California Capitol Hill Bulletin

Volume 5, Bulletin 6 — February 12, 1998

CONTENTS OF THIS ISSUE:

 Senate Finance Extends Employer Education Assistance to Graduate Level
 SCAG Transportation Briefing
 Governor Wilson Sets Date for 9th District Special Election
 President Declares Major Disaster In 27 California Counties
 Rep. Farr Circulating Federal Disaster Aid Letter
 House Panel Considers Impact of Trade Agreements on Agriculture
 California Home Sales Strongly Outpace Nation in 1997
 CHI to Give Biomedical Briefing in Washington on Feb. 25
 DOE Secretary Announces IBM Contract for Livermore Supercomputer
 Multi-State Effort Focuses on Value of California and Other Bases

Senate Finance Extends Employer Education Assistance to Graduate Level
 On Tuesday, the Senate Finance Committee reported out an education tax bill (S. 1133) that includes an extension of the Section 127 employer education assistance to graduate students.  Section 127 allows students to deduct from their income tuition assistance received from their employers.  Last year, Congress extended the provision for three years, but limited it to undergraduate studies.
 The Finance Committee’s action extends Section 127 through December 31, 2002 and provides the income exemption benefits to graduate courses, as well as undergraduate.  California’s high technology industry strongly supports the income exclusion for graduate studies, because of the need for advanced education in the industry.  Other provisions approved by the Committee would give state-sponsored pre-paid tuition plans tax-free treatment (under existing law they are tax-deferred) and will raise limits on contributions to an education IRA from $500 to $2000 per year.

SCAG Transportation Briefing
 The Southern California Association of Governments (SCAG) held a briefing in the Capitol on Monday to discuss their Regional Transportation Plan and to demonstrate SCAG’s new desktop geographic information systems (GIS) software.  The Southern California Association of Governments serves as the metropolitan planning organization for approximately 16 million residents in a six-county region of Southern California.
 Representative Steve Horn (Long Beach) addressed the gathering, reaffirming his commitment to increase funding for transportation and to ensure California’s gets its fair share of the formula funds available under ISTEA.  According to SCAG, many provisions of its regional transportation plan will depend on the authorization or funding of programs included in the House and Senate ISTEA reauthorization bills.  SCAG highlighted the Mag-lev and TIFIA programs to help build high-speed rail, authorization for value pricing and toll roads, and designation of the Southwest passage as a corridor of national significance.  In addition, SCAG supports efforts to help the region meet federal air quality standards under a financially constrained plan.
 SCAG also demonstrated its new GIS software which gives data on over 500 Census variables, including transportation data, for the six-county region of the Imperial, Los Angeles, Orange, Riverside, San Bernardino, and Ventura counties.  SCAG also has provided TranStar, an automated transit trip planning system, to its members which allows users, particularly welfare-to-work participants, to plan detailed travel guides using transit to get to work.  If you’d like to learn more about SCAG and its GIS software, please visit their web site at http//:www.scag.ca.gov or call their Los Angeles office at 213/236-1800.

Governor Wilson Sets Date for 9th District Special Election
 Governor Wilson this week set a special election for April 7th to determine a replacement for Representative Ron Dellums who retired from Congress on February 6th.  Under state law, if no state candidate receives more than 50% of the vote on April 7th, the top vote-getters in each party will square off on June 2nd (the same date as the statewide primary election).  Governor Wilson has already set April 7th for the 44th District special election to fill the seat vacated by the late Rep. Sonny Bono.

President Declares Major Disaster In 27 California Counties
  Mudslides, high winds, and flooding have hit the California coast hard in the last three weeks, wrecking havoc in over half of the state.  In response to Governor Wilson’s request for relief from the winter storms, on Monday President Clinton declared major disasters in 27 of the state’s 58 counties in California.  The President’s action makes available federal funding for individuals through housing, grants, and low-cost loans to cover property losses in the affected areas.  Federal funding is also available to local governments who qualify for assistance in debris removal, emergency protective measures, and hazard mitigation measures.
 Preliminary damage estimates done earlier this week climbed to over $275 million in property damage and agriculture losses.  The Governor’s Office of Emergency Services said in press reports that more than 1,150 homes and 280 other buildings were damaged as a result of the storms.
 Californians are expecting more rainfall in the coming weeks.  Many regions, especially those in the North, are far above their average rainfall.  Some estimates place San Francisco and Oakland at 245% of seasonal precipitation and Los Angeles at 156% of normal.  Meteorologists believe it is too early to measure the impact or attribute the unusual amounts of rainfall brought by the El Niño weather pattern.
 The 27 declared counties are: Alameda, Butte, Calaveras, Colusa, Contra Costa, Glenn, Humboldt, Lake, Marin, Mendocino, Merced, Monterey, Napa, San Benito, San Francisco, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Sonoma, Sutter, Tehama, Ventura, Yolo, and Yuba.
 For more information on weather forecasts, 1998 flooding, and other emergency public information, please visit the Governor’s Office of Emergency Services’ web site at http://www.oes.ca.gov.
 
Rep. Farr Circulating Federal Disaster Aid Letter
   Representative Sam Farr (Carmel) is circulating a letter addressed to President Clinton, urging the Administration to continue to provide federal support for California areas that need assistance to recover from the effects of the recent winter storms.  “Given that California’s economy is the seventh largest in the world,” the letter states, “a sustained recovery is in the best interests of the country.”  Earlier this week, the President declared 27 California counties major disaster areas, which allowed federal aid to begin flowing to individual and local governments affected by the storms and flooding (see related article).  The letter thanks the President for efforts so far, and encourages him to continue providing federal aid as more winter storms come ashore during the next two months.
 Members wishing to sign the letter should contact Debbie Merrill with Representative Farr at 225-2861 by the close of business on Tuesday, February 17th.

House Panel Considers Impact of Trade Agreements on Agriculture
   On Thursday, the Subcommittee on Trade of the House Ways and Means Committee held a hearing to examine U.S. efforts to reduce trade barriers in agriculture.  Representatives from the U.S. Department of Agriculture (USDA), U.S. Trade Representative (USTR), American Farm Bureau, and various farm commodities testified before the Subcommittee on the success and failures of recent trade agreements, such as the Uruguay Round and the North American Free Trade Agreement (NAFTA), to open foreign agriculture markets.  The U.S. will again have an opportunity to address agriculture trade in 1999, when another round of multilateral talks take place under the World Trade Organization (WTO).
 While these trade agreements have increased the productivity and opportunity for agricultural exports, many witnesses testified that there is still work to be done to reduce tariff and non-tariff barriers to trade.  Anita Brown, representing the Western Growers Association, encouraged Congress and the Administration to reexamine and enforce existing trade agreements before further liberalization of U.S. markets.  (The Western Growers Association represents over 90% of fresh vegetables and about 60% of the fresh fruit and nuts grown in Arizona and California.)
 Witnesses identified four major issues to be addressed in upcoming trade negotiations: implementation of agreed upon phytosanitary barriers, harmonization of labeling requirements, adequate funding of federal agencies for food inspections, and more transparency of domestic subsidies provided to growers by competing foreign nations.  Michael Wootton of Sunkist Growers, also testified that the Uruguay Round Sanitary and Phytosanitary (SPS) should be further strengthened in future trade negotiations and the U.S. should compel more counties to meet the already agreed upon standards.  Several industry representatives singled out nations such as Japan, China, and Mexico for not meeting the agreed upon phytosanitary standards.  (Sunkist Growers, a farmer-owned marketing cooperative, produce approximately 65% of the oranges, lemons, and grapefruit grown in Arizona and California.)
 Most testifying before the Committee also joined USDA and USTR in supporting the renewal of the fast track negotiating authority as a tool to help reduce trade barriers.  The Wine Institute also submitted comments on U.S. efforts to reduce trade barriers.  According to the Wine Institute, while the U.S. has the lowest tariffs and most open market for wine imports, U.S. winegrowers face high tariffs and barriers in other nations, especially to Mexico.
 In 1996, U.S. exports totaled $60 billion and California’s agricultural exports alone totaled nearly $13 billion.  At the hearing, Ranking member Representative Robert Matsui (Sacramento) said that Congress must work to have full and timely implementation of existing trade agreements and should continue to work for reductions in remaining barriers to U.S. agriculture exports.

California Home Sales Strongly Outpace Nation in 1997
 A report released Wednesday by the California Association of Realtors (CAR) found that home sales and home values in the golden state outpaced the rest of the nation in 1997. According to CAR, home sales in California increased 9.9 percent — from a total of 505,420 in 1996 to 555,380 in 1997.  Median home prices in the state also rose — from $177,270 to $186,490 over the same period, a 5.0 percent increase.  These state increases compare to national rises of 3.1 and 5.0 percent respectively, according to a similar study by the National Association of Realtors.
 In a separate report by CAR covering more localized data, two-thirds (214 of 321) of the state’s cities and communities were shown to have increased in median home price.  Communities with the highest priced homes were: Hillsborough, $1,097,500; Atherton, $925,000; Monte Sereno, $874,500; Woodside, $840,000; Saratoga, $729,500; Belvedere/Tiburon, $703,500; Los Altos, $660,000; Beverly Hills, $660,000; Palos Verdes Estates, $659,750; and Pacific Palisades, $658,750.
 Santa Clara County achieved notoriety by surpassing Honolulu as the most expensive in the nation.  Its $316,250 level exceeded Honolulu, which fell to $307,000 due to Asian investment pullouts.
 Also notable is that the Southern California area is a strong participant in the most recently reported upturn, with many areas reporting double-digit increases.
 To access detailed information on the California Association of Realtors’ report, visit their website at: http://www.car.org./economics/archives/dataqtr497pr.html

CHI to Give Biomedical Briefing in Washington on Feb. 25
 The San Diego-based California Healthcare Institute, which represents more than 175 biomedical organizations, will hold a media and Congressional briefing in Washington D.C. on February 25 to release the California Biomedical Resource Directory and describe the importance of biomedical R&D to the state’s economy as well as how research investment translates into the commercial arena.  For information on the event, contact Molly Ingraham at 619-551-6677.

DOE Secretary Announces IBM Contract for Livermore Supercomputer
 During a speech today in Washington, Secretary of Energy Federico Pena announced the signing of an $85 million contract between DOE and IBM to build an ultra-high-speed supercomputer for the Lawrence Livermore National Laboratory.  The IBM RS/6000 SP is to be capable of 10 trillion calculations per second (“tera-flops”).  It is the third in a series of five increasingly fast computers built in DOE’s Accelerated Strategic Computing Initiative (ASCI) program, which is charged with creating computers of 1, 3, 10, 30, and 100 tera-flops.  One use of the computer will be as a component of Lawrence Livermore’s mission to ensure the safety and reliability of the nation’s nuclear weapons stockpile without nuclear testing.

Multi-State Effort Focuses on Value of California and Other Bases
 Military installations in California, Arizona, Nevada, New Mexico, and Utah are not only important freestanding entities in their own right, but should also be viewed as an integrated whole, according to supporters of the Southwest Defense Alliance.
 A byproduct of the 1995 base closure round was an increased focus on interservice activities — activities which combine and integrate the resources of the several military branches.  One approach under consideration has been the consolidation of a major portion of aircraft and air launched weapons research, development, testing and evaluation at installations in the Southwestern United States — including at the Air Force Flight Test Center at Edwards Air Force Base, the Naval Air Warfare Centers at China Lake and at Point Mugu, and the White Sands Missile Range in New Mexico.
 When combined with the broad testing and training capabilities in the region — which include Fallon Naval Air Station in Nevada, the Naval Training Center at California’s Fort Irwin, Nellis Air Force Base in Nevada, Vandenberg Air Force Base in Lompoc, the Marine Corps Base at Twentynine Palms, the Utah Test and Training Range, and the Army’s Yuma Proving Ground and Marine Corps Air Station in Yuma, Arizona — the Southwest Defense Complex offers a nearly contiguous range of defense assets for use in concurrent RDT&E and training capacities.  The southwest complex addresses the National Defense Panel’s call for jointness and represents what many feel is the best alternative to reduce DOD infrastructure, save money, and preserve research, development, test, and evaluation capability.
 Supporters of the Southwest Defense Complex were discussing the concepts with colleagues on Capitol Hill this week, and plan to hold more formal discussions later this year.  Last June, half of the bipartisan California Congressional Delegation joined with members from other states in writing Defense Secretary William Cohen to urge the consolidation of ranges and labs in the Western U.S.