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Oct 24 2011

Flap’s California Morning Collection: October 24, 2011

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Monterey, California

The California Legislature is not in session.

But, the Senior Legislature is.

The California Senior Legislature opens its 31st session at 9 a.m. in the Assembly chambers. Listed speakers for the four-day event include Attorney General Kamala Harris, Insurance Commissioner Dave Jones, Health and Human Services Secretary Diane Dooley and Democratic Assemblyman Paul Fong of Cupertino. More information is here.

And, President Obama is accessing his California Campaign ATM again.

President Barack Obama makes another swing through California this week, starting with a fundraiser tonight in Los Angeles and a sit-down with Jay Leno.

The commander in chief’s evening, in fact, will be chock-full of big Southern California names.

Air Force One is scheduled to land at LAX at 4:50 p.m., after which Obama will be whisked to the home of Hollywood notables Melanie Griffith and Antonio Banderas. There, “Desperate Housewives” star Eva Longoria is co-hosting a Latino gala fundraiser for Obama and the Democratic National Committee.

Los Angeles Mayor Antonio Villaraigosa and San Antonio Mayor Julian Castro are among those expected to attend. Tickets range from $5,000 to $35,800.

Plus, I am in Los Angeles today and am praying the President’s Air Force One is late, so I can get back to Thousand Oaks uneventfully around 5 PM tonight.

On to today’s headlines:

Jail expansion: Counties seek millions from state

California counties are lining up to secure millions of dollars in state funds to expand jails now that Gov. Jerry Brown’s plan is under way to shift the incarceration of some felons from prisons to jails.

But while many county officials cheer the availability of $600 million in state funds to add more jail beds, opponents of prison expansion say building more incarceration space will discourage prosecutors, police and other public safety officials from seeking alternatives to lockups.

“We’re terrified that California … is using realignment as a cover to push unnecessary and unneeded jail expansion projects,” said Emily Harris, statewide coordinator for Californians United for a Responsible Budget, a coalition of more than 40 groups focused on limiting prison spending. “It eliminates the incentive for counties to do things differently.”

Brown’s program, known as realignment, took effect Oct. 1 and is designed to ease prison overcrowding by sentencing thousands of nonviolent felons to county jails instead of state prisons.

California leads way in putting Amazon in its place

California’s role as a pioneer of crucial social, political and technological movements — the Internet, clean air standards, property tax reform, Lindsay Lohan case law — is part of the legacy we teach our schoolchildren.

In that context, it’s not too early to ponder the state’s role in putting Amazon.com in its place, even though the ink is not quite dry on the deal signed by Gov. Jerry Brown last month requiring the giant online retailer to collect sales tax on purchases by its California customers.

The settlement shut down a potentially ugly fight that started when Brown signed a bill finding that the company’s physical presence within the state was sufficient to require it to collect sales tax, then was escalated by Amazon’s launching of a campaign to place a repeal referendum on the June 2012 state ballot.

The company backed up its threat with a $5.25-million fund for signature-gathering and other purposes. The original bill was designed to comply with a 1992 U.S. Supreme Court decision holding that a state couldn’t force a business to collect sales tax unless the business had a physical presence, such as a store or office, within its borders.

The deal pushes off Amazon’s duty to collect California sales tax until next September, unless Congress passes a bill simplifying sales taxes nationwide first. (Don’t hold your breath.) That means the loss of one year’s revenue, which has been estimated at $200 million.

In return, Amazon has dropped the referendum and made an informal commitment to open two distribution centers, or warehouses, and create about 10,000 jobs in the state.

The key question, of course, is who won? I’ve been thinking about that lately, because the outcome of the battle of California has been resonating in the halls of Congress and statehouses across the country.

“The tide is turning, a little,” Michael Mazerov, who has followed the issue for the Washington-based Center on Budget and Policy Priorities, told me. “Will Amazon throw in the towel? It’s too early to say.”

What’s clear is that a key mechanism of Amazon’s business model, which was to exploit the price advantage it gained by not collecting sales tax from its customers, is beginning to come apart, in no small degree because of California.

Since bricks-and-mortar retailers as well as some of Amazon’s online rivals collected the tax at the point of sale either by law or voluntarily, the difference could come to as much as 10%. (Among Internet-only retailers of general merchandise that haven’t been collecting sales tax in California, Amazon, with $34 billion in sales in 2010, is the big dog by a huge margin; the next biggest, according to the marketing website Internet Retailer, appears to be L.L. Bean, which owns retail stores and outlets mostly in the East and had $1.4 billion in sales in 2010.)

“We won,” says Lenny Goldberg of the California Tax Reform Assn., who supported the compromise. He observes that if Amazon had placed its referendum on the June ballot, the law Brown signed would have been suspended at least until the vote — and repeal would have been a real possibility. In other words, the compromise gained Amazon little more than three additional months free of collecting, while removing the threat that the law would be overturned.

And what of that promise of warehouses and jobs? Although new jobs and construction aren’t to be sneezed at in today’s crummy economy, these will likely be low-wage positions.

Moreover, to maintain its reputation for speed and efficiency Amazon eventually would need expanded distribution facilities in California, its largest domestic market, no matter what.

California’s agreement has led other states to reconsider the sweetheart deals they offered Amazon on tax collection in the past, when the company insisted on exemptions in return for the construction of in-state warehouses and hiring of hundreds or even thousands of workers. In Tennessee, for example, former Gov. Phil Bredesen, a Democrat, quietly cut a deal to exempt the company from collecting sales tax as part of a deal to attract at least two distribution centers that Amazon had threatened to build across the state line in Georgia. How quiet was this arrangement? State officials aren’t even sure if it was set down in writing, as opposed to being a “handshake deal.”

Barack Obama Campaign Strategy Keeping Hollywood Out of Sight

Like every Democrat, President Barack Obama covets Hollywood’s financial support. But there’s a growing sense that he doesn’t want to be seen with industry figures.

A source close to the White House tells The Hollywood Reporter it was no accident stars were absent from an Oct. 13 state dinner for Korean president Lee Myung-bak. Industry attendees included only American Beauty producer Bruce Cohen and the evening’s performers, the Ahn Trio sisters and singer Janelle Monae.

Celebrities have long been a fixture at White House gatherings. Obama’s previous state dinners have included such A-listers as Steven Spielberg, Barbra Streisand, David Geffen and Jeffrey Katzenberg.

But Obama might want to put visual distance between himself and boldface names. Facing a close race, strategists might want to head off allegations that he is starstruck, as GOP candidate John McCain portrayed him in 2008 ads.

Obama seems to be positioning himself as a guy on the side of the middle and working classes. Being photographed with wealthy celebrities while preparing for a possible run against Mitt Romney could undermine his effort, especially if he intends to portray the former Massachusetts governor as a rich man who doesn’t care about working people and who laid a fair number of them off.

“State dinners need to make an imprint, but they shouldn’t be ostentatious at a time when Obama is spending all day talking about jobs and the economy,” says Donna Bojarsky, a public policy consultant. “Everyone gets it.”

The president’s longtime friend George Clooney stayed mostly out of sight in 2008, saying he’d learned a lesson when his father lost a congressional seat after a campaign in which his celebrity son was very visible. Still, Obama will be back in Hollywood on Oct. 24 for private fund-raisers co-hosted by Eva Longoria, Melanie Griffith and Will Smith.

Enjoy your morning!

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