The California Institute For Federal Policy Research California Capitol Hill Bulletin Volume 4, Bulletin 12 -- April 10, 1997 BIPARTISAN CALIFORNIA DELEGATION URGES AEROSPACE FIRMS TO LOCATE JOINT STRIKE FIGHTER PROJECT IN CALIFORNIA In an early effort to situate the development, production and flight testing of the Joint Strike Fighter (JSF) project in California, 47 members of the state's Congressional delegation wrote to the heads of the two competing contractors expressing their strong support for a California-based JSF program. The JSF is designed to consolidate the production costs of the six fighters currently used by the U.S. military into three versions of one fighter with the capacity for both warship and conventional take-offs. The winning contractor can expect contracts totaling $1 trillion over a twenty- to thirty- year period. The Department of Defense plans to buy 2,800 of the planes by the year 2025, at a cost of around $34 million per plane. The contract will be awarded in 2000, following a "fly-off" between the two remaining competitors' prototypes, with the first plane being delivered in 2008. In letters to J. A. Blackwell, President and COO of Lockheed Martin Aeronautics Sector, and Allan Mulally, President of Boeing Defense and Space Group, the California delegation emphasized the state's "commitment to the program as well as the unique facilities, weather, workforce, and capabilities that California has to offer." The letters, spearheaded by Rep. Buck McKeon (Santa Clarita), highlighted pending state legislation that would offer contract cost savings for JSF work done in California and noted Governor Wilson's decision to establish a Trade and Commerce Agency "Red Team" to create a positive business climate for JSF activities in the state. The delegation reminded the contractors that, "California has a long history as a base for major aerospace and defense contract activity and can provide benefits that no other state can match." ISTEA TASK FORCE CIRCULATING LETTER ON CALIFORNIA'S REAUTHORIZATION PRIORITIES As the Intermodal Surface Transportation Efficiency Act (ISTEA) reauthorization battle heats up, members of the California ISTEA Task Force are making certain that California transportation priorities are given full consideration. To that end, the Task Force is currently circulating a delegation letter to House Transportation and Infrastructure Committee Chairman Bud Shuster expressing its belief that, while the fundamental structure of ISTEA is sound, it could be improved upon in several areas. In the letter, the Task Force identifies four policy areas of particular interest to California: trade infrastructure; border infrastructure; the CMAQ program; and transit programs. Recent projections estimate that by the year 2000 international trade will account for 25% of California's economy. The current ISTEA formula fails to account for the burden that international trade and goods movement places on state transportation infrastructure. The Task Force proposes that "funding formulas for the National Highway System and the Surface Transportation Program should include a factor that apportions funding based on a state's relative share of international trade." California is only beginning to experience the fiscal and infrastructure fallout from the passage of the North American Free Trade Agreement. Already California has been compelled to divert hundreds of millions of dollars from county minimum allocations to pay for border infrastructure improvements. Considering the "national" nature of the NAFTA agreement, the Task Force thinks it reasonable that costs of implementing the agreement should be shouldered by the federal government. Given California's substantial air quality improvement needs, and effectiveness of the Congestion Mitigation and Air Quality Program (CMAQ), the Task Force recommends "higher funding levels for the CMAQ program, continued eligibility of air quality maintenance' areas for CMAQ funding, and removal of the cap on the amount of CMAQ funds that may be allocated to a single state." Current CMAQ guidelines cap funding for large states like California and risk the loss of funding for "maintenance areas." Given California's air quality remediation needs, a successful resolution to this problem is important. Finally, the Task Force urges the committee to "adequately support the federal transit program, retain ISTEA's flexible funding provisions, and guarantee that California continues to receive its share of the funds allocated to transit." California members wishing to add their names to the letter should contact Dan Mathews or Bryan Peebler at Rep. Kim's office (x53201) or Victor Castillo at Rep. Filner's office (x58045). CALIFORNIA EDUCATION ALLIANCE AND INSTITUTE BRIEF DELEGATION STAFF Leaders of a California-based alliance of K-12 education organizations briefed Congressional delegation staff this week regarding current legislative issues. The briefing, sponsored by the California Institute, focused on newly-released poverty estimates and the formula for federal disabled education assistance, among other issues. Commenting at the briefing were Tom Bancroft of the Assn. of California School Administrators, Judith Michaels of the California Federation of Teachers, Bob Walczak of Computer Using Educators, and Tim Ransdell of the California Institute. Also providing legislative status comments were Trent Barton with the office of Rep. Frank Riggs (Windsor), Chair of the Subcommittee on Children Youth & Families, and Frank Purcell with the office of Rep. Randy "Duke" Cunningham (San Diego). Barton described the ongoing negotiations over legislation to reauthorize the Individuals with Disabilities Education Act (IDEA), and Purcell described Rep. Cunningham's "21st Century Classrooms Act", which would expand tax incentives for corporations to donate computer technology, equipment, and software to schools. The California-DC Education Alliance encompasses representatives of most major K-12 education groups in the state, including school districts, school boards, teachers' organizations, and other California education advocates. CLINTON ADMINISTRATION GRANTS 18 CALIFORNIA COUNTIES TEMPORARY WELFARE REFORM EXEMPTION In response to a shortage in available jobs for the poor in California, the Clinton Administration has agreed to grant eighteen California counties a six month exemption for welfare reform requirements that would eliminate food stamp benefits for single jobless adults. The administration denied a request from Governor Wilson to extend the exemption to all 58 counties, a move which would give the state additional time to develop public service jobs in which food stamp recipients could participate to avoid the cuts. In addition to the 18 counties, several cities, including Oakland and Sacramento, would also receive an exemption based on Department of Labor statistics showing job shortages in those cities. JOB CREATION OUTPACING POPULATION GROWTH; HOME SALES POST STRONGEST SHOWING OF THE DECADE A State Department of Finance report, released earlier this week, revealed that California gained 320,000 new residents in 1996 and added more than 400,000 new jobs during that same period. All of California's population growth between 1995 and 1996 was attributed to natural growth, with births exceeding deaths by 336,150, and out-migration exceeding in-migration by approximately 16,150 persons. State growth rates are often considered to be excellent indicators of the overall economic health since population growth and the creation of new jobs are often intrinsically interwoven. Los Angeles County posted the greatest net gain in population, adding 44,200 residents, a growth level of 0.5%, for a total of 9.39 million residents. Thanks in large part to the booming Silicon Valley economy, San Francisco and Santa Clara counties posted the greatest relative growth among California's largest counties at 2.2% and 2.18% respectively. The total number of unemployed workers in California dropped to its lowest level in six years, while the average annual unemployment rate dropped to 7.3% for 1996. Unemployment rates declined in every county except in Los Angeles which remained stable. Meanwhile, the March edition of the California Real Estate Monitor reported that 1996 marked the strongest year this decade for home sales. Sales of existing homes reached 505,220, an increase of 18.8% above 1995 home sales and the highest posting since 1989 for home sales. Each of California's 15 major metropolitan areas showed double-digit growth in home sales and the average listing of homes on the market was reduced from 10.4 months to 8.6 months. CALIFORNIA RESEARCH BUREAU RELEASES REPORT ON MEXICO The California Research Bureau recently released a comprehensive, detailed report on the state of Mexico entitled "The Many Faces of Mexico." The report is intended to provide California policymakers with a thorough background discussion of some of the key demographic, education, health, economic, and political factors that characterize modern Mexico. CRB hopes that, through the report, the reader will gain an appreciation of the challenges posed by Mexico's rapidly growing, diverse population, its depressed domestic economy, and its political environment. The report covers such topics as education and agriculture in Mexico, as well as migration and immigration, although not border issues, and concludes with an overview of Mexico's economy. For copies of the report contact the California Research Bureau at 916-653-7843. CENSUS BUREAU RELEASES REPORT ON U.S. FOREIGN BORN POPULATION; 25% OF CALIFORNIA'S POPULATION IS FOREIGN BORN The Census Bureau released its annual "The Foreign-Born Population: 1996" on Tuesday. Among its findings is that the percentage of foreign-born individuals living in California has reached about 8 million, or about 25% of the state's population. The report also found that the longer immigrants live in the United States, the higher their economic status becomes. Newer arrivals experience more poverty and unemployment rates, whereas those who arrived in the 1970s are doing as well as the native-born population, according to the report. Mexico contributes the greatest number of foreign-born U.S. residents, with 27.2% of the total foreign-born population coming from that country. All of Asia is second, with 26.7% of the total. Of the nation's total foreign-born population, 68% were white, 24% Asian and Pacific Islander, and 8% black. Over 40% of the nation's total foreign-born were Hispanic (of any race). The report is on the Bureau's Internet homepage at: www.census.gov/population. BART BOARD APPROVES SFO LEASE AGREEMENT By a 7-2 vote on Thursday, April 10, the BART Board of Directors approved an agreement with the San Francisco International Airport that will govern the use and operating arrangements for that portion of the BART/Airport Extension at the airport property. The lease agreement outlines how SFO, BART and the airline industry will cooperate to build and operate the BART station at the airport, and confirms the airport's financial contribution to the project. A key provision of the agreement is BART's commitment to pay the airport $2.5 million a year for 50 years, projected to begin in the year 2001, and to make available a 25% discount to airline employees who purchase high-value tickets or some form of monthly passes for trips into and out of the airport to be paid from operating revenue generated by the extension. The airport will contribute $200 million to the project on airport property, of which $113 million will be the airline contribution and the remaining $87 million will come primarily from the airport with BART paying a portion of it; $108 million will come from the state; $99 million from SamTrans; and, $10 million from the Metropolitan Transportation Commission. The federal government will contribute $750 million to the project. With the airport lease agreement in place, BART will now concentrate on seeking the release of the $750 million grant from the Federal Transit Administration of the U.S. Department of Transportation. BART's airport extension will be an 8.7 mile project with four stations located in South San Francisco, San Bruno, inside the airport, and an intermodal station in Milbrae where the system will link up with CalTrain via a connecting platform. According to BART officials, if ground breaking can take place this spring or early summer, the project is expected to be completed by late in the year 2000. It is expected to generate 50,000 jobs directly and indirectly. CENSUS BUREAU DIRECTOR TESTIFIES BEFORE SUBCOMMITTEE On Thursday, Dr. Martha Farnsworth Riche, Director of the Bureau of the Census, and Dr. Everett M. Ehrlich, Undersecretary of Commerce for Economic Affairs, testified before the House Appropriations Subcommittee on Commerce, Justice, State and the Judiciary regarding the Census Bureau's proposals and progress for the upcoming 2000 Census. The Bureau and some members of Congress remain at odds over the Bureau's plan to employ a statistical sampling overlay to complement the Bureau's direct enumeration efforts. The Bureau's statistical sampling proposal is to make direct contact with at least 90% of residents in a census neighborhood tract -- either by telephone, by mail, or in person -- and then sample for the remaining 10% who historically have proven to be the most difficult residents to contact. The Census Bureau proposed the use of statistical sampling to resolve many of the problems that were uncovered shortly after the 1990 decennial Census was completed. After the 1990 count was complete, the Census Bureau employed non-binding sampling techniques, and thereby discovered that they had failed to count as many as 834,000 Californians in their final numbers. The state thus faced an unfunded federal mandate which forced California to provide services to nearly one million people more than the federal government had counted. Western states such as California, Arizona, and Colorado -- each of which have experienced rapid growth, urbanization, and internal migration -- were undercounted in the 1990 census by as much as nearly 3%, while some northeastern and midwestern states whose populations have remained more stable and less migratory, have been undercounted by as little as .029%. While Dr. Riche re-affirmed her belief that the partial use of statistical sampling would result in a more accurate, equitable, and less expensive census than those of past years, Subcommittee Chairman Harold Rogers (R-KY) remained skeptical and challenged Riche's assertion that the use of statistical sampling would result in either a more accurate census or a $200 million savings. Instead, Chairman Rogers proposed the use of statistical sampling only for persons who receive the long-form, about 1-in-2 households in rural areas, and 1-in-18 in urban areas. Accurate decennial census results are critical because the results are used to allocate and apportion numerous elected districts; 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 accurate census data to allocate their own funds for the decade to come. 1996 CALIFORNIA TRADE ROSE BY $12 BILLION LAST YEAR, TO $318 BILLION; L.A. UP 3.6%, SAN FRANCISCO UP 2.6%, SAN DIEGO LEADS WITH 23% JUMP In 1996, Los Angeles maintained its stranding as the busiest customs district in the nation with $170.1 billion in international trade moving through the district, an increase of 3.6% over 1995 levels. According to CMC-Tradeweek Regional Trade Report, San Francisco posted a 2.7% increase to $105.5 billion in total trade in 1996, coming in fourth in total volume behind L.A., New York and Detroit. San Diego's customs district ranked 21st in the nation, at $18.4 billion, but posted one of the largest percentage gains, growing a whopping 23% over 1995 figures. Growth in the Los Angeles customs district resulted largely from a 16.3% increase in trade with China, bringing the annual trade with that nation to $21.2 billion. Japan continues to be L.A.'s biggest trading partner, especially in receipt of L.A. exports. In 1996, L.A. exports to Japan topped $16 billion, an increase of more than $500 million over the previous year. Included among the list of exports fueling L.A.'s trade increase were computer circuits and parts, aircraft, cotton, cars, and auto parts. Top imports included computers and parts, cars, telephone and office equipment, footwear and consumer electronics.