The California Institute for Federal Policy
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California Capitol Hill Bulletin
Volume 12, Bulletin 4 — February 18, 2005 [or see
pdf
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CONTENTS OF THIS ISSUE:
Bipartisan California Congressional Delegation Confers with Governor and State Legislative Leaders
Institute Releases Latest “Balance of Payments” Report
Spyware Bill Reported By House Subcommittee
Matsui Courthouse Bill Reported By Senate Committee
Bonding Plan Rolled Out as Inexpensive Transportation Financing Plan
Association of California Water Agencies Holds DC Conference
Decline In Grape Harvest Yielding Stronger Prices for Industry
Home Builder Wins Auctions for Land at the Former El Toro Marine Corps Air Station
Breakfast Briefing to Feature Remarks by California Secretary of Food and Agriculture, A.G. Kawamura
To expand communications between Washington and California, the California Institute provides periodic bulletins regarding current activity on Capitol Hill that affects our state. Bulletins are published weekly during sessions of Congress, and occasionally during other periods.
Bipartisan California Congressional Delegation Confers with Governor and State Legislative Leaders
On Thursday, February 17, 2005, the top California leaders in Sacramento and Washington met in the U.S. Capitol Building to discuss federal policy and funding issues that affect the state. Visiting Washington for the meeting with the bipartisan California Congressional Delegation were Governor Arnold Schwarzenegger, Assembly Speaker Fabian Núñez, Senate President Pro-Tempore Don Perata, Assembly Republican Leader Kevin McCarthy, and Senate Republican Leader Dick Ackerman.
More than 40 members of California’s current 52-member bipartisan Congressional delegation participated in the mid-day meeting, and the event yielded a promise to continue discussions. The Congressional delegation, led by Republican David Dreier (San Dimas) and Democrat Zoe Lofgren (San Jose), held the session in the chambers of the House Rules Committee, which Rep. Dreier chairs.
On the agenda were base closures and reuse issues, Medicaid/Medi-Cal policy and finances, federal funds for incarceration of undocumented felons (via the State Criminal Alien Assistance Program or SCAAP), homeland security grant formulas, and transportation spending. Other topics were brought up during the session, including education and the state’s overall fiscal relationship with the federal treasury. The California Institute’s research regarding the state’s share of federal spending and its donor-state status was cited by many participants.
During the meeting, former Rep. and OMB Director Leon Panetta, who now co-chairs the Governor’s Base Retention Council, briefed participants regarding the upcoming base closure process, and California Health and Human Services Secretary Kim Belshe gave a briefing regarding efforts to secure a Medicaid waiver for the state.
Also on Thursday, the State leaders met with Senators Dianne Feinstein and Barbara Boxer; the Governor and Republican Legislative leaders met separately with the California Republican Congressional Delegation; and Rep. Lofgren, Speaker Núñez and President Pro-Tem Perata engaged in a roundtable discussion with members of the California news media. The Governor said that state officials were going from the event to the Department of Health and Human Services to work toward an agreement on federal Medicaid waiver for the California.
Bipartisan Congressional Delegation and State Leaders Cite Outcomes From State-Federal Meeting in Washington
At a press conference following the February 17, 2005, Bipartisan Congressional Delegation meeting with the Governor and State Legislative leaders, Governor Arnold Schwarzenegger said that it had been a “terrific meeting and stressed themes of bipartisanship and unity. He assured that “We are not asking to go and get a handout. We just want our fair share” of federal funding, and added that the strategy should be “unite and conquer.” He said that he has suggested that the group meet again in California to further develop a “bipartisan coalition with both the Democrats and the Republicans hosting the meeting.” He cited the need for additional SCAAP program funding, noting that the state spends $1 billion per year on incarceration of undocumented alien felons. Citing past declines in balance of payment statistics, he said, “We want to make sure that we don’t continue the trend.” He noted that his first budget had assumed $350 million in federal funding and California won $1.1 billion, referring to administrative victories such as waivers, extensions, and penalty avoidance.
Rep. Zoe Lofgren, Chair of the California Democratic Congressional Delegation, said that the Californians were pleased to have the opportunity to work with the Governor to develop “a solid working plan and to strategize regarding the financial good of California.” She noted that the Governor asked the participants to come to Sacramento to continue the dialogue. She added, “All 53 of us need to stick together around federal funding issues.” Lofgren also noted that the two partisan California delegations meets on a regular basis, but that she hoped that the entire bipartisan delegation would begin to meet regularly as well. Calling this session a good start, she acknowledged that “We knew going into this meeting that we weren’t going to walk out with a check for California.”
Citing an impressive turnout of California members and the logistical challenge of bringing them together, Rep. Christopher Cox (Newport Beach) reminded observers that the entire delegation is comparable to both “the size of both the offensive and defensive squads of a few football teams.” He noted that issues discussed at various points throughout the day’s activities included cargo container security at the Ports of Los Angeles and Long Beach, and making permanent the internet taxation ban. He later urged that the state and delegation avoid settling for one-time fixes and hold out for long-term systemic solutions.
State Assembly Speaker Fabian Núñez cited education, transportation and Medicaid as key discussion topics and said he looked forward to making substantive progress at the next meeting. He pointed out that the state receives back 79 cents for every dollar of taxes paid by California taxpayers, and he urged that the Bush Administration work with the State to lessen that imbalance. The Speaker commented, “For 18 years California has been a donor state and has not received its fair share not only of education and transportation but also of Medicaid.” Regarding the meeting, he added, “We had a very good bipartisan discussion, and we moved the ball forward.”
State Senate President Pro-Tem Don Perata cited transportation, economy and health care as prime discussion topics and commented that the Governor not only stayed at the meeting for the full two hours but he was very engaged for the session.
Rep. Brad Sherman (Sherman Oaks) spoke regarding California’s federal payments shortfall, focusing on its sharp rise over the last decade. Displaying the Institute’s balance of payments statistics, he called for a unified effort to tap the state’s political muscle to reverse the fiscal slippage by voting as a bloc. He noted that 10 years ago California received back well above 95 cents per tax dollar paid, but that amount has now slipped to 79 cents.
At the present time, video of the news conference is available from C-SPAN television at http://inside.c-spanarchives.org:8080/cspan/cspan.csp?command=dprogram&record=183504984 .
California Assembly Budget Committee Holds Hearing on Federal Budget and Flow of Federal Funds to and from State; California Institute Director Testifies
On Tuesday, February 15, 2005, the California Assembly Budget Committee held a hearing to review President Bush’s FY 2006 Budget proposal and the flow of funding between California and Washington. Leading off seven witnesses was California Institute Executive Director Tim Ransdell, who outlined reasons for the negative balance of payments and examined key California-federal issues that were part of the President’s budget proposal. Other witnesses spoke regarding Medi-Cal and Medicaid; transportation programs; the State Criminal Alien Assistance Program (SCAAP); homeland security grants; law enforcement funding; and education grant programs.
Full streaming video from the hearing is available in Windows Media Player format at http://www.calchannel.com/MEDIA/0215C.asx . (Please note that the hearing began approximately 35 minutes late but the video began recording on time, so it is advisable to skip forward past the first one-fourth of the 2-hour hearing.)
Institute Releases Latest “Balance of Payments” Report
On Monday, February 14, 2005, the California Institute released the latest report examining the fiscal relationship between California and Washington. Entitled “California’s Balance of Payments with the Federal Treasury: 1981-2003,” the report finds that California taxpayers sent $50 billion more in federal tax dollars to Washington in 2003 than the state received in federal spending for contracts, salaries & wages, grants to state and local governments, and direct payments such as social security and medicare. The discrepancy amounted to $1,409 for every Californian or 79 cents in federal spending for every $1 of federal taxes paid. The $50 billion number represents a new record for any state, but California’s donor-state status is not a complete surprise, given that the state is relatively young (a smaller percentage of older persons suppresses the share of Social Security and Medicare dollars) and relatively wealthy (higher incomes drive higher income tax payments). Relatively, the state also receives a far smaller proportion of federal defense contract spending than it did 20 years before.
The report is available at http://www.calinst.org/pubs/balance2003.htm . Alternatively, a pdf version is available in two parts: the text and graphics are available at http://www.calinst.org/pubs/Bal03.pdf , and the accompanying tables at http://www.calinst.org/pubs/BalCht03.pdf .
Spyware Bill Reported By House Subcommittee
H.R. 29 was reported out of the House Energy and Commerce Subcommittee on Commerce, Trade and Consumer Protection on Weds. February 16. The SPY ACT (Securely Protect Yourself Against Cyber Trespass) bill would prevent the unknowing downloading and activation of spyware by requiring that consumers receive a clear and conspicuous notice prior to the transmission of spyware programs. Spyware software programs are used to start pop-up ads, and expropriate and monitor online habits and personal information from Internet users. Rep. Mary Bono (Palm Springs) is the author of the bill.
H.R. 29 would also prohibit other deceptive behavior, such as key-stroke logging, computer high-jacking, and the display of advertisements that cannot be closed, according to Bono
During the subcommittee’s markup, an amendment was adopted to clarify that cookies (passive text files), including tracking cookies, are not subject to the bill’s provisions, in order to allay the concerns of some technology companies.
The House passed a similar bill authored by Rep. Bono last year by a vote of 399-1.
CA Wilderness Bill Breezes Through Senate Committee, May Face Opposition in House; Yosemite/Golden Gate Bill Also Reported
Two California-related bills were reported by the Senate Committee on Energy and Natural Resources on Wednesday. S. 128, which would designate more than 300,000 acres of federal land in Northern California as protected wilderness, was unanimously reported. Entitled the Northern California Coastal Wild Heritage Wilderness Act, S. 128 would alter the classification of, and provide added protection to, large areas of Humboldt, Del Norte, Mendocino, Lake, and Napa Counties, including Snow Mountain, Mount Lasic, the Trinity Alps, the King Range, and the Sanhedrin, Yuki, and Siskiyou wilderness areas. The bill is sponsored by Sen. Dianne Feinstein (CA) and co-sponsored by Sen. Barbara Boxer (CA).
Last year, a similar bill also passed the Senate, but faced resistance from the House Resources Committee, which is chaired by Rep. Richard Pombo (Tracy). Quick passage in this congressional session indicates the Senate’s continued strong support of the bill. Companion legislation has already been introduced in the House by Rep Mike Thompson (St. Helena), whose district encompasses most of the affected lands. Governor Schwarzenegger, through his Secretary for Resources, Mike Christman, endorsed the bill. A letter from Christman to the House Resources Committee stated that “the State of California strongly supports this proposed legislation.” Still, there is concern that the bill, H.R. 233, will again be opposed by Rep. Pombo in the House.
Also on February 16, the Committee approved S. 136 with an amendment. The bill, introduced by Sen. Dianne Feinstein, authorizes the National Park Service to provide supplemental funding for three small schools in Yosemite National Park attended by approximately 130 children of park service employees. Sen. Feinstein stated that the schools have faced significant hardship in recent years and have had to cut down on educational services and faculty just to stay open, and will help students who attend Yosemite schools avoid a commute of more than 45 miles to and from school each day.
The bill also would expand the Golden Gate National Recreation Area (GGNRA) by adding 4,700 acres of land to the GGNRA in San Mateo County, including a 4,076 parcel known as the Rancho Corral de Tierra. Senator Feinstein stated that the mountainous property, which surrounds the coastal towns of Moss Beach and Montara, was previously purchased by the Peninsula Open Space Trust (POST). The Trust has agreed to transfer the land to the Federal Government for about half of the purchase cost. S. 136 was approved by voice vote.
Matsui Courthouse Bill Reported By Senate Committee
On February 16, 2005, the Senate Environment and Public Works Committee favorably reported S. 125, to honor the late Congressman Robert T. Matsui by naming the United States Courthouse located at 501 I Street in Sacramento in his memory. The bill is sponsored by Senators Barbara Boxer and Dianne Feinstein.
In a press statement after the markup, Senator Feinstein said that naming the federal courthouse after Congressman Matsui was an appropriate memorial because he “was instrumental in obtaining more than $142 million in federal funding for the Courthouse,” and Senator Boxer added it “is an appropriate memorial to his efforts toward a just and fair society.”
Bonding Plan Rolled Out as Inexpensive Transportation Financing Plan
On Thursday, February 17, 2005, Sens. James Talent (MO) and Ron Wyden (OR) unveiled a bipartisan plan that would seek to generate $30 billion in funding for transportation construction projects through the issuance of one-time bonds. The sponsors of the proposal asserted that the plan would generate 1 million jobs while improving safety and mobility for highway and transit users and enhancing the nation’s economic competitiveness.
The proposal known as Build America Bonds would establish a federally-chartered non-profit corporation to issue $39 billion in bonds, $30 billion of which would be directed to support transportation infrastructure while the remaining $9 billion would be invested over the 30 year life of bonds to pay for the cost of the bonds. Participating individuals and corporate bond holders would qualify for tax credits rather than accruing interest on their investment.
The proposal would supplement the limited resources available for a surface transportation bill, however bond finances would be available chiefly for construction projects, while state and local recipients would be required to meet historic matching fund commitments, and update construction materials and technology to ensure efficiency and cost-effectiveness.
Few specific guidelines governing funding apportionments of bond money are included in the proposal, however the sponsors indicated that each state would be entitled to receive at least $150 million of bond generated resources, under the legislation. Sen. Talent deflected concerns that the White House would oppose the plan– in keeping with the Administration’s opposition to bonding proposals introduced in 2004– declaring that it was too soon to say if the White House would maintain its opposition. “This is a great deal for the taxpayer,” said Sen. Talent.
Representatives from a number of business, labor and transportation interest groups expressed their support for Build America Bonds at the news conference including: the American Association of State Highway and Transportation Officials (AASHTO), and the U.S. Chamber of Commerce, and the National Heavy & Highway Alliance – Laborers’ Union.
Senate Transportation Leader Agrees to Lower Reauthorization Price Tag; House Leaders Reportedly Near Minimum Guarantee Deal
Sen. James Inhofe (OK) Chair of the Senate Environment and Public Works Committee, which is charged with jurisdiction over highways, publicly declared that he supports an overall funding level of $284 billion for a 6 year highways and transit reauthorization bill. This figure would fall in line with the price tag of the recently reintroduced House Transportation Equity Act: Legacy for Users (TEALU) bill and the White House’s wishes. That bill mirrors the House bill that was approved by the Transportation & Infrastructure Committee during the 108th Congress.
Chairman Inhofe’s statement represents a reversal from his support up until now for a more expensive surface transportation bill. Inhofe did not rule out the possibility of raising the total price when the bill reaches the Senate floor. Last year’s $319 billion Senate transportation bill cleared the floor by a vote of 76 to 21.
Questions remain as to how transportation leaders will successfully increase the minimum guarantee to donor states with limited resources at their disposal. The topic of securing equitable returns to states who send a higher proportion of highway user taxes to the Highway Trust Fund (HTF) than they receive back in federal highway spending, was a sticking point during transportation reauthorization discussions in the prior Congress. Many donor states joined a coalition known as the States Highway Alliance for Real Equity (SHARE), asking Congress to approve an increase in the minimum guarantee from the current 90.5 percent to 95 percent. (The percentage represents a state’s rate of return on its gas tax contributions to the federal Highway Trust Fund.)
House Republican leaders in the meantime claim that a deal on minimum guarantee distributions is close to being struck among House members. At a meeting on February 17, House Majority Leader Tom Delay (TX) and House Transportation and Infrastructure Chair Don Young (AK), were reported to have agreed on a MG plan that they will now shop to their colleagues. Details of the plan have not been released, but it is likely – given the bill’s inextravagant overall price tag – that the minimum guaranteed rate of return to each state will be lower than the 95 percent target.
California’s Chief Vocational Education Official Opposes Vocational Education Cuts Proposed in President’s Spending Plan
On February 15, 2005, the House Subcommittee on Education Reform heard testimony from vocational education community members at a hearing on the bipartisan Vocational and Technical Education for the Future Act (HR 366). All witnesses testifying, including Patrick Ainsworth, a top California Department of Education (CDE) official, expressed their opposition to the President’s proposal to eliminate funding for the $1.3 billion Perkins vocational and technical education program.
H.R. 366 reauthorizes academic and technical Carl D. Perkins training programs through 2011, providing support for initiatives that help prepare secondary and postsecondary level students for college or employment. The measure, introduced by Subcommittee Chair, Michael Castle (DE) in January, closely resembles a bill (H.R. 4496) he sponsored last year that cleared the Education and Workforce committee by voice vote. According to Chair Castle, H.R. 366 would strengthen accountability requirements in current law, consolidate Tech-prep grants into a larger state grant to improve secondary and postsecondary coordination, and require the establishment of course sequence models to ensure non-duplicative course progression for students as they work to complete their vocational training.
The Subcommittee’s ranking member, Rep. Lynn Woolsey (Petaluma), expressed support for the bill in her opening statements. She expressed her opposition to the President’s FY2006 budget request that would eliminate funding for Perkins grants, noting that the Budget had given added urgency to the witness panel’s testimony. “Vocational and technical education works” said Rep. Woolsey. Each of the witnesses expressed similar concerns about the potential elimination of Perkins grants. Dr. Ainsworth, the CDE’s Assistant Superintendent and Director of the Secondary, PostSecondary, and Adult Leadership Division, noted that Perkins was compatible with state mandated goals of helping K-12 students prepare for higher education and workforce careers. Dr. Ainsworth referred to Perkins as an invaluable resource that provides $140 million annually to serve 3.2 million California students.
When asked to comment on the achievements of vocational education, in light of the Administration’s claims that Perkins has shown “little or no improved outcomes for students,” panelist Russ Moore of the Central Education Center in Newnan, Georgia, cited statistics that he said showed improved academic performance among his students, a 42 percent decline in the drop out rate, and job placement advances, since his vocational education organization opened its doors in 2000. Dr. Ainsworth suggested that the data being used by the Administration to assess the Perkins program is outdated and that data restrictions such as those that exist in California to protect student privacy can limit the tracking of student outcomes.
Although Dr. Ainsworth supported Chair Castle’s reauthorization bill, he had reservations about H.R. 366’s 60 percent cut in state administration setasides. He predicted that California’s capacity to provide services beyond funds distribution and data collection and reporting would be significantly hampered. He said administrative setaside rollbacks would make it more difficult to maintain current services, let alone fulfill the expanded requirements included in H.R. 366.
For the witness testimony visit the House Education and Workforce Committee website at:
http://edworkforce.house.gov/hearings/109th/edr/voced021505/wl21505.htm .
Association of California Water Agencies Holds DC Conference
The Association of California Water Agencies (ACWA) hosted its annual Washington D.C. Conference from Tuesday through Thursday of this week. The Conference brings representatives from numerous California water agencies and districts to Washington to meet with congressional delegation members and representatives of the executive branch.
During this year’s conference, ACWA hosted a breakfast with Senator Dianne Feinstein and a lunch with Rep. George Radanovich (Mariposa). During the breakfast at the Washington Court Hotel, Sen. Feinstein spoke about her water priorities for the state and the upcoming Congressional session. In particular, she focused on CALFED’s status in this year’s budget process and the upcoming battle over Colorado River water rights. While lauding the President’s budget for its total funding of CALFED at approximately $203 million, Feinstein pointed out a number of funding areas, including levee stability, conveyances, ecosystem restoration and drinking water quality, that received disappointing allocations. Concerning the Colorado River, the Senator noted the impending problem with some parties in Arizona over California’s priority water rights and emphasized the importance of maintaining those rights in times of drought. At the same time, she recognized the importance of working cooperatively with Arizona and the other Southwestern states to regulate the river’s water supply. She specifically called for Congressional approval of $37.6 million to excavate behind the Laguna Dam and to build a small regulating reservoir near the All-American Canal. The Senator also discussed the danger perchlorate poses to the nation’s water quality and the effects of global warming on California’s limited water supply.
As the guest speaker at Thursday’s lunch, Rep. Radanovich started by saying how happy he was to be the new Chair of the House Resources Water and Power Subcommittee and he looked forward to meeting with representatives from California’s many water agencies in the near future. On CALFED issues, Rep. Radanovich discussed the need to keep the focus on water storage and commended Sen. Feinstein for her commitment to solving that problem. He also raised the impending fight with Arizona over the Colorado River. In response to a question regarding the delegation’s future efforts on that issue, he said that a bipartisan letter was being drafted and he was optimistic that most of the California delegation would sign it. In terms of issues before the Subcommittee, Rep. Radanovich noted that he hoped to review the Central Valley Project Improvement Act this year to measure its progress and goals, and determine whether there were any areas that needed improvement.
Decline In Grape Harvest Yielding Stronger Prices for Industry
According to a preliminary report from the California Agricultural Statistics Service, the California wine grape harvest declined for the second year in a row in 2004. The decline resulted mainly from the removal of 100,000 acres of vines in the Central Valley and contributed to increases in the price per ton for both red and white wine grapes. Red wine grapes rose to $626.18 per ton, a 3 percent increase from 2003, while white wine grapes increased to $486.94 per ton, an impressive 13 percent leap. The larger increase in the white wine price per ton was due to a 7% decrease in overall tonnage, down to 1.114 million tons, the smallest harvest since 1996. Overall, California wineries crushed 3 percent less grapes than in 2003. Of particular grape types, Fresno County French Colombard, Merlot and Chardonnay experienced the most dramatic increases in price. The news of the harvest was welcomed by the wine industry, which had suffered through a surplus of grapes and accompanying lower product prices for the past several years.
To download the preliminary Grape Crush Report for 2004, compiled by the California Agricultural Statistics Service, go to ftp://www.nass.usda.gov/pub/nass/ca/Crush/Prelim/2004/200402gcbnarr.pdf . For information regarding the California wine industry, visit the Wine Institute at http://www.wineinstitute.org .
Home Builder Wins Auctions for Land at the Former El Toro Marine Corps Air Station
In what may signal the end to nearly a decade of political fighting over the fate of the former El Toro Marine Corps Air Station in Orange County, Lennar Corp., the third largest home builder in the nation, won auctions for all four parcels of land on Wednesday, February 16, 2005. Lennar, which spent $649.5 million on the four victorious bids, plans to develop the land to build 3,400 new homes. The builder plans to develop the entire plot, but will deed approximately 40 percent of the land to the City of Irvine for the construction of roads, parks, drainage, and a 250-acre museum site. The auction was held by the Navy as part of the continuing 1993 base closure process, during which El Toro was closed. Funds generated by the auction will help pay for environmental cleanup at El Toro, as well as at other closed military installations throughout the country. While some expected a higher final selling price, the Department of Defense recouped $124.5 million more than the minimum bids it had set.
Since the announcement of El Toro’s closure, local and state concerns have battled over how to use the valuable parcel of land. In 1994, voters approved turning El Toro into a commercial airport. Legal battles ensued through 2002, when voters reversed their decision and approved the land for residential and commercial development. Approximately one-quarter of the land is still contaminated by pollution from the military and is unsuitable for development.
A number of critics have charged that federal government expenditures for cleanup and reuse of former military installations nationwide has been inadequate.
Breakfast Briefing to Feature Remarks by California Secretary of Food and Agriculture, A.G. Kawamura
A.G. Kawamura, California’s Secretary of Food and Agriculture, will be in Washington to provide a breakfast briefing on Friday, February 18, 2004 at 8:30 AM. The briefing will be held in Room 1537 of the Longworth House Office Building.
The Secretary will be updating congressional staff and others on California agriculture issues. The event will be hosted by California Grown and Fleishman-Hillard Government Relations. To attend or for additional information, call or email at (202) 551-1446 or [email protected] . For information on Secretary Kawamura and the California Department of Food and Agriculture, visit the Department’s website at http://www.cdfa.ca.gov/ .
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