No E-Fairness in California Budget

Earlier this week, the e-fairness provision was left on the cutting room floor as California Gov. Arnold Schwarzenegger agreed with state legislators on a final budget plan, which did not include a provision for sales tax equity. The final plan contains $15.6 billion in spending cuts, about $2.1 billion in borrowing, $3.9 billion in new revenues, and about $2.7 billion in "accounting maneuvers," such as moving some paydays into the next fiscal year, as reported by the New York Times.

In June, both the California state Assembly and Senate had approved a budget containing an e-fairness provision, which would have clarified state law and required out-of-state online retailers with nexus in the state via online affiliates to collect and remit sales tax. It was estimated that the e-fairness provision would have raised $176 million per year for the cash-strapped state. However, on June 30, Gov. Schwarzenegger vetoed the provision after online giants including Amazon.com and Overstock.com had threatened to de-list their affiliates in the state if the final budget contained the e-fairness provision.

Regarding the final outcome, Northern California Independent Booksellers Association (NCIBA) Executive Director Hut Landon said, "We've been fighting for 10 years, and we're not going away. We have learned from every roadblock that we've faced, and we continue to gather new allies moving forward." Jennifer Bigelow, executive director of the Southern California Independent Booksellers Association (SCIBA), noted, "SCIBA is very disappointed with the governor's seemingly total disregard for Main Street business and the value they add to their communities. The additional tax revenue is needed for crucial programs such as education and other basic services."

ABA CEO Oren Teicher is urging California booksellers to write the governor to express their disappointment with his decision, and to send copies of their letters to their elected state representatives. "Though this news is discouraging, it is important to remember the strong support the e-fairness issue had in the legislature. And, importantly, this fight for fairness and equity is far from over," said Teicher. "We expect that it will again become a legislative issue, and, so, it is important to let Gov. Schwarzenegger and state lawmakers know where you stand."

ABA, NCIBA, and SCIBA have provided a template letter that booksellers can send to Gov. Schwarzenegger, with a copy to their elected officials. They also asked that David Grogan, ABA public policy liaison, be notified when a letter has been sent, to help compile information to support future lobbying efforts. --David Grogan