Explaining Southern California's economy

Can we afford the jobs that Amazon wants to bring to California?

Gov. Jerry Brown isn't sure. This is from the L.A. Times' Money & Company blog:

Brown on Thursday did not dismiss the Amazon bid out of hand. But, he stressed that he's mostly concerned about losing an estimated $300 million in badly needed state revenues that his budget expected to get once Amazon complies with a new law that took effect on July 1.

"I'm concerned about anything that would reduce revenues going forward because we're in a very uncertain economy," the governor said after attending an awards ceremony for correctional officers in Sacramento. "We need more revenues unless we're going to keep curbing schools, courts, corrections."

Amazon, so far, has refused to collect the tax on purchases made by California customers. Instead, it's contributed more than $5 million to a referendum campaign to repeal the new sales tax collection law.

Amazon may be hedging against the possibility that state legislators will block the referendum vote next year. Dangling 7,000 jobs in front of Californians who have the second-highest unemployment rate in the country isn't a bad move. The jobs would be created to staff two (or maybe six, reports conflict) distribution centers that Amazon would build in the state. And although the company would have a physical presence in California — the lack thereof is why it's refused to collect sales tax in the past — it would strike a bargain to avoid collecting sales tax until 2014.

In a nutshell, Democrats don't like the Amazon proposal while Republicans do (Surprise surprise!). Over the L.A. Times' Opinion L.A. blog, Robert Green and John Healey also have principled misgivings:

Amazon has struck deals like this with other states, trading the promise to hire more workers in a state for détente in the war over sales taxes. But these negotiations come at the expense of the many retailers who are compelled to collect the tax, and as such are at a competitive advantage. That’s unseemly, and it smacks of a referee settling the rules for a game by talking to just one team.

True, but Amazon isn't asking for a permanent sales-tax collection waiver, just a two-year indulgence. If the online retailer plays fair, it will start collecting California sales tax on schedule. And the state will get thousands of jobs at a growing, new-economy company. Gov. Brown says revenue is more important right now, but jobs aren't exactly unimportant. 

However, Amazon has been criticized, and even sued, in the past for labor practices, so California might need make sure that those jobs come with the right kind of respect for those workers whose employment would be the price Amazon is paying to avoid collecting sales tax. That is, of course, if it goes for this deal to make the referendum challenge go away.

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Photo: Karen Bleier/Getty Images

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