To avoid ballot fight, State to agree to deal with the online giant

by Brian Leubitz

Amazon had put up over $5 million in a show of force for a potential referendum.  But, they never really wanted to go to the ballot.  And it looks like both parties avoid an expensive ballot fight with an agreement scheduled to be finalized before the end of session:

Under the handshake deal, Amazon won a delay until at least September 2012 but will eventually collect state sales taxes.

The arrangement could lay the groundwork for a national online sales tax law. Amazon and major brick-and-mortar retailers like Wal-Mart and Barnes & Noble agreed to lobby Washington over the next 11 months for an Internet sales tax law that applies across 50 states. …

If no federal deal emerges by July 31, 2012, Amazon would have to begin collecting California sales taxes starting on Sept. 15, 2012.

State lawmakers intend to pass a new bill in the next two days that would delay implementation of the online sales tax law until that date, according to Calderon and several sources. If Congress strikes a deal by July 31, 2012, online retailers would begin collecting taxes starting on Jan. 1, 2013, under whatever federal requirements are approved.(SacBee)

While the governor has previously said that he’s not really all that excited about a deal with Amazon, given that this was negotiated by the Senate leaders, it would seem hard to block.  

The bigger issue is how are we going to deal with the $200 million hole this blows in the budget.  And the fact that we basically only get a promise to lobby for a sales tax measure?  Well, that and a quarter might be able to get you a gumball.

But the reality is that Amazon wasn’t going to collect any sales tax anytime soon.  And were they to collect and submit the signatures, the law wouldn’t go into reality until approved (if approved).  So we are essentially dealing with a bunch of posturing.  Amazon knows that they are going to have to collect sales tax at some point and are hoping to delay it as long as possible. And oh, sure, it wouldn’t hurt to have one national standard.

With Amazon and the big retail giants on board, there is likely to be significant movement on the bill.  We’ll end up getting money into the system at some point by 2013, and we can stop messing with this fight.  Covering another $200 million, well, that won’t be so easy.

After some nudging from a list of Democratic activists, longtime San Francisco politician aims to increase stability in Democratic Party

by Brian Leubitz

As you may know, I am a regional director for the state Democratic party.  As a San Franciscan, I have tremendous respect for the work that Sen. John Burton has done for our community and for the state.  He is a progressive that will fight for his beliefs.

But it turns out he knows how to lead a state Democratic party.  He knows how to hire a good team and let them run a solid organization.  Since he assumed control, the party has been in a much better financial situation, has spoken out on issues that it was too timid to discuss before, and oh, by the way, also managed to sweep statewide during a tough election year.

And as somebody who, as a statewide field director, relied heavily on the state Democratic Party’s field operation last year, I know that John Burton and his team know how to mobilize voters and win elections.  It was for these reasons I was glad to sign on to a letter asking him to run again, and equally glad to hear that he’s running again.

California Democratic party chair John Burton, 78, hasn’t officially announced it yet — but he has made the decision to run for another term to lead the party in 2013, the Chronicle has learned.

The plain-spoken, tough-talking Burton — one of the most battle-scarred of California political veterans — was urged earlier this month to run for another term by a host of party activists and insiders. Their efforts were expressed by two party leaders, CDP regional director for San Francisco Brian Leubitz — who’s also the Calitics blog director — and Alice Huffman, NAACP president, in a letter earlier this month. The group expressed “strong support” of Burton’s next term and urged him to announce his decision for another term.(SF Gate)

The day he was elected as chair, Sen. Burton called on President Obama to bring our troops home from both Iraq and Afghanistan. And he has continued to challenge the Democratic Party to dream big. He’s done well, and the party will be lucky to have him and the strong team that he’s built (and convinced to stick around).

By the way, Burton had some choice words for the Republicans debating in our state right now.  Check that out over the flip.

In Advance of Tonight’s GOP Presidential Debate in California, Democrats Release New Numbers on Job Losses in California Which Would Result From GOP’s Extreme Budget Policies

GOP’s Support of Tea Party Budget Plan Would Cost 931,570 Californians Their Job

Sacramento – In advance of Wednesday night’s GOP Presidential debate at the Reagan Library in Simi Valley, the California Democratic Party released an estimate of the number of jobs which would be lost in California, based on a new analysis conducted by the DNC, as a result of the GOP Presidential candidates support for radical economic policies.

The DNC’s analysis found that just the balanced budget amendment called for in the GOP plan, if in place in 2012, would result in the loss of 9.5 million American jobs including 931,570 jobs right here in California. The loss of so many jobs could blow a hole in the U.S. economy and further damage recovery prospects while adding millions of Americans to the ranks of the jobless.

Statement of California Democratic Party Chairman John Burton:

“Tonight’s debate will be a showcase for an extremist agenda that promises much but ultimately results in more corporate profits for the few and the privileged and more layoffs for Californians struggling to get by. The draconian cuts to Social Security, education, health care, Medicare, infrastructure and job training supported by these Republican candidates would cost millions their job.

Californians are still busy digging their way out of the mess produced by the last bad batch of Republican policies and we don’t need more of the same.”

Link to DNC Report

Governor aims to pass a tax reform measure before close of session

by Brian Leubitz

The Governor has been itching to get some sort of job plan going. Unfortunately, many of his ideas require a 2/3 vote, and Sacramento Republicans, like their counterparts in DC, seem more intent on blocking Democratic initiatives than getting anything done.

But this isn’t even a measure that is increasing taxes:

Brown last month proposed eliminating a corporate tax benefit that allows companies to pick the less-expensive of two tax formulas when calculating tax liability. He proposed using the money, about $1 billion, to fund a sales tax exemption for purchases of manufacturing equipment, and he proposed expanding an employer tax credit.

Even before Brown announced the plan, Republicans criticized it and Democrats acknowledged it was not likely to pass. The change would require a two-thirds vote in the Legislature, and Republicans blocked a similar proposal in budget talks with Brown earlier this year.

“Any time you have legislation, it’s the work of more than one hand,” Brown said at the biotech company Gen-Probe Inc. “There are some Republicans that are already on board, and there’s active discussion by those individuals with other legislators of that party. So, I’m reasonably optimistic we’re going to get something by the end of the week. It will reshape itself as it goes through the legislative process.”(SacBee)

Of course, the Republicans talk about “job creators” like somehow being rich equals creating jobs.  Corporations aren’t creating jobs, but Brown is trying to do something to spur spending.  Anything.  The elective tax structure hasn’t really shown to be a boon for anything but corporate treasuries, and creates no real incentive to create jobs in California.

Meanwhile, the Republicans moan about job creation, and then won’t do anything to create jobs. Color me shocked.

Measure by Jared Huffman would allow non-profits to run parks

by Brian Leubitz

I’ve brought up the subject of “privatization” of state parks in the past, and mentioned that I’m quite fond of the Willow Creek extension to the Sonoma Coast state park that is managed by a non-profit, LandPaths.

However, a new law passed by Asm. Jared Huffman would allow state parks to be run by a nonprofit organization.  To put it lightly, there are progressives on both sides of this issue.  But the CA State Parks Foundation has been pushing for this legislation.

“Nonprofit organizations have been supporting the state park system throughout its more than 100 year history, and AB 42 provides another venue for that critical support,” said Traci Verardo-Torres, Vice President of Government Affairs for the California State Parks Foundation, the organizational sponsor of the bill. “Across the state, park advocates and concerned Californians are coming together to identify creative, collaborative solutions to keep our parks protected and open for public access. Allowing nonprofits to help keep state parks open will help parks that would otherwise close, and will engage Californians in safeguarding the resources that belong to all of us.”

Let’s put the first caveat out there: we should not be dealing with this.  We should have enough money to run our state parks, and pay for our higher education.  But, because of both GOP extremism and some crazy governmental structures, we have to make choices.

LandPaths is a tremendous organization with some really dedicated staff who are willing to go to incredible lengths to get the job done.  And I’m sure the other organizations who are going to take up this challenge are good groups as well.  But this has to be a very temporary fix. This is most definitely not a permanent solution to anything, and we need to ensure that this kind of mess does not happen in the future.

Online Giant Looks to Avoid Sales Taxes

by Brian Leubitz

Amazon has been publicly piling money into a campaign fund to halt the new legislation that would force them to collect sales taxes.  But, if they could avoid a big fight with California’s brick and mortar retailers by pulling a quick deal, they’d prefer it.  One of the ways they’ve done that in a few other states is to promise some jobs in the state as long as they aren’t taxed.  Queue the rumors of a deal here:

While discussions are still preliminary, sources said legislative leaders have received an Amazon-inspired plan that would give the online retailer a two-year moratorium on the new tax. In return, Amazon would bring 7,000 jobs to the state, these sources said.(SacBee)

Obviously, the retailers are none too pleased, with good justification.  They are facing an uphill battle against a company that has a 8-9% price advantage right off the top.  Whether this actually amounts to a) any new jobs or b)

The problem with this is that Amazon is just shifting jobs from state to state for these deals.  It is a race to the bottom, while brick and mortar retailers continue to lose out, and our main streets continue to look bleaker and bleaker.

Sen. Steinberg raises idea of granting tax authority to local governments

by Brian Leubitz

With all the realignment talk running around, granting additional taxation authority to local governments hasn’t been immune.  In fact, Sen. Steinberg has addressed the idea a couple of times.  However, the current proposal seems more fully considered to a particular government sector.

Senate Bill 791 would allow local transportation agencies to seek voter approval for a “regional transportation congestion reduction charge” on gasoline or diesel. The bill language, introduced in the form of amendments to existing legislation last week, would also allow a new vehicle registration charge on electric vehicles. Revenues raised by the fees, which would require approval of a majority of voters in the impacted region, would fund transit proposals developed by the local transportation planning agencies to reduce vehicle congestion.

The Sacramento Democrat called the bill an effort to create a “local option” for funding transit projects, saying it is “very consistent with the work that we’ve done this year on bringing services closer to the people” through realignment of state and local functions. (SacBee)

Now, at first blush this seems to be an indicator of nothing good.  The only reason such a proposal is necessary is that our state government is essentially unworkable.  And, in fact, that is the motivation behind much of realignment.  The supermajority requirements have done a number on Sacramento, and the only remaining solution is to recreate tiny little fiefdoms.  It is regrettable, but given the circumstances, not an unreasonable path for Steinberg and the Legislative Democrats.

We are essentially at the point that the state is better off without coordination, and, from a functional standpoint, that is a poor use of resources.  But from a where we are standpoint, any taxing authority that can be reasonably achieved seems like a good idea.

Sen. hopes to avoid referendum

by Brian Leubitz

Sen. Hancock (D-Berkeley) has refiled her “Amazon” sales tax measure. Why, you ask? Well, the thing about the referendum process is that you can’t use it against a bill passed by 2/3 of the Legislature.  So, can she get the two votes?

Getting this passed will take the votes of two Republicans in each chamber — votes that weren’t there when the bill passed as part of the budget earlier this year.

Asked if she had secured the needed votes, Hancock said, “We’re talking to people. We have a week and a half left so we’re putting it out there and talking to people.”(SF Gate)

As we’ve mentioned here a few times, the Amazon tax measure raises some really interesting questions that don’t always line up perfectly with the R-vs-D divide.  Specifically, the Big Box stores are quite interested in seeing Amazon’s built-in government subsidy cut.

The question is how much influence do Wal-Mart and Best Buy have over the Republican caucuses in each house?  We’ll see over the next few weeks.

$4B of anticipated revenue now looks unlikely to materialize

by Brian Leubitz

The budget was always something of a hope and prayer exercise.  Well, with today’s cash figures from Controller Chiang’s office, you better start praying harder:

“While July’s revenues performed remarkably similar to last year’s, they still did not meet the budget’s projections,” said Chiang. “While we hope for better news in the months ahead, every drop in revenues puts us closer to the drastic trigger cuts that could be imposed next year.”

Income taxes were above projections by $89 million (2.9 percent) in July. But sales taxes were down $139.4 million (-12.5 percent), and corporate taxes were down $69.5 million (-19.3 percent) in the same month.

Unfotunately, we need to exceed projections by quite a few bucks every month to get to the hopeful goal of $4b of “additional revenue.”  With this latest setback, we are down $538.8 million from where we need to be to avoid the triggers.

And at this point, we can’t even get enough money from new sources soon enough if we thought we could pass a ballot measure.  The next election, in June, comes at the end of the fiscal year, too late to really help.

Of course, those triggered cuts would further devastate the California economy, our schools and our services.  Unless we get that revenue soon, this fiscal year could be a lot bleaker than we thought.

Investment makes it extremely likely to qualify

by Brian Leubitz

There was some thought rumbling around that Amazon was just going to use their measure to overturn the online sales tax measure as a stick to beat politicians with.  But it now seems they are intent on getting it on the ballot:

In a filing Friday with the Secretary of State, {Amazon} revealed it had already contributed $3 million to the More Jobs Not Taxes Committee, which was established less than a month after a state law taxing online purchases took effect.

The committee bills itself as a “growing coalition of taxpayer groups, consumers, small businesses, and online companies,” but so far it has only one funder: Amazon.

The company’s contribution will go toward gathering signatures to put an initiative repealing the tax on the June 2012 ballot, committee spokesman Ned Wigglesworth said. The committee must submit 504,760 valid signatures to the Secretary of State by Sept. 27. (The Bay Citizen)

I think it is at least interesting to note that Wigglesworth is a former staffer for Common Cause, who, you know, advocates for openness and is generally against large corporations buying electoral votes.  But since he also managed the campaign for Prop 26 and the expansion of the 2/3 rule, I guess that Common Cause stint is more the anomaly than the current gigs.  

Returning to the issue of speculation, there is one more side benefit for qualification for Amazon.  As soon as the referendum is qualified for the ballot, the law isn’t valid until it is approved by voters.  Of course, Amazon isn’t obeying the law now, as they aren’t gathering taxes for their California sales, but the referendum puts the legal question off for a while.  Even if they lose on the ballot measure, they likely earn back that $3 million bucks.

Of course, they’ll need to spend more than $3 million to win when this gets to the ballot, but they certainly have the easier side of the argument.