Ms. Bridgett Wagner

Director, Coalition Relations

The Heritage Foundation

214 Massachusetts Ave. N.E. Washington, D.C. 20002-4999

Dear Bridgett:

I am very pleased to provide you with some examples of the success that the Pacific Research Institute has been able to enjoy as a result of having the Cal- STAMP model of the California economy. PRI is now in its second year of using the model and it has proved to be a very valuable tool for our important work in the state in the area of taxation.

For example, in 2000, Assemblywoman Carol Migden (D-San Francisco) introduced a bill that would have resulted in further taxation of the internet in California. Based on the research results coming from the Cal-STAMP model showing significant job loss in the state if the tax were implemented, Governor Gray Davis vetoed the legislation. This study's findings, based on the model, received prominent media coverage throughout the state, including the front page of the Business Section of the San Francisco Examiner.

In June of this year, PRI published its bi-annual California Legislators' Guide 2001. This guide has proved to be extremely popular with members of both sides of the legislature. The 2001 edition contained two chapters on Taxation and Budget. Based on the results from the model, author Erik Bauman was able to make clear recommendations for legislators on promoting the fiscal health of California. The launch took place at a barbecue luncheon on the grounds of the State Capitol. It was very well attended by legislators and their staffers. A lively question and answer period ensued.

In July, when Republicans in the California legislature dug their heels in for a protracted budget fight, they relied on PRI data to bring their anti-tax message home. The standoff was over an automatic quarter-cent reduction in the state sales tax that was triggered when the California budget surplus was booming. When the Governor started using up the surplus faster than anticipated, the Democrats wanted to reinstate the tax.

Relying on data from one of the chapters in the California Legislators' Guide 2001 cited above, Republicans were able to show that the sales tax could cost California over 150,000 jobs by 2004. Assembly Leader Dave Cox and Assemblymen Strickland and Runner all cited data on the Assembly floor and in op-eds throughout the budget battle. The impasse finally ended in a partial victory for the Republicans and Californians —the final budget passed changes the formula by which the tax will be triggered.

Dr. Lawrence McQuillan, Director of PRI's Center for Entrepreneurship and Mr. Chris Middleton who has responsibility for the model, will be visiting state legislators this Fall to further demonstrate the capabilities of the model. Included in their presentations to legislators will be the impact of tax changes on the budget and employment.

These are just a few examples of the exciting work and impact that the Pacific Research Institute has been able to have using the Cal-STAMP model developed by David Tuerck and his staff at the Beacon Hill Institute in Massachusetts.



Sally C. Pipes

President & CEO

Pacific Research Institute

*Please note that is a fascimile of the original correspondence endorsing BHI's work. It has been formatted for the web. Original copies of correspondence are available upon request.