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California Capitol Hill Bulletin

                           Volume 7, Bulletin 14 — April 20, 2000    [or see pdf version]

Cal State University Files FEMA Comments
Briefing Predicts Demographic Changes in California and the Nation; California
          to Lead as “Multiple Melting-Pot” Region
Report Details Mexico’s Social, Political & Economic Transformation
USDA to Fund Research for Sequencing Genome that Causes Pierce’s Disease, a
          Significant Threat to Wine Industry
U.S. Wine Exports Continue to Rise
Speaker’s Commission on State and Local Government Finance Recommends Fiscal Reform for California
San Bernardino County Area is State’s Pick for Venture Star Launch
State’s Census Response Rates Continue to Beat Nation’s
California Census Response Rates

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.

Cal State University Files FEMA Comments

The California State University filed comments with the Federal Emergency Management Agency (FEMA) on its Advanced Notice of Proposed Rulemaking concerning Public Assistance Insurance. The comments were filed last week in conjunction with those of the various other California entities. See, Bulletin, Vol. 7, No. 13 (4/13/00). CSU states that it has surveyed the insurance and reinsurance markets to determine availability. Although it found that all risk (excluding flood and earthquake) insurance is commercially available, the premiums for coverage would be three times higher than its current premiums. It also questions the feasibility of an organization self-insuring, because of the requirement that the entire $125 million maximum coverage limit would have to be placed in a non-discretionary fund approved by FEMA. As for earthquake insurance, CSU states that it would be the most expensive and least available in California (as compared to other states), and FEMA’s proposed cap of $.30/$100 coverage would reduce the University’s ability to negotiate the broadest coverage at the least cost.

In addition to several other proposals, CSU recommends that a national study be conducted to determine the insurance market’s capacity to absorb the risk of earthquakes, not only in California, but in other states as well. It also points out that the proposal does not acknowledge the mitigation efforts taken to reduce future earthquake damage and, in fact, may act as a disincentive to further mitigation efforts, due to the fact that significant funding will have to be diverted instead to insurance coverage.

Briefing Predicts Demographic Changes in California and the Nation; California to Lead as “Multiple Melting-Pot” Region

On Thursday, April 13, 2000, the California Institute and the Population Resource Center co-sponsored a briefing entitled “America’s Demography in the New Century: Aging Baby Boomers and New Immigrants as Major Players.” The Briefing featured an introduction by former California Representative Anthony Beilenson and remarks by Dr. William H. Frey, Senior Fellow of Demographic Studies at the Milken Institute in Santa Monica.

Much demographic research has looked at two major population trends facing the nation – the aging of the baby boom generation and the influx of new immigrants. Some have concluded that the nation will either be a “Nation of Floridas” (with all states having increased elderly populations) or a “Nation of Californias” (with all states broadening in ethnic and cultural diversity).

Dr. Frey’s research indicates that these readings are oversimplified, and that there will be major differences among the nation’s regions which will be just as important as the traditional distinctions of urban vs. rural or city vs. suburb. A prime distinction, according to Dr. Frey, will be between “melting-pot regions” and “heartland regions.”

In particular, he finds that California will further broaden its diversity and epitomize the new “multiple melting-pot” region, while the remainder of the Western states will experience decreasing diversity and become increasingly white. While 11 percent of the nation’s married couples live in California, Frey notes, the state is home to 23 percent of mixed-race couples. Furthermore, the Los Angeles area contains one-fifth of the entire U.S. Hispanic population and ranks second among metro areas with gains in its Asian community. But, between 1990 and 1998, L.A. lost more than 400,000 whites and ranked as one of the top five states with highest net domestic migration. He noted that “California is the West’s window on the dynamic, global economy. Yet, it also provides an overflow of people and consumer items” to its neighboring Western states. He highlighted significant consumer business implications of the shifts, noting “one of the most under-appreciated market segments,” is the Hispanic community, which he calls the fastest growing market in absolute numbers and one of the most profitable because they “spend more on food, utilities and shelter, even after adjusting for income and family size.”

Dr. Frey also cites the difference between the aging “yuppie” boomers with greater education and those who come from backgrounds of divorce, broken families and less stable employment. California’s younger population, made up largely of Hispanic and Asian immigrants with higher fertility rates, will, according to Frey, may lead to greater support for education expenditures and other government services. Diversity among the elderly, Frey predicts, should make “mass marketed retiree products less attractive to seniors in decades ahead.” The report notes that targeted politics and specific social programs will need to replace broad programs in an effort to address the needs of all people in the ensuing demographic divide.

For more information contact Frey at or at (888) 257-7244.

Report Details Mexico’s Social, Political & Economic Transformation

The Pacific Council on International Policy recently released “Mexico Transforming,” a detailed report on changes in Mexico that are critical to policy makers, economists, entrepreneurs, human rights activists, and teachers in both the United States and Mexico.

Economically, Mexico is opening up its markets to free trade through NAFTA — more than doubling its exports to the United States. The earlier protectionist Mexican economy has redefined itself through the introduction of competition and investment and the integration of free market ideals. Yet, even with the transforming economy, Mexico is struggling with structural reform. The country maintains a deficit around 3.5 percent of its GDP.

In 1998, for the first time in 70 years, political parties were able to compete on a more level playing field. And partially as a result, the country as a whole has become less authoritarian. The current Mexican President, Ernesto Zedillo, is known for his less interventionist style. However, the less progressive political party, the PRI, still prevails as the only party with real national presence – proof positive that change is slow.

Socially, drug trafficking and crime make public security Mexico’s most important concern. The Mexican military presence for drug trafficking at border towns further strains relationships with border people and divides the country socially.

Lastly, the report raises important questions: “how to make the most of economic integration and how to cope with social issues on both sides of the border; how Mexico will reshape its laws, institutions and practices to meet the challenges of an open international economy, of the technological revolution and of democratic politics.” While Mexico has transformed dramatically in recent years, these questions prove that it is now faced with many challenges a result of its development.

The report was produced by the 56-member bi-national, independent study group and was showcased in a number of U.S. and Mexican cities and areas, including San Diego, San Francisco, Los Angeles, Sacramento and Orange County.

For more information, contact the Pacific Council on International Policy at (213) 740-9498 or at .

USDA to Fund Research for Sequencing Genome that Causes Pierce’s Disease, a Significant Threat to Wine Industry

On April 12, 2000, Secretary of Agriculture Dan Glickman announced that the Department of Agriculture (USDA) will partially fund a $500,000 effort to sequence all the genes in the Xylella Fastidosa, which is carried by the Glassy-Winged Sharpshooter and causes the Pierce’s Disease.

Pierce’s Disease has caused considerable damage to many of California’s vineyards and threatens to destroy California’s $11 billion wine industry. The pest carries Xylella Fastidosa in its gut and then releases the poison in water canals of grape vines, cutting the vine off from its water source. Due to the unlimited flight range of the pest and its restistance to pesticides, Northern Californian wineries are taking precautionary measures to ward off the Sharpshooter.

The gene sequencing project will be led by Agriculture Research Service (ARS) scientist Edwin Civerolo (Davis) and Andrew J.G. Simpson from the Ludwig Institute for Cancer Research in Sao Paulo, Brazil. In less than a year, the scientists expect to sequence the genes in hopes of preventing further destruction by the Glassy-Winged Sharpshooter and future pathogens.

Specifically, the funding for the project will come from four sources. The American Vineyard Foundation and the California Department of Food and Agriculture will each contribute $62,500. USDA will match that amount with $125,000 and Sao Paulo State Research Foundation in Brazil will pitch in $250,000.

U.S. Wine Exports Continue to Rise

The dollar value of the nation’s exports of wine rose for the 13th consecutive year in 1999, climbing from $537 million in 1998 to $548 million in 1999. In total volume, exports rose 5%, from 71.9 million gallons in 1998 to 75.4 million gallons last year, according to the Wine Institute.

The rise was not as dramatic as the jump from 1997 to 1998, which had been 26% in revenue terms and 20% in volume, but the 1999 levels constituted a record on both fronts. Nearly a quarter of 1999 exports ($132 million) went to Great Britain, followed by Canada at $98 million, Japan at $80 million, and the Netherlands at $78 million.

As reported previously (see Bulletin, Vol. 7, No. 11 – 3/30/00), California’s wine sales also reached record levels in 1999. The state accounts for three-fourths of the U.S. wine market, with an estimated value within the U.S. of more than $13 billion and an output in 1999 of 446 million gallons.

For more information, contact the Wine Institute at .

Speaker’s Commission on State and Local Government Finance Recommends Fiscal Reform for California

In March 2000, former Speaker Antonio Villaraigosa’s Commission on State and Local Government Finance released a report evaluating the relationship between fiscal policy and governmental accountability as well as how that relationship affects the economy, environment and social equality. The report recommends a program for fiscal reform and increased governmental responsibility in the context of regional growth policies, transportation, and financial equity.

According to the Commission’s Chair, David Abel, local fiscal rules have recently been marked by instability and unpredictability due to the unintended consequences of Proposition 13 — the ballot initiative that shifted control from localities to the State by placing limitations on the amount of property taxes levied and moving funding authority to the State. As a result, Mr. Abel says that “Sales tax is king for local governments today; and run down school facilities, exorbitant housing prices and the proliferation of strip malls and big box retailers are the price to this sovereign.”

Three principles guided Commission goals: local finance should facilitate balanced state, regional and local conservation and development policies as well as finance local and regional services; a balance of revenue sources should exist, including both property taxes, sales tax, and general purpose state subventions; constitutional protection for the financial base of local and regional services; and increased communication between state and local government.

The Commission recommends several ideas for fiscal reform. The “swap” concept would allow counties and cities to swap some of their sales tax revenue with the State for an equal amount of the property tax, with reductions in the locally levied sales tax rate of 0.5 percent, and an increase in the State rate by 0.5 percent. Under the swap idea, the State would use revenue from the 0.5 percent of the sales tax for educational programs through the State aid system.

Another fiscal reform proposal includes returning $1 billion of property taxes to counties, cities and special districts from the Educational Revenue Augmentation Fund (ERAF) in each county and other state sources over time.

The Commission further recommends creating a Constitutional obligation to maintain the per capita subvention and replace the revenue lost due to the reduction in the Vehicle License Fee. Under the Commission’s proposals, voters would have the authority over the existing 0.5 percent “transactions and use” taxing, with allocation based on local agreement.

The Commission calls on the State and localities to develop an accountability system, whereby performance can be gauged by outcomes. The Commission further recommends a “compact model,” between the State and counties, detailing the responsibilities of evaluation systems and programs. The proposal encourages counties to implement their own budgets and would create a concise report specifying the amount and relative share of the property revenues for each agency.

After its 34 citizen representatives met for more than a year in a range of public forums, the Commission made the above recommendations to the Legislature.

For more information on the report, contact the Commission at (213) 483-2730 or visit their website at .

San Bernardino County Area is State’s Pick for Venture Star Launch

On Thursday, April 20, the California Department of Trade and Commerce announced that the Harper Dry Lake area of San Bernardino County is California’s choice to be the primary launch site in the competition for the VentureStar next-generation spacecraft. VentureStar is an X-33 prototype single-stage-to-orbit reusable launch vehicle, which is currently under development at Lockheed-Martin’s Skunk Works plant in Palmdale.

Decision-makers cited the sparse population and high altitude as key factors in the selection. The location would also offer an eastward over-land trajectory away from major population centers to meet the demands of the growing commercial space market. The site is located between Barstow, Edwards Air Force Base, and the China Lake Naval Weapons Center in northwestern San Bernardino County.

Other California sites, including Lancaster, Merced, and Vandenberg Air Force Base will serve support the primary site as the state competes with 15 other states in a national competition for the final VentureStar siting.

State’s Census Response Rates Continue to Beat Nation’s

This week, the Census Bureau released what may be its final report of mail-in responses to the 2000 census before it begins sending enumerators to collect additional returns in person. The final results showed that California remained significantly above the national average in its census response levels to date.

California’s response rate of 67% (as of April 19) exceeded the national rate of 65%, and was ahead of every other state in the West and all Southern states except Virginia. Compared to Northeastern states, California’s rate matched that of Massachusetts and Connecticut and was exceeded only by Pennsylvania’s. In the Midwest, on the other hand, all states were above the national average and nearly all exceeded California’s level.

Of 470 California cities, 123 met their “target” response rate (their 1990 rate plus 5%) for the 2000 census. In other words, 26% percent of the state’s cites have met or exceeded their target rate, well above the 15% mark reported for all the nation’s cities.

Among cities which met their target levels very early, some are in urban areas (Compton, East Palo Alto, Inglewood, City of Industry); while others are in more affluent suburbs (Anaheim, Calabasas, Dana Point, Folsom, Los Alamitos, Mission Viejo, Windsor); some are fast-growing “exurbs” on the fringes of urban areas (Palmdale, Lancaster, San Marcos, Temecula, Tracy, Woodland) and still others are in more rural areas (Carmel-by-the-Sea, Chico, Ceres, Coalinga, King City, Redding, Wasco).

With the exception of Anaheim, Riverside and Santa Ana, most of the state’s largest cities had not met their targets by this week. Yet all but one of these cities were at or above their comparable rate at this point in the 1990 census. (An important exception is Sacramento, site of last year’s dress rehearsal for the census, where responses were lagging badly.) Large city rates to date include: Anaheim 72% (target was 69%), Fresno 65% (target was 68%), Long Beach 66% (target was 68%) Los Angeles 61% (target was 65%), Oakland 61% (target was 62%), Riverside 69% (target was 69%), Sacramento 53% (target was 69%), San Bernardino 59% (target was 64%), San Diego 70% (target was 72%), San Francisco 64% (target was 69%), San Jose 70% (target was 74%), and Santa Ana 70% (target 66%).

Among counties, the highest response rate was in Ventura County (73%); followed by Contra Costa, Orange and San Mateo (all at 72%); Santa Clara, Stanislaus and Yolo (at 71%); and Marin and San Diego (at 70%). At the low end of the state spectrum to date were the Counties of Mono (30%), Plumas (47%), Lake 48%), and Sierra (49%). A full breakout of California county response rates follows below.

California Census Response Rates

as of 4/19/2000

by California County

COUNTY Rate Target
    Alameda  68  70 
    Alpine  50  70 
    Amador  64  70 
    Butte  64  68 
    Calaveras  56  70 
    Colusa  61  63 
    Contra Costa  72  76 
    Del Norte  55  70 
    El Dorado  59  71 
    Fresno  66  68 
    Glenn  63  67 
    Humboldt  62  71 
    Imperial  56  56 
    Inyo  65  71 
    Kern  63  65 
    Kings  65  67 
    Lake  48  51 
    Lassen  50  70 
    Los Angeles  67  69 
    Madera  65  65 
    Marin  70  76 
    Mariposa  59  70 
    Mendocino  56  64 
    Merced  67  71 
    Modoc  51  70 
    Mono  30  70 
    Monterey  66  67 
    Napa  69  75 
    Nevada  53  69 
    Orange  72  74 
    Placer  65  73 
    Plumas  47  70 
    Riverside  63  64 
    Sacramento  64  71 
    San Benito  66  72 
    San Bernardino  65  68 
    San Diego  70  73 
    San Francisco  64  69 
    San Joaquin  66  69 
    San Luis Obispo  64  73 
    San Mateo  72  75 
    Santa Barbara  68  74 
    Santa Clara  71  76 
    Santa Cruz  64  70 
    Shasta  67  70 
    Sierra  49  70 
    Siskiyou  54  70 
    Solano  69  72 
    Sonoma  69  72 
    Stanislaus  71  69 
    Sutter  68  70 
    Tehama  62  65 
    Trinity  52  70 
    Tulare  65  65 
    Tuolumne  53  64 
    Ventura  73  81 
    Yolo  71  72 
    Yuba  60  63 

SOURCE: U.S. Census Bureau

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