California Capitol Hill Bulletin
Volume 4, Bulletin 28 -- August 21, 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 Continues to Carry Burden of Federal Tax Dollars
A study prepared by the California Institute indicates that California,
for the 10th consecutive year, remains firmly entrenched as a donor state.
That is to say that California and its taxpayers send more in federal tax
dollars to Washington than the state receives back in federal spending or
payments.
The Institute's report notes that California continued its trend as a
donor state in Fiscal Year 1996, sending $9.83 billion more to the federal
government in taxes than it received in federal spending. This figure
represents an increase over 1995 when California sent $8.14 billion more in
federal taxes than it received in return, and a significant increase over
1994's $5 billion discrepancy. With 12% of the nation's population,
California shouldered 12.3% of the nation's federal tax burden, but
received back only 11.6% of U.S. expenditures.
For every dollar that California sent to the federal government in FY96,
the state received only $0.94 in federal payments and services in return.
Or to put it another way, each Californian paid over $300 more in federal
taxes than he or she received in services.
Beginning in 1987, California's federal budget shortfall climbed to a high
of $14 billion in 1991, declined to $5 billion in 1994, and rose again to
$10 billion in 1996. The one constant, year after year, is that California
has underwritten federally-funded activities in the other 49 states during
every year since 1987.
For a more detailed accounting of California's tax burden and changes in
federal spending patterns in the state, as well as graphics of this
information, contact the California Institute at (202) 546-3700 or by
e-mail at emyoung@calinst.org.
Banner Year For California's Agriculture Economy
For the past fifty years California has led the nation in agricultural
production, culminating in a record breaking $24.5 billion in production
value in 1996. Overcoming the previous year's record by $1 billion,
California far outpaced its closest rival Texas, having nearly double the
output as that of the Lonestar state. Secretary of Food and Agriculture
Ann M. Veneman credits California's banner year to the large variety of
products being produced, enabling the farm economy to flourish despite
setbacks in certain commodities.
Although it produces more strawberries than any other state, California
producers estimate a loss of $20 million in the strawberry market last
year, due to erroneous reports of California berries being the carriers of
illness-causing parasites called cyclospora. Eventually the microscopic
creatures were traced to Guatemalan raspberries.
Effectively overshadowing the berry dilemma, California excelled in the
production of dairy products and wheat. With farmers gaining an increase
of 17% in dairy product value, combined with a 2% increase in production,
the overall value of California's dairy products rose by nearly 20% for
1996, marking the third straight year that California has kept the dairy
state crown from Wisconsin. Similarly, because of an increase in both
wheat prices and production, California's crop value grew over 80%.
New technology enabling wine grape growers to cultivate hilly and
previously unworkable terrain has allowed California to capitalize on an
increase in prices due to a wine grape shortage. The grape market played a
formative role in California's agriculture dominance having the second
highest value at $1.86 billion, with dairy the highest at $3.08 billion in
1996.
State officials believe that California will continue to be the
agricultural leader in 1997 and beyond because of innovative technological
advances and an increase in farm exports to foreign markets. With the
westernization of Asian eating habits in the Pacific Rim region, the demand
for California's farm exports will continue to rise.

Governor Signs $68 billion State Budget; Line-Item Vetoes $314 Million
Governor Wilson signed into law the state's massive $68 billion spending
package on Monday, one week after the Legislature presented it to him and
seven weeks past the constitutionally-mandated deadline for passage of the
bill. But before doing so, the Governor took the opportunity to invoke the
line-item veto and struck $314 million from the budget and placed $203
million of that amount in an unallocated state-of-suspension until the
Legislature agrees to his plan to institute statewide testing to measure
the performance of California's public schools.
Some specifics of the 1997-98 spending bill that the Governor signed,
include:
¿¿ a $40 million line-item for food stamps to children and senior
citizens who are legal immigrants;
¿¿ $100 million in state-aid for local law enforcement, jail maintenance
and district attorneys;
¿¿ full lump-sum repayment of a $1.36 billion court judgment to the
Public Employees' Retirement System (PERS);
¿¿ a continuation of the suspension of the $60 renters' tax-credit;
¿¿ an increase in per-pupil spending on K-12 education of 7.6 percent
over the 1995-96 budget level, bringing the total to $4,773 per-pupil;
¿¿ an 8 percent jump in prison spending to $3.5 billion; and
¿¿ a 5 percent corporate tax cut, effective Jan. 1.

Welfare Reform Bill Signed by Governor
Nearly one year to the day after President Clinton signed legislation
allowing states to radically reconfigure their system to administer
welfare, Governor Wilson last week signed into law the historic welfare
reform legislation known as CALWORKS ˆ California Work Opportunities and
Responsibility to Kids -- that will limit welfare recipients' time on aid
and mandate work and training in return for benefits. The reconfigured
CALWORKS program is expected to cost an additional $33 million more than
the previous $6 billion in state and federal monies that was required to
administer the previous system.
The new CALWORKS program, unlike the previous welfare system, will mandate
that:
¿¿ within the federal five year time frame, welfare recipients be limited
to no more than two years of services at any one time;
¿¿ single parent recipients are required to enter into a minimum of
twenty to thirty-two hours of work-related activities, and two-parent
families must meet a minimum of 35 hours combined;
¿¿ after five years on aid, parents will lose their supplement and
children will be provided child-only grants;
¿¿ after the two-year limit on aid is reached, parents who still are not
employed could move to restore their benefits by assuming a community
service job through a government entity or a nonprofit organization.
For a more detailed assessment of the CALWORKS program, see the California
Institute's July 31, 1997 issue (Bulletin, Vol. 4, No. 27).

California Receives $101 Million For Flood Damage
Last week, northern California residents received welcome news from the
White House and the U.S. Department of Transportation when they announced
the allocation of $101 million for repairs to the infrastructure damaged
during Mother Nature's incredible display of flooding power last winter.
This new sum of emergency relief money follows an earlier payment of $100
million used to help with the recovery from the holiday torrents. It will
be used primarily for reimbursement to the state for already completed
emergency work.
John Witt, spokesman for the California Department of Transportation, said
that while California is pleased with the Administration's strong federal
support, the state hopes to receive an additional reimbursement payment of
$180 million, bringing the total emergency relief allocation to $381 million.
The funding, distributed by the Federal Highway Administration, will
reimburse repairs in 46 counties, including Amador, Butte, Colusa, Del
Norte, El Dorado, Humboldt, Lake Lassen, Marin, Mendocino, Modoc, Nevada,
Placer, Plumas, Sacramento, San Joaquin, Shasta, Sierra, Siskiyou, Solano,
Stanislaus, Sutter, Tehama, Trinity, Yolo and Yuba.

Legislators Rally To Defend EPA's New Air Standards
In a bipartisan effort to support the Environmental Protection Agency's
new clean air standards, Reps. Henry A. Waxman (Los Angeles), Sherwood
Boehlert (NY), and Christopher Shays (CT) have joined together to oppose
legislation that would weaken the new standards. Opponents of the
pollution cuts argue that the health benefits to be gained from stricter
measures do not justify the costs of compliance, especially when some
regions are still struggling to meet current standards. Nevertheless, the
trio of representatives leading EPA's defense have collected 125 member's
signatures on letters to President Clinton in support of the new policies,
stated that they have private backing from over 20 other members. With a
proposed 145 members willing to back the stricter pollution limits,
opponents could not override a presidential veto of their legislation,
needing 290 votes out of a possible 435.
The new air quality standards will be phased in over the next fifteen
years in an effort to economize the costs of cutting back pollution.
Studies conducted by EPA estimate that the stricter limits will prevent
15,000 premature deaths per year and improve the health of thousands of
children.

LAEDC Reports Strong Economy
The Economic Development Corporation of Los Angeles (LAEDC), a private
non-profit organization that focuses on economic health resources in the
Los Angeles region and beyond, reports that California's economy is keeping
pace with the strong national economy, with almost all business indicators
posting strong gains.
The LAEDC report notes that the solid gains have emerged in a wide variety
of areas such as California's agriculture industry, international trade,
tourism, and high-technology -- which has been a driving force in
California's rebound. The LAEDC projects that in 1997, California should
experience a 2.9 percent increase in non-farm employment which follows last
year's impressive 2.8 percent rise. The greatest gains will come in the
services sector (including computer software, engineering and motion
picture production) with a 195,000 person gain, and manufacturing, which
will experience a 52,000 person increase in employment. Californians'
personal income should outpace inflation by a solid margin and post a 6.3
percent increase.
More information can be obtained from the LAEDC at (213) 622-4300, or by
contacting them by e-mail at laedc-info@laedc.org.

______________________________________________________________
Tim Ransdell, California Institute for Federal Policy Research
419 New Jersey Ave., SE, Basement Level, Washington, DC 20003
Voice: 202-546-3700 -- Fax: 202-546-2390 -- Cell: 202-288-6598
-- Home: 301-773-4078 -- Website: <http://www.calinst.org>