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California Capitol Hill Bulletin

Volume 6, Bulletin 29 — September 16, 1999

Delegation Circulating SCAAP Letter; Governor Weighs In
Administration Plans to Substantially Eases Encryption Export Rules
Senate VA-HUD Bill Supports FEMA Public Insurance Rule; Version is at Odds with California-Backed House Language
Plummeting Almond Prices Lead Industry To Seek Federal Help
Californians Prepare Title XX Letter
CCSCE Report Predicts California’s Growth will be Concentrated in Large Metropolitan Regions; Highest Incomes will Remain in the North
Census Releases Data on Immigrant Population Growth; California Again Leads The Way

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 in kind donations from Sun Microsystems and QUALCOMM, Inc.

Delegation Circulating SCAAP Letter; Governor Weighs In

The California Congressional Delegation is circulating a letter urging the House position on funding for the State Criminal Alien Assistance Program (SCAAP). The letter, to House conferees on the Commerce, State, Justice (CJS) Appropriations bill, urges the House level of $585 million, rather than the drastic cut down to $100 million that the Senate version has. SCAAP provides funding to state and local governments to partially reimburse them for the costs of incarcerating illegal criminal aliens.

Earlier this year, all 52 members of the delegation signed a letter to Chair Harold Rogers (KY) and Ranking Member Jose Serrano (NY), which was instrumental in getting the House CJS Subcommittee to fund the program at $585 million, the same level as FY99.

Governor Gray Davis again added his voice supporting SCAAP funding, as well. In letters dated September 9, 1999 to the Chairs and Ranking Members of the Senate and House CJS Appropriations Subcommittee, the Governor urged them to support “the maximum possible level of funding.”

The letter note that in June he joined with Governors Hull (AZ), Whitman (NJ), Pataki (NY), and Ryan (IL) to urge Majority and Minority Leaders Trent Lott (LA) and Tom Daschle (SD) to support SCAAP funding and urges the appropriators to weigh the broad-based, bipartisan support that the program has garnered.

The Commerce, Justice, State Appropriations is in conference, but no action has been taken as yet to resolve House-Senate differences. Members wishing to sign the letter should contact David LesStrang in Rep. Lewis’ office at 5-5861, or Sherry Greenberg in Rep. Sam Farr’s office at 5-2861.

Administration Plans to Substantially Eases Encryption Export Rules

The Administration reportedly took a big step toward easing export controls on encryption policy today in announcing plans for revised regulations and legislative proposals. Although the details of the provisions are not known, it reportedly will have three prongs aimed at reaching a balance between information technology realities and law enforcement needs. First, under the plan, the Administration will request $500 million in funding over three years to increase the Defense Department’s information technology security.

Second, exporters of strong encryption, even with 128 bit levels, will only need a one-time technical review in most cases before exports are allowed. However, they will be required to report the foreign purchaser of the product, although not necessarily the end-user. Technology companies have opposed end-user requirements, because many mass market encryption products are sold to wholesale distributors and then on to thousands of individuals retail buyers. Exports under the proposal also would not be allowed to so-called “rogue” nations, and a specific license would be required before sales are allowed to foreign armed forces or governments.

Finally, the Administration will propose legislation to establish a process for law enforcement officials to get court orders for release of unencrypted data by third parties. The legislation would also request $80 million over four years for the FBI to enhance its ability to decrypt data.

Although many information technology companies expressed enthusiasm for the new proposal, they cautioned that the details of the regulations and the legislation, especially that requiring access to decrypted material through third parties, will be most important in ensuring global marketability of U.S. encryption products. Lew Platt, chairman of Hewlett-Packard, commented that, “The administration has taken a courageous and wise step,” adding, “A significant barrier to providing the building blocks for electronic commerce worldwide is about to fall.”

Rep. Zoe Lofgren (San Jose) and Rep. Robert Goodlatte (VA) have been instrumental in pushing for lessened controls, and the Administration’s action is seen as a recognition of the vast support for their legislation, H.R. 850, which has been co-sponsored by more than half the House.

Senate VA-HUD Bill Supports FEMA Public Insurance Rule; Version is at Odds with California-Backed House Language

The report accompanying the Senate VA-HUD-Independent Agencies Appropriations bill contains language supporting the Federal Emergency Management Agency’s (FEMA) efforts to require public entities to insure their buildings against natural disasters, such as earthquakes. Although the language does not call on FEMA to move immediately on its proposal, it differs from the House-approved report which contains strong language directing FEMA to postpone its proposed rulemaking on Public Assistance Insurance Requirements.

Under FEMA’s proposal, public entities would be required to obtain private insurance or self-insurance for the buildings they own against damage from natural disasters. The entities affected would include not only state and local government buildings, but also schools, public hospitals, and universities. In order to be eligible for any public assistance grants from FEMA, public buildings covered by the rule would have to have “adequate insurance” against the peril that caused the damage.

To date, through the efforts of the California Congressional delegation and public interests throughout the state, FEMA has not officially released a proposed rule. The House report language directs the agency not to do so until the General Accounting Office has done a study of the financial impact of the rule and Congress has reviewed the study.

California’s public agencies are extremely concerned about the deleterious financial impact the new rule would have, and have also questioned whether insurance coverage of such a magnitude would be available in the private market. In June, fifty-one members of the California Congressional Delegation, as well as Governor Gray Davis, wrote letters to James Lee Witt, Director of the Federal Emergency Management Agency, urging the agency to delay publication of its proposed rule. See, Bulletin, Vol. 6, No. 25 (7/29/99).

Plummeting Almond Prices Lead Industry To Seek Federal Help

Citing the devastating financial situation faced by the almond industry, the Almond Board of California sent a letter to Secretary of Agriculture Richard Rominger requesting that the government make a significant purchase of almonds, 40-50 million pounds. The request was made under the surplus removal authority granted the federal government in Section 32 of the Agriculture Act of 1935.

The almond growers are harvesting the largest crop in the industry’s history. Speculation, and other market factors last year, however, led to the plummeting of almond prices, with the California Agricultural Statistics Service’s initial 1998 survey pegging prices at $1.85 per pound, but later revised downward to $1.40, and some growers received just $.85 for their almonds. The estimated September 1999 price is down to $.74 per pound, while growers’ average cost of production is $.94 per pound.

The letter points out that the almond industry has rarely requested that the Department of Agriculture purchase surplus almonds, but dire circumstances this year warrant such a move. The Board also states that it will provide a team of experts in nutrition, recipe development, and marketing, to work with Agriculture on using the almonds in federal food and nutrition programs.

Californians Prepare Title XX Letter

Reps. Gary Miller (West Sacramento) and Bob Matsui (Sacramento) circulated a letter this week to House Labor-HHS-Education Appropriations Subcommittee Chair John Porter (IL) urging full funding for Title XX of the Social Security Act, known as the Social Services Block Grant (SSBG). The letter also urges the Subcommittee to retain the current law provisions that allow states to transfer up to 10 percent of their TANF block grants into Title XX. The letter states that, despite the understanding reached at the time of enactment of the welfare reform law, Title XX’s funding level has been reduced each of the last three years, with a funding level of only $1.9 billion in FY99, rather than the authorized $2.38 billion. The letter calls on the Subcommittee to fund the program at the full $2.38 billion for FY00.

The letter further argues that California has lost $56 million in funding for this fiscal year, because of the reductions. California’s counties primarily use SSBG funds for important services, such as home-based services for the elderly and disabled. Additionally, California is currently utilizing $183 million in transferred funds for child-care services.

CCSCE Report Predicts California’s Growth will be Concentrated in Large Metropolitan Regions; Highest Incomes will Remain in the North

According to new 2010 projections released by the Palo Alto-based Center for Continuing Study of the California Economy (CCSCE), most of California’s future population and income growth will occur in the state’s existing large regions. More than 80% of California’s growth will occur in counties within the Los Angeles, San Francisco, San Diego and Sacramento regions. In 2010 the state’s ten largest concentrations of households, income and spending and the state’s ten wealthiest counties will all still be in these existing large urban regions.

“Riverside and San Bernardino counties alone will add more households in the next ten years than all of California’s major agricultural counties combined,” according to CCSCE’s Director, Stephen Levy, who added, “The quality of life for most Californians will be determined by how these large regions handle the growth pressures.”

Most of the state’s fastest growing counties like El Dorado, Placer, Riverside, San Benito, San Bernardino and Solano are near existing job concentrations. The greatest growth pressures will occur near the fringes of the Los Angeles, Bay Area, San Diego and Sacramento regions according to CCSCE’s projections. “The major threat to agricultural lands and unique state natural resources will be if the major urban regions fail to provide adequate and affordable housing,” Levy said.

The report also predicts that Northern California counties will continue to have the highest per capita incomes in the state in 2010. Nine of the top 10 counties in per capita income will be in the Northern half of the state, with only Orange County (at no. 8) breaking into the ranking. Incomes in Marin County are now the highest in the state and are predicted to rise from $47,344 in 1998 to $57,523 in 2010. Predicted per capita 2010 incomes for the next ranking counties, in descending order, are San Mateo at $51,194, Santa Clara at $49,543, San Francisco at $48,717, Contra Costa at $44,589, Napa at $39,634, Placer at $39,634, Orange at $38,378, Alameda at $37,983 and Santa Cruz at $37,983. Per capita income in the state overall is expected to grow from $26,930 in 1998 to $32,968 in 2010. (All figures are in 1998 inflation-adjusted dollars.)

The Center for Continuing Study of the California Economy (CCSCE) was founded in 1969 as an independent, private economic research organization specializing in the analysis and the study of California. CCSCE focuses on long-term economic and demographic trends in the State and its major economic regions.

More detailed tables can be found at the press release section of CCSCE’s website, . The tables are based on CCSCE’s publication “California County Projections — 1999 Edition.”

Census Releases Data on Immigrant Population Growth; California Again Leads The Way

On Wednesday, the Department of Commerce’s Census Bureau released annual estimates from 1990 to 1998 of the population by race, Hispanic origin, age and sex of the nation’s states and counties. The results show that the number of foreign-born Hispanics and Asians in the U.S. has increased substantially since 1990, with the greatest numerical growth being in California.

California’s foreign-born Hispanic population has increased 2.4 million since the 1990 Census, and now stands at 10.1 million. This increase far outstrips Texas’ 1.5 million and Florida’s 669,000. With California’s total population now at about 32.7 million, its Hispanic population now accounts for about 31 percent of the total. New Mexico, however, tops the states with the highest concentration of Hispanics in its population, at 40.3 percent. Los Angeles County ranks first in the nation among counties in number of Hispanics with an increase of 678,000 since 1990 to a total 1998 Hispanic population of about 4.03 million, out of a total population of 9.2 million.

California’s foreign-born Asian and Pacific Islander population has also grown substantially. It increased by about 990,000, from the 1990 level of roughly 2.9 million to the 1998 level of almost 3.9 million. The state had both the largest Asian and Pacific Islander population and the largest numerical increase among all the states.

Further information is available from the Census Bureau at: .

In a related census data issue, the Census Bureau was expected to release on Friday estimates showing that foreign-born residents made up 9.3 percent of the U.S. population on July 1, 1998, up from 8.0 percent on April 1, 1990. The estimates, available on the Census website at , show that the proportion of foreign-born residents in the United States is midway between the peak of 14.7 percent in the 1910 census and the low point of 4.7 percent in the 1970 census.

Between 1990 and 1998, the estimates show that the 27.1% growth in the foreign-born population was nearly four times that of the native population (7.1%). The number of foreign-born residents rose from 19.8 million to 25.2 million, while native residents increased from 228.9 million to 245.1 million.

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