California Capitol Hill Bulletin, 2/4/97 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 3, Bulletin 42 -- December 5, 1996 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 SENDING LETTER TO PRESIDENT URGING SELECTION OF CALIFORNIANS FOR CABINET AND TOP SLOTS Reps. George Brown, Jerry Lewis, and Zoe Lofgren are circulating a Dear Colleague letter asking members of the California delegation to sign a letter to President Clinton urging him to select Californians for Cabinet positions and senior posts. The letter responds to the departure of several Californians from the current top positions in the Administration, including Chief of Staff Leon Panetta, Secretaries Warren Christopher, Mickey Kantor, and William Perry, and CEA head Laura D Andrea Tyson. The letter urges the President to remain mindful of the importance of the state as it emerges from the recession of the early 1990's, and notes the importance of California s jobs and industries to the national economy. The letter will be sent to the President on Friday, December 6. Members wishing to sign should contact Derek Ludwin (5-3072) or Skip Stiles (5-8483).
California Capitol Hill Bulletin, 2/4/97 Page 2 BOXER WINS COVETED APPROPRIATIONS COMMITTEE SLOT Earlier this week Senate Democratic Leader Tom Daschle (South Dakota) announced that Senator Barbara Boxer would be named to the coveted and powerful Appropriations Committee. Boxer was awarded the spot in part because Senator Dianne Feinstein relinquished her right to claim a spot on the Committee. Under the agreement reached by Daschle, Feinstein, and Boxer, Feinsein retains the right to reclaim the seat from Boxer in 1999. Feinstein who held the seat beginning in 1992, lost her post after the Democrats lost control of the Senate to Republicans in 1995 and the number of Democrats on the committee was reduced. Under Senate rules, Feinstein was eligible to reclaim a spot on the Committee as soon as a Democratic vacancy occurred. The Appropriations Committee has jurisdiction over all spending bills with the exception of entitlement programs such as Social Security, Medicaid, and Medicare which are fixed into a rolling expenditure program. Members of the Senate Appropriations Committee are responsible for recommending funding levels to the full Senate and as a result are often very influential in directing federal money back to their home states. As importantly during the current focus on deficit reduction, a post on the Appropriations Committee can help prevent deeper cuts in federal programs that benefit California. Senator Feinstein retains her committee assignments on the Rules, Judiciary, and Foreign Relations committees. In addition to the new Appropriations slot, Senator Boxer retains her assignments to the Budget, Environmental and Public Works, and Budget committees. CONGRESSIONAL PANEL CALLS FOR CONSUMER PRICE INDEX REFORM On Wednesday, a panel of congressionally appointed economists, chaired by Californian Michael Boskin, released a report calling for reform of the consumer price index (CPI) to reflect a more "accurate" measurement of the rate of inflation. The panel estimates that the government has been overestimating the rate of inflation by approximately 1.1 percentage points per year. Those who argue that the current calculation of the CPI overstates inflation suggest that it should be revised downward, a move which would save the federal government up to $1 trillion over the next twelve years. The savings would be accrued through the reduction of the cost of living adjustments (COLA) for a number of federal benefit programs. In FY 1996 the federal government will spend $518 billion on programs with automatic COLA's linked to the CPI, of this amount 83% will be for Social Security and other retirement benefits, with 66% for Social Security alone. Although both Administration and Congressional officials have expressed concern over the inaccuracy of the CPI estimation, it has become increasingly clear that elected officials are uncomfortable with the political consequences that would result from a correction. The California impacts of a downward revision of the CPI are unclear and vary across programs. Although California houses 12.1% of the U.S. population, the state's share of U.S. recipients in the programs affected by the CPI ranges from 9.4% for Social Security to 16.6% for Supplemental Security Income. Additionally, 12.9% of military retirement expenditures, a program with an automatic COLA, is directed to Californians. The chart below details California's share of the largest programs which use the CPI. A reduced CPI would also affect federal revenues by modifying the tax bracket and deduction levels. The Institute has not yet analyzed the impact of CPI revisions on federal tax
California Capitol Hill Bulletin, 2/4/97 Page 3 indexing. These impacts could be significant -- CBO estimated that nearly half the budget savings from a CPI reduction would come in increased federal tax revenues. California Share FY 1996 California Share of U.S. Recipients Fed. Outlays of U.S. Spending Social Security ('93) 9.4% $346 B 9.5% Supp. Security Inc. ('93) 16.6% $24 B 14.6% - 21.3%* Food Stamps ('94) 11.5% $26 B 10.5% Fed. Employee Retir. ('94) unavail. $43 B 9.7% Military Retir. ('94) unavail. $29 B 12.9% *Estimates of this figure vary due to inclusion or exclusion of federally administered state funds. Sources: U.S. Census Bureau; Congressional Budget Office, Congressional Research Service. LEADERSHIP IN THE STATE LEGISLATURE DETERMINED On Monday December 3, both the 80 member California Assembly and the 40 member State Senate convened for the first time since the November elections. Each house immediately held elections for leadership. In a historic move, Cruz Bustamante (D-Fresno) was selected as the Speaker of the Assembly along a party-line vote of 43-37. The ascension of Bustamante to the second highest post in California government, marks the first time that a Latino has held that job. Bustamante, regarded as a pro-business moderate, stated that his Speakership would be one of bi-partisan cooperation focusing largely on expanding education while holding taxes down. Among Bustamante's first moves as Speaker was to appoint the decidedly more liberal Sheila Kuehl (D-Santa Monica) as Speaker Pro Tempore, the second highest ranking position in the Assembly. Curt Pringle (R-Anaheim), who last year served as Speaker, was unanimously selected by the Republican delegation to serve as the caucus' Floor Leader, the highest ranking position of the minority party. In the Senate, Bill Lockyer (D-Hayward) was re-elected as President Pro Tempore of the Senate on a 37-0 vote. Robb Hurtt (R-Garden Grove) was re-elected as the Republican Floor Leader. COURT BLOCKS GOVERNOR'S ORDER TO STOP PRENATAL CARE FOR ILLEGAL ALIENS Last week, the San Francisco Superior Court issued a preliminary injunction against Governor Wilson's emergency order to stop making prenatal care available to new illegal immigrant applicants as of December 1. (Under the same enjoined order, prenatal care to current illegal alien recipients would have stopped as of January 1.) After passage of the federal welfare reform legislation this past summer, Governor Wilson issued an order cutting off prenatal care benefits on an emergency basis. Under California law, emergency-based regulations do not require the standard public comment and review period. The Court, however, rejected the view that the denial of benefits was necessary on an emergency basis, and ordered the state to comply with the regular notice and comment times. The Governor has stated that the order will be appealed. The state estimates that it provided prenatal care last year to about 70,000 illegal immigrants at a cost of $69.3 million. Governor Wilson stated that the Court's order will cost California an estimated $25-35 million.
California Capitol Hill Bulletin, 2/4/97 Page 4 WEEKLY CALIFORNIA JOBLESS CLAIMS ROSE DESPITE SUBSEQUENT NATIONAL FALL Across the country the number of first-time applicants for unemployment benefits fell last week. In the week ended November 30 state jobless claims totaled 336,000, down 8,000 from the previous week. The four week moving average, a more reliable short term indicator of unemployment trends, climbed to 337,500. Despite last week s fall in filings, 13 states, including California, reported jumps in initial claims exceeding 1,000 in the week ended November 23. During that period, 19,564 Californians filed for initial employment benefits. The latest unemployment rate figures will be released on Friday, December 6. TWO CALIFORNIA CASES COME BEFORE THE U.S. SUPREME COURT Earlier this week, the Supreme Court heard oral arguments in two cases arising from California disputes. In Glickman, Secretary of Agriculture v. Wileman Bros. and Elliot, Inc., et al. the Court will consider whether it violates the First Amendment for the Secretary of Agriculture, pursuant to marketing orders issued under the Agricultural Marketing Agreement Act of 1937, to require the handlers of California peaches, plums, and nectarines to fund generic advertising programs for those commodities. The peach handlers argued, as did the Ninth Circuit, that regulation impacting protected commercial speech rights must be supported by a substantial governmental interest and must be advanced in a manner no more extensive than necessary to serve that interest. Under this standard, the law was not valid because the government could not show it advanced governmental interests any more than private advertising would. The government claimed that the law does not affect free speech and is a logical and unintrusive way to advance the substantial governmental interest of increasing sales of these fruits. Furthermore, because the government's requirement that all handlers contribute protects against "free riders," the law advances government interests more than private advertising. In a less controversial matter, the court heard arguments for The Regents of The University of California, et al., v. John Doe, et al. This case considers whether an entity, in this case the University of California, which otherwise would be considered part of the State or an "arm of the State" and thereby immune from suit in federal court under the Eleventh Amendment, may lose its immunity where it has a claim for reimbursement or indemnity from the federal government or other third party. BANK OF AMERICA REPORT FORECASTS STRONG 1997 EXPORT GROWTH Pacific rim activity is expected to fuel double-digit growth in exports from California in 1997 according to a report released Tuesday by the Bank of America s International Trade Bank. The group forecasts that exports from the state will grow from $108 billion in 1996 to $123 billion in 1997. The report predicts that while economic growth in many Asian countries may slow in 1997, California exports to those markets will remain strong thanks in part to economic restructuring and resulting demand for California s high-technology and information sensitive products. For a copy of the report, contact the bank at 415-622-2645, or access the BofA web site at www.bankamerica.com and clicking on the Corporate Banking icon.
California Capitol Hill Bulletin, 2/4/97 Page 5 [Note: On Tuesday, the California Institute prepared and circulated a roster of California Congressional delegation office numbers, as well as a tentative list of House committee assignments. If you did not receive a copy and would like one, please contact us.]