Click to

September 06, 2012

Associated Press


California will hire dozens of specialists to enforce a new law requiring Internet merchants to collect state sales tax — an effort that could bring in more than $300 million a year for the cash-strapped state.

The state Board of Equalization, which collects taxes, announced on August 30 that it will spend $10 million over the next three years to hire nearly 100 new state auditors, lawyers and other specialists for the effort.

Many online retailers based out of state, including Seattle's, had avoided adding state sales taxes to their prices because they had no business operations on the ground.

Brick-and-mortar stores, who must collect taxes of up to 9.75 percent, had long argued that was unfair competition.

A new law passed last year as a compromise with expands the state sales tax requirement. It now applies to out-of-state online merchants that do substantial business in California.

That includes those who sold more than $1 million worth of goods to California shoppers in the past year and had more than $10,000 in sales referred to them by California-based affiliated websites, the Los Angeles Times reported.

“This law is a giant step forward,” said Jerome E. Horton, chairman of the Board of Equalization. “It will help California collect much-needed revenue to support critical public services.”

The Board of Equalization estimated that more than 2,000 out-of-state online retailers may have to collect state taxes under the new law but it will take time to identify them.

Hence, the new enforcement effort., the nation’s largest online retailer, agreed to start collecting state sales taxes on Sept. 15.

Parent Category: News
Category: Business

September 06, 2012

By Judy Lin

Associated Press


Democratic lawmakers approved a bill Friday August 31that would create the nation’s first state-run retirement program for private-sector workers over the objection of Republicans who said it creates a new liability for taxpayers.

The Senate sent SB1234 to Gov. Jerry Brown on a 25-13 vote just before the Legislature’s midnight deadline. The Assembly approved the bill earlier in the day on a 44-24 vote.

Democratic supporters say the bill would establish the California Secure Choice Retirement Savings Program for nearly 7 million low-income workers whose private employers don’t offer retirement plans.

According to the bill's author, Sen. Kevin de Leon, D-Los Angeles, the program directs employers to withhold 3 percent of their workers' pay unless the employee opts out of the savings program. It would be administered by a seven-member board chaired by the state treasurer.

Democrats said the program gives workers more savings options, particularly women working low-paying jobs. Supporters say it will not cost the state money because it will be backed by underwriters.

But Republicans said they have too many questions about the program and note that if the underwriter fails to meet investment targets, taxpayers and employers could be held responsible for covering investment losses and administrative overhead.

“It’s still troublesome that the measure would have the government take over the retirement, insert itself into the retirement plans in the private sector here,” said Sen. Doug La Malfa, R-Willows. “For the state to be usurping that responsibility from the private sector is really a giant leap.”

Assemblyman Tom Ammiano, D-San Francisco, defended the bill, saying it sets up a fiscally responsible program. He noted it would not be implemented unless the savings program is exempt from federal rules that cover private-sector defined benefit plans. Such plans have to meet minimum standards under the federal Employee Retirement Income Security Act.

The bill also requires the board to submit an annual audit. It is opposed by businesses, insurance companies and financial services firms.

“I encourage you not to be fooled by the Wall Street subterfuge,” Ammiano said. “This is a responsible bill that will be a tremendous benefit for working Californians.”

Morrell said low-income workers might be better off financially if they put after-tax earnings into a Roth IRA, which would allow them to earn investments tax-free.

He also expressed concern that the fund could be administered by the California Public Employees’ Retirement System. The state’s largest pension fund posted an annual return of just 1 percent last year, missing its own long-term annual target of 7.5 percent.

“CalPERS is going to request to manage this money, and I know they’ve done a pretty good job when the stock market was booming, but the last few years they have not done very well and that's another concern,” Morrell said.

De Leon introduced the bill earlier this year in response to what he called the “looming retirement tsunami” as millions of low-wage workers face financial hardship in their retirement years. He said the program would act as a supplement to Social Security by offering private-sector workers a portable savings plan with a guaranteed return.

“One of the most common myths being perpetrated about this bill is that it creates a pension for private-sector workers,” Ammiano said.

Parent Category: News
Category: Business

August 30, 2012


By JUDY LIN Associated Press




Gov. Jerry Brown recently announced systemic reforms to California's badly underfunded public pension system that he says will save taxpayers billions of dollars over time, but he also was unable to persuade his fellow Democrats to give him some of the fundamental changes he had sought.


The reform deal does not include putting new government workers in a hybrid system that includes a 401(k)-style plan, greater independence for the board that oversees the state’s main pension fund or a reduction in retiree health care costs, which are skyrocketing.


Pension reform supporters say the proposal won’t make much of a dent in the state’s pension problem but labor leaders were angered by what they saw as a violation of collecting bargaining rights.


“We are fighting back and we’re struggling, and in this case it appears like we’re losing,” said Dave Low, chairman of Californians for Retirement Security, a labor coalition representing more than 1.5 million public employees and retirees.


Nevertheless, Brown hailed the deal as a landmark achievement and said it will make pension benefits for public employees lower than they were during his first term in office, in 1975.


“These reforms make fundamental changes that rein in costs and help to ensure that our public retirement system is sustainable for the long term,” the governor said in a statement. “These reforms require sacrifice from public employees and represent a significant step forward.”


Pension reform has been an undercurrent throughout the entire legislative session this year, in part because the state's two main pension funds, the largest in the nation, are so badly underfunded — by at least $150 billion.


But the governor also had a lot at stake: He has promised reforms since rolling out a 12-point plan last October and is trying to persuade voters that he is fiscally responsible at a time when he is asking them to increase the sales and income taxes in November.


Although pension payments account for a fraction of state spending, the cost has been growing in recent years.


Republicans note that the state’s main pension system cost $370 million in 2001, but the cost went up to $1.7 billion in 2011, nearly the amount the state spends to fund the 23-campus Cali­fornia State University system.


Brown’s original plan was projected to save $4 billion to $11 billion over 30 years. On Tuesday, the governor said the changes, if enacted by the Legislature, would save $30 billion, although the time period for that savings was not clear.


The changes that will save the most money apply primarily to new workers, rather than existing ones, so the greatest financial benefit to the state will be decades in the future.


“We’ve lived beyond our means. The chickens are coming home to roost,” Brown said during a news conference in Los Angeles, referring to the difficulty of negotiating pension reforms with the Legislature’s Demo­cratic majority and the public employee labor unions that fund their campaigns.


The reforms include a cap on annual pension payments for new employees at $110,100 for most workers and $132,120 for employees not covered by Social Security, such as teachers and some public safety workers.


They also require new employees to contribute at least half of their pension costs and sets a similar target for current workers, although that will be subject to collective bargaining.


Reflecting longer life spans, the reform plan also raises minimum retirement ages for new employees. A civil service worker will now have to work until age 67, rather than 55, to receive full benefits. For public safety workers, that goes from age 50 to 57 and the maximum benefit formula is reduced.


The plan also ends some of the most egregious abuses of the pension system, including a practice known as “spiking” in which employees are given big raises during their last year of employment as a way to inflate their pensions.


Employees also will not be able to buy additional years of service — or “air time” — which allows them to get pension benefits they did not earn through working.


One politically popular provision, although it will apply to only a very small pool, will prevent government workers from collecting pensions if they are convicted of a work-related felony.


“Those items may be worth addressing for other reasons, but they have little to do with rising retirement costs,” said David Crane, who served as economic adviser to former Gov. Arnold Schwarzenegger and now president of Govern for California, which advocates for government changes.


Crane said the proposal doesn’t address the current long-term unfunded liability of the state’s pension systems because it leaves benefits for current employees unchanged. Brown and legislative advisers have indicated that the courts have deemed retirement benefits guaranteed by contract and difficult to take away for current employees.


Some public employee unions were upset by the reforms, which must be acted upon by the Legislature by Friday.


“This is a one-size-fits-all approach that really does not work for all the different bargaining units and situations,” said David Miller, president of the California Association of Professional Scientists, which represents scientists throughout state government.


He said guaranteed defined benefits are the best way to deliver a secure retirement for public employees.

Parent Category: News
Category: Business

August 30, 2012

Associated Press


Betfair Hollywood Park officials told the California Horse Racing Board that they can’t commit to racing next fall.

The board asked track officials to commit to staging its spring-summer meet from late April to mid-July 2013 and its fall meet in November and December 2013, but Hollywood Park President Jack Liebau says they can’t commit to the fall meet that far in advance.

The racing board this month approved 2013 dates for Santa Anita, Betfair Hollywood Park and Del Mar, contingent on officials at the Inglewood track announcing whether it will run in the fall by Jan. 1.

The track’s parent company, Bay Meadows Land Co., has said it wants to end racing at the site and develop the property into residential and commercial use. Liebau told the board that the struggling economy has created unfavorable conditions for development.

Parent Category: News
Category: Business

August 30, 2012

Associated Press

California lawmakers have sent the governor a contentious bill that would make it easier for dependents of police officers and firefighters to collect workers' compensation benefits after their death.

The Assembly approved the bill 51-18 Tuesday.

AB2451, by Assembly Speaker John Perez, would double the period in which death benefits could be claimed to almost nine years. The benefits apply to police and firefighters diagnosed with conditions such as cancer that are presumably job-related.

Republican critics called the bill an unaffordable giveaway to politically powerful unions. GOP Assemblyman Chris Norby of Fullerton said it pushes the notion of a death benefit too far.

Perez, a Los Angeles Democrat, said the state should take care of those who expose themselves to toxic chemicals for the good of the community.

Parent Category: News
Category: Business