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 7 -- February 27, 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. CALIFORNIA ISTEA TASK FORCE CIRCULATING DELEGATION LETTER ON TRANSPORTATION BUDGET ALLOCATIONS; CALTRANS TO BRIEF FRIDAY The California ISTEA Task Force is circulating a letter to Budget Committee Chairman John Kasich (Ohio) requesting that ISTEA budget allocations in the FY 1998 resolution be increased to reflect yearly tax revenues coming into the Highway Trust Fund (excluding revenues committed to deficit reduction). Without moving the trust funds Òoff-budget,Ó this change would increase annual ISTEA authorizations to about $30 billion in 2002, an increase of $4 billion over current levels. A bipartisan group of 31 California members have already signed the letter. For more information or if your member would like to sign the letter, contact Dan Mathews or Bryan Peebler at Rep. KimÕs Office (225-3201). While reauthorization of ISTEA is progressing this year, perhaps the most significant factor affecting any new federal transportation program will be the funding allocations provided by the FY 1998 Budget Resolution. The Department of Transportation recently estimated that meeting the nationÕs pressing infrastructure needs will require a doubling of the investment currently made by federal, state and local governments. Increased support for infrastructure will play a significant role in the future of CaliforniaÕs economy, which will depend heavily on commerce, international trade and goods movement. If the federal governmentÕs historical practice of providing about half of total transportation monies is maintained, Congress would be expected to annually provide approximately $40 billion annually to meet the nationÕs transportation needs. On a related note, the Task Force will sponsor another in its series of briefings this Friday, February 28, at 10:30 a.m. in 1539 Longworth House Office Building. The California staff briefing will feature Secretary Dean Dunphy, who heads California's Business, Transportation and Housing Agency, which has jurisdiction over the California Department of Transportation (CalTrans). The event will be an opportunity for California delegation staff to express opinions and concerns to CalTrans and will provide an overview of the StateÕs priorities for ISTEA reauthorization. 42 MEMBERS SIGN BAY-DELTA FUNDING LETTER A broad, bipartisan group of forty-two members of the California congressional delegation sent a letter to Appropriations Chairman Bob Livingston in support of Bay-Delta funding. The letter, dated February 25, urges Chairman Livingston to include $143 million in the 602(b) funding allocation for the Energy and Water Appropriations Subcommittee. The money represents the total funding payment requested in the President's FY 1998 budget for Bay-Delta funding. If appropriated, it will be the first installment of federal money for this vital restoration project. The letter points out that the San Francisco Bay-Delta Estuary is considered one of the most important ecosystems in the country. Millions of birds migrate through and live in the Bay-Delta estuary, as do 53 species of fish. In addition, 20 million Californians, both rural and urban, rely on the estuary for much of their water needs. The CALFED Bay-Delta Program will develop a balanced, comprehensive, and lasting plan to restore the ecological health and improve water management in the Bay-Delta. Funding for the restoration will be comprised of federal, state, and local contributions. California voters in November approved Proposition 204, providing nearly $1 billion in state funding for the program. HEARING HELD IN HOUSE ON PATENT BILLS The Judiciary Committee's Courts and Intellectual Property Subcommittee held a hearing Wednesday on H.R. 811, the Patent Term Restoration Act of 1997, as well as other patent bills. H.R. 811, introduced by Rep. Dana Rohrabacher (Huntington Beach), would amend the patent laws to provide inventors with a patent term of 17 years from the grant of the patent, or 20 years from filing the patent application, whichever is longer. In 1995, as part of the GATT implementing legislation, Congress changed the historical term of 17 years from patent award to 20 years from patent application filing. The bill would also reconfirm the confidentiality of information filed with the Patent and Trademark Office while the patent application is pending and allow only three exceptions to this confidentiality, two of which are intended to eliminate so-called submarine patents. Rep. Tom Campbell (Stanford), an original co-sponsor of the bill who also testified, supplied the submarine patent language to the bill. Submarine patents are instances where an inventor of a particular process will rush to file the patent application knowing that other corporations or individuals are pursuing the same process. Then, rather than pursue the patent grant, the original filer waits until the other entities invest the time and money to finalize the process and file for a patent. At that time, the original filer "rises from the depths" to claim the rights to the patent because of the earlier filing. The committee also heard testimony from Rep. Duncan Hunter (Imperial) on his bill, H.R. 812, the Patent Sovereignty Act of 1997. The bill is intended to improve and tighten up Patent and Trademark Office operations to counter other proposals to corporatize it. Rep. Hunter's bill, among other initiatives, would require that all fees collected by the PTO be used only for PTO functions. Last year, according to Rep. Hunter's testimony, almost half of the fees collected by the PTO were used to fund other government programs. The bill also calls for changes in federal personnel policy applied to the PTO to ensure that qualified patent examiners can be hired and retained. TRADE SUBCOMMITTEE HOLDS HEARING ON INFORMATION TECHNOLOGY AGREEMENT AND WORLD TRADE ORGANIZATION; ADMINISTRATION SAYS FAST- TRACK LEGISLATION MAY BE SENT TO CONGRESS NEXT MONTH The Trade Subcommittee of the House Ways and Means Committee held a hearing on Wednesday on the outcome of the World Trade Organization ministerial meeting in Singapore last December. Among the issues before the committee was the negotiation of the Information Technology Agreement (ITA), which will eliminate all tariffs on a wide range of technology and computer-related products by the year 2000. (See Bulletin Vol. 4, No. 6.) Among those testifying was Aaron Cross, Public Policy Director of IBM's Governmental Programs Office, who appeared in his capacity as chair of the Information Technology Industry Council. His assessment of the Singapore meeting was that the ITA is a landmark trade agreement that will serve as a model of how industry and governments can work cooperatively to achieve common goals. John Boidock, Vice President and Director, Government Relations, Texas Instruments, Inc., also testified in support of the ITA in his capacity as Chairman of the Government Affairs Committee of the Semiconductor Industry Association. Mr. Boidock pointed out that elimination of tariff duties under the ITA will save U.S. semiconductor makers and their European customers approximately $1.4 billion cumulatively by the end of the century. In addition, the agreement also covers semiconductor manufacturing equipment. Global exports of these products exceeded $12 billion in 1995, and the savings realized as a result of the elimination of tariffs on those exports will also be substantial. The ITA was negotiated under the now-expired fast-track authority for trade agreements, and therefore will be given congressional approval, as long as Congress does not take a vote against the measure. For the ITA to take effect internationally by its July 1, 1997 target date, 90 percent of the world's trade volume in information technology products must be accounted for by the signatory countries. The original 28 signatories account for about 84 percent, therefore, the Information Technology Industry Council believes the remaining 6 percent necessary can be reached by July. During his testimony at the hearing, Jeffrey Lang, Deputy U. S. Trade Representative, told the Committee that the Administration was working on drafting new fast-track negotiating authority and the bill may be sent up to Congress as early as next month. The fast-track legislation would give the Administration the authority to negotiate trade agreements that cannot be amended by Congress, but are subject only to an up or down vote. Reauthorization of the prior fast-track legislation was put on the back-burner last year, when the Administration and the congressional leadership failed to reach agreement on the inclusion of the authority to negotiate issues concerning labor and environmental standards in trade agreements. The Administration supports broad authority to negotiate such issues under fast-track, but many in the Republican-led Congress oppose it. If fast-track legislation is passed, the Administration will probably use it first to negotiate Chile's admittance into NAFTA. Invited to join NAFTA in 1994, Chile has indicated it will not begin negotiations until the Administration has fast-track authority. HOUSE AND SENATE PANELS EXAMINE ADMINISTRATIONÕS ISTEA PROPOSAL This week, the House Surface Transportation Subcommittee and the Senate Environment and Public Works Committee both heard testimony from newly confirmed Transportation Secretary Rodney Slater on the Clinton AdministrationÕs plan for reauthorization of the Intermodal Surface Transportation Efficiency Act (ISTEA). Despite his lengthy testimony, the Secretary failed to offer the committee a detailed description of the AdministrationÕs reauthorization proposal. Still, his remarks outlined the central features of the Department of TransportationÕs plan for reauthorizing the ISTEA legislation. In emphasizing his general satisfaction with the transportation priorities effected in ISTEA, Slater stated that ÒISTEA is working and working well.Ó The AdministrationÕs proposal calls for $175 billion in transportation spending over the next six years. The bulk of the 11 percent increase over existing expenditures would accrue to safety and environmental programs. With the Administration pushing for annual highway expenditures of about $21 million, roughly $5 billion less than the amount currently considered a baseline by many lawmakers, highway funding would essentially remain level. Among the gaps in the SecretaryÕs testimony, was its failure to adequately address a key issue on the minds of most California lawmakers: the formula used for allocating federal transportation funds. The policies for distributing transportation dollars among the states are perhaps the most hotly contested aspects of all the major reauthorization proposals. Of particular interest to California were the SecretaryÕs proposal of new programs to help improve border crossings, major trade corridors and innovative financing opportunities for states. Secretary Slater said the Administration plans to introduce legislation containing its proposal by the end of next week. CALIFORNIA'S NON-CITIZENS RECEIVE NOTICE OF INELIGIBILITY FOR SSI Beginning in February and continuing through March, the Social Security Administration (SSA) will undertake the process of notifying legal non-citizens of their potential ineligibility to continue to receive Supplemental Security Income (SSI) benefits. The change in status is a result of last year's welfare reform bill that excluded, for the first time, most legal non-citizens from receiving benefits. Of the 10.5 million legal non-citizens residing in the U.S., more than 35% reside in California, easily the largest number of any state. Legal permanent residents are entitled to live in the United States but are not naturalized citizens, either because they have chosen not to apply for citizenship, or because they have not met the citizenship requirements. SSA has classified California's non- citizens receiving notices of potential ineligibility into four general groups: _ Type I residents, which constitute 221,545 persons, are those who are likely to be ineligible to receive benefits. This includes refugees and asylees who have been in status for more than 5 years, most lawfully admitted residents (LAPR), and all other categories of aliens who are likely to be ineligible; _ Type II residents, which constitute 76,293 persons, are those who likely will remain eligible to receive benefits. This includes LAPRs who have received Social Security benefits, aliens who have received veterans benefits or Department of Defense annuities, and recipients with unknown alien status; _ Type III residents, which constitute 12,496 persons, are those who are eligible until at least August, 1997 to continue to receive benefits. This includes refugees and asylees who have been in status for 5 years or less as of August, 1997, and; _ Type IV residents, which constitute 799 persons, who are aliens newly entitled to receive SSI benefits after August 22, 1996 based on the new eligibility criteria. SSA has compiled a county-by-county breakdown for California of the non-citizen recipients in each category. For a copy of this table, please contact the Institute. A FIFTH BASE CLOSURE ROUND MAY BE PROPOSED With a comprehensive Defense Department review underway, there is widening speculation that the Pentagon may propose a fifth round of base closures, perhaps in either 1999 or 2001. In comments to the Association of the U.S. Army on February 24, Deputy Defense Secretary John P. White commented that, in the ÒQuadrennial Defense ReviewÓ (which DOD must deliver to Congress by May 15), the Pentagon intends to Òidentify the challenges that confront us and determine the best and most affordable way to meet those challenges.Ó In particular, White stated, Ò[w]e probably need to consider further base closing and realignment. I donÕt have to tell you how politically difficult that will be, but when weighed against other choices that option may begin to look more attractive.Ó Defense Secretary William Cohen has also reportedly hinted at further closures. California was hit disproportionately hard by the 1988, 1991, 1993 and 1995 base closure rounds, weathering 60% of the net job cuts nationwide, despite having housed only 15% of the nationÕs military personnel before the closures began. Despite past excesses, additional California facilities could still be vulnerable to closure should another BRAC (Base Realignment and Closure) round be instituted. GORE TO ADDRESS CALIFORNIA LEGISLATURE California State Senate President Pro-Tem Bill Lockyer (D-Hayward) confirmed today that Vice President Al Gore has accepted Lockyer's invitation to address a rare joint-session of the California Legislature. The tentative schedule has Gore speaking March 13 to members of the Senate and Assembly regarding education policies, specifically the proposals outlined in the State of the Union. Federal officials rarely appear before the Legislature, which normally only convenes jointly once or twice a year. IDEA REVISIONS BACK TO SQUARE ONE With revisions to the law covering federal education for the disabled failing last fall and progress slow so far this year, staff from the House, the Senate and the Clinton Administration have been meeting to start over. Staff have reportedly settled on a range of issues to discuss in a new bill to reauthorize IDEA (the Individuals with Disabilities Education Act). Unfortunately for California, the list of issues at present does not include changes to the programÕs funding formula, which disadvantages California. The bill originally proposed by the House Education and Workforce Committee would have altered the formula to one based on an objective census count of school-age children. BART-TO-SFO DEAL HITS NEGOTIATION SNAG Negotiations between officials from BART, the San Francisco International Airport (SFO), and the airlines who are opposed to BART's proposal to extend services to SFO, hit a significant snag Tuesday when participants signaled that they were unable to finalize tentative agreements reached just two weeks ago. The tentative deal reached February 14 in a summit at San Francisco Mayor Willie Brown's office, with Senator Dianne Feinstein and Representative Nancy Pelosi in attendance, had called for the airlines to pay $113 million through increased airport fees (limited to $7.5 million annually) and for BART to pay $2.5 million in annual rent to SFO, with SFO supplying the remainder of the money by raising fees and cutting costs. The $1.2 billion rail project would include $750 million in federal funding and would significantly improve access to the airport for the Bay AreaÕs residents and visitors. BLUE DOG BUDGET PROPOSED; INCLUDES PER CAPITA CAP ON MEDICAID PROPOSAL WHICH WOULD FREEZE CALIFORNIAÕS RECEIPTS AT LOW LEVEL The group of Capitol Hill lawmakers that call themselves the ÒBlue Dog Democrats,Ó of which Rep. Gary Condit (Ceres) is a key leader, introduced its budget balancing proposal on Wednesday. The proposalÕs authors calculate that the plan would achieve $500 billion in deficit reductions between FY1998 and FY2002, reaching a budget surplus by 2002 if Social Security and other trust fund surpluses are factored in, and by FY2007 if they are not. The proposal would, however, impose a state-by-state per capita cap on Medicaid spending in order to save $26 billion over seven years. The per capita cap concept, which is also proposed by the Clinton Administration, would hamstring California. A state-by-state per capita cap favors states which already provide rich levels of medical service to a narrow range of patients -- such states could simply expand coverage and take in federal dollars at a high matching rate. California, however, is at the other end of the spectrum -- providing very cost-efficient service to a wide range of patients. (According to GAO, California ranks lowest among states in spending per patient, yet we are 6th highest in breadth of patient coverage.) A Medicaid per capita cap would permanently lock in the high federal receipts of free-spending states, and prejudice cost-conscious states. Thus, a new patient in, say, New York would have the benefit of many more federal dollars than his or her counterpart in California -- at California taxpayersÕ expense. One positive note on the Medicaid front for California is the proposal to provide additional funds for states with low per capita limits, though details were not provided. Other proposals in the Blue Dog budget plan include a 0.8% downward adjustment in indexation of the Consumer Price Index (CPI) which is used to calculate increases in Social Security and other programs and to index tax brackets. It proposes to save $119 billion under Medicare, including $38.3 billion from hospitals in part achieved by removing Graduate Medical Education and Indirect Medical Education payments and creating a teaching hospital trust fund. It would also reserve funds to allow currentl resident legal immigrants to continue receiving SSI and food stamps for two years. The Blue Dog budget proposes to save $166.5 billion through reductions in myriad discretionary spending programs in education, health, agriculture, research, defense and other areas.