Wilson Bid for Welfare Cuts Is Dismissed : Appeal: The Supreme Court says it will not rule on the constitutionality of reviving a two-tiered system that would pay lower benefits to new residents.

WASHINGTON — The Supreme Court dealt a setback Wednesday to Gov. Pete Wilson’s effort to reduce welfare costs by dismissing California’s bid to revive a scheme of lower payments for new residents.

Because of a procedural problem, the justices announced that they will not rule on the constitutionality of the state’s plan.

Lawyers for welfare mothers hailed the outcome. “This is a victory for the poor and the Constitution,” said Mark Rosenbaum, legal director for the ACLU Foundation of Southern California.

But state officials said that they have not given up. “We’re still hopeful we will be able to implement this reform,” said Shannon Bowman of the state Department of Health Services.

The dispute concerns a 1992 law intended to end the “welfare magnet” by imposing a two-tiered system of benefits. Newcomers to the state would receive for one year the same benefits they had been getting in their previous states, rather than the levels that are standard in California.

Officials of the George Bush Administration had given California a waiver to make this change. However, a federal judge in Sacramento ruled the law unconstitutional on the grounds that it discriminated against persons who crossed state lines.

In October, the Supreme Court agreed to hear the state’s appeal. But separately another federal court had invalidated the waiver. While the state has asked Clinton Administration officials to issue a new waiver, they have not done so.

“We now find that no justifiable controversy is before us,” the Supreme Court said in a brief opinion issued in the case (Anderson vs. Green, 94-197).

Left unmentioned was the fact that the briefs filed in the case last fall clearly noted this problem, but the justices and their clerks somehow overlooked it until the case came up for argument in January.

If Clinton Administration officials grant the waiver, the state can try again to implement the change.

Meanwhile, the court handed down rulings in two key cases Wednesday.

In a victory for nearly 2 million federal employees, the justices ruled that government workers have a free-speech right to earn money in their spare time writing articles or giving speeches on topics unrelated to their jobs (United States vs. NTEU, 93-1170).

In a 6-3 ruling, the high court said that Congress went too far when it included all federal employees in a 1989 law that banned them from receiving extra money.

Embarrassed by stories about lawmakers receiving big fees to give brief speeches at vacation spots, members of Congress voted to give themselves and top government executives a 25% pay increase in exchange for giving up all honorariums, or extra payments.

But the ban on honorariums covered all civilian employees in the government, even though a vast majority of them did not get a pay increase.

The National Treasury Employees Union, which represents 140,000 federal workers, filed a lawsuit contending that the law violated the First Amendment. Its plaintiffs included a Postal Service mail handler who writes about the Quaker religion and a microbiologist at the Food and Drug Administration who writes dance reviews on weekends.

Writing for the court, Justice John Paul Stevens said the government had failed “to justify this crudely crafted burden on (their) freedom to engage in expressive activities.”

Chief Justice William H. Rehnquist, joined by Justices Antonin Scalia and Clarence Thomas, dissented.

The ban on honorariums remains in effect for senior executives, as well as for low-level employees in Congress and in the courts, because they did not challenge the law.

In a second ruling, the court dealt the city of Chicago a potentially costly setback in a case that grew out of the “great flood” of 1992.

In a 7-0 ruling in the case (Grubart vs. Great Lakes Dredge, 93-762), the court said the incident that led to the flooding of basements in downtown Chicago was a maritime accident because it was caused by a dredge barge floating on the Chicago River. The dredge, hired by the city, had accidentally poked a hole in an old railroad tunnel that ran under the Loop.

Water poured into an underground network of tunnels and virtually paralyzed the downtown area. Hundreds of businesses filed damage claims that may go as high as $500 million.

These damage claims will be decided in federal courts under admiralty laws, rather than in a state court. In a state court, Chicago would have been immune under Illinois law from paying for damage caused by one of its contractors. But admiralty law generally protects shipowners. It gives no protection to the city.

Last year the city appealed the case to the high court, contending that it is an “absurd result” to say that a downtown flood is a maritime accident.

But Justice David H. Souter said the barge was “a vessel” sitting on “navigable waters” and was engaged in “traditional maritime activity.” Therefore, the damage claims must be decided under federal admiralty law, he said.