Òstandard industry classificationÓ codes or SIC codes. These codes classify all businesses into categories, and current codes are so outdated that they do not adequately identify many of the major employers in the new economy, particularly in the technology fields so important to CaliforniaÕs economy. SIC codes have been under review for some time, but no changes have yet been implemented. For briefing handouts, contact the Institute at 202-546-3700. CLINTON TO ATTEND LAKE TAHOE ENVIRONMENTAL SUMMIT According to White House officials, President Clinton plans to attend an environmental summit at Lake Tahoe later this year where local state and federal officials will meet to consider alternatives for best protecting the alpine lake. Meeting participants will discuss a number of environmental issues facing the lake, such as its declining clarity and the decaying surrounding forest. Also under consideration will be matters related to air pollution, transportation, land and water conservation, federal land acquisition and property rights. California and Nevada supporters of the summit have argued that the federal government -- which owns 75 percent of the land in the Tahoe Basin -- has a clear interest in, and responsibility for, the future of North AmericaÕs largest mountain lake. The Tahoe Regional Planning Agency (TRPA), the local organization responsible for regulating development around the lake, has identified $730 million in projects which could help mitigate the areaÕs ecological decline. Local officials are optimistic that the participation of national officials in the summit will result in more federal dollars for the projects. Senators Barbara Boxer and Harry Reid (Nevada) and Rep. Vic Fazio (West Sacramento), who had sought the PresidentÕs attendance, expressed hope that other state and federal officials would attend, including California Governor Pete Wilson, Nevada Governor Bob Miller, Interior Secretary Bruce Babbitt and Agriculture Secretary Dan Glickman. On a related subject, the TRPA and the State of California are involved in a case which will be argued before the U.S. Supreme Court later this month regarding the rights of governments to regulate development in environmentally sensitive areas. In a brief submitted to the court, Governor Wilson states that both the regulatory authority of TRPA and the use of market mechanisms to protect environmental quality in California and across the country are at risk in the case. The case examines whether a government can separate the right to develop a property from the property itself in an effort to protect the environment. The TRPA allows a Tahoe landowner to separate the development potential of land from the land itself and sell that development right to someone else. As California Resources Agency Secretary Doug Wheeler points out in an op-ed in todayÕs Sacramento Bee, ÒThere is an active market for such rights within the Tahoe area because TRPA requires property owners who wish to build something new or renovate an existing structure to acquire a sufficient number of these rights in order to proceed.Ó JANUARY HOME CONSTRUCTION FIGURES STRONG IN THE WEST; SOUTHERN CALIFORNIA BENEFITS FROM RISING INDUSTRIAL-BUILDING SALES The U.S. Commerce Department reported today that construction starts on new homes and apartments nationwide increased only slightly in January despite earlier optimistic predictions by Wall Street analysts. Starts rose 2 percent to a seasonally adjusted rate of 1.35 million last month following a sharp 11 percent drop in December. The release did, however, contain good news for some regions. In the West, starts climbed 29.8 percent to a rate of 344,000 a year, more than recovering from a 25.6 decline in December. The sharp drop for western states during that month has been attributed largely to harsh winter weather. In related news, the American Industrial Real Estate Association has announced that a dramatic 46 percent rise in the amount of industrial building space sold, and nearly 30 million square feet of space leased, reflected strong increases in user and investor activity in the five- county Los Angeles Basin during 1996.