Michael Hiltzik: Rick Perry runs off the highway

Texas Gov. Rick Perry's take on the federal Highway Trust Fund is something of a car wreck.

Perry's hastily assembled economic plan released Tuesday holds up the Highway Trust Fund as the model for how to "protect" federal funds from being raided by Congress for "unrelated purposes." The idea is to contrast the HTF with the Social Security trust fund, which Perry claims has been "pilfered...by spendthrift Washington politicians."

Thus Perry manages to demonstrate that he doesn't know the first thing about either fund.

Funded principally from federal gasoline taxes, the Highway Trust Fund has, in fact, been a disaster. In May, the Congressional Budget Office forecast that it would be out of money by mid-2012 -- in effect, bankrupt. By 2018, the CBO says, its shortfall of receipts versus proposed expenditures will be $80 billion.

Not even the right-wing Heritage Foundation would agree that it's been well-managed. In fact, Heritage offers a list of all the ways Congress has raided the fund -- for ferry boats and magnetic levitation research, among other things.

Congress borrows from the highway fund all the time. But it also requires the fund's balance to be invested in non-interest bearing securities, thus stiffing motorists on the interest their tax funds would accrue. By contrast, the Social Security trust fund must by law be invested in interest-paying Treasury bonds. That trust fund collected $117 billion in interest last year on its balance of more than $2.5 trillion -- a risk-free return of better than 4.6%.

Perry's critics in both parties will no doubt be picking apart all the details of his economic plan in coming days. But this one bollixed nugget leads us to ask: Did he do all his research this way?

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-- Michael Hiltzik

Photo: Rick Perry speaking in South Carolina on Tuesday. Credit: Mary Ann Chastain / Associated Press

Consumer Confidential: BofA woes, Ivory upgrade, reader privacy

Here's your whoa-nellie Wednesday roundup of consumer news from around the Web:

--Bank of America just can't catch a break. After taking it on the chin over a new $5 monthly debit card fee, the bank has been struggling to keep its website up and running. The company had said Friday that the troubles had been fully resolved, but some customers still had difficulty accessing their accounts through the weekend. A message on the bank's homepage Tuesday noted that customers can still access their accounts at ATMs or at one of the company's nearly 6,000 branches. It also suggested that customers try logging back on during a "non-peak time." BofA is the largest U.S. bank and has 29 million online customers.

--Ivory soap is getting a facelift. Procter & Gamble is updating its 132-year-old Ivory brand with colorful, eye-catching packages, a remade logo and a new marketing campaign. But the soap itself isn't changing. The remake is part of an effort by the Cincinnati-based company to breathe new life into Ivory. It comes at a time when Americans are scaling back on spending but are looking for little, cheap ways to pamper themselves, by, say, taking a long, hot shower. As P&G has focused on bigger, faster-growing brands, the white bar of soap has lagged behind its rival Dove and faced increasing competition from the likes of Dial and Irish Spring.

--You are what you read. And thanks to a new California law, readers' privacy has new safeguards. Gov. Jerry Brown has signed the Reader Privacy Act, updating state privacy laws to cover new technologies such as electronic books and online book services as well as local bookstores. The Reader Privacy Act will become law on Jan. 1 and will establish privacy protections for book purchases similar to long-established privacy laws for library records. In other words, your online book browsing, buying and reading won't be revealed to marketers, lawyers and others. Not that we have anything to hide, of course.

-- David Lazarus

Photo: BofA is having technical troubles. Credit: Andrew Gombert / EPA

 

Gov. Jerry Brown asks PUC to pass electric bill surcharge

 

Gov. Jerry Brown is asking his appointed members of the California Public Utilities Commission to come up with a way to continue tacking a surcharge on residential and commercial electric bills to pay for an energy efficiency program that did not get renewed by the Legislature last month.

The $400-million-a-year program is set to expire at the end of the year.

"We cannot afford to let any of these job-creating programs lapse," Brown said in a letter to PUC President Michael Peevey. The surcharges -- $1 to $2 a month on a typical residential bill -- pay for a 14-year-old levy called the Public Goods Charge. It pays for retrofitting structures to make them use less energy, for renewable energy subsidies and for research.

"I request that you take action under the commission's authority to ensure that programs like those supported by the Public Goods Charge are instituted -- and hopefully at their current levels," Brown wrote to Peevey.

The PUC will consider opening a legal and administrative proceeding on Brown's request at its Oct. 6 meeting in San Francisco, said spokeswoman Terrie D. Prosper.

"We're pursuing the fastest path to consider maintain funding levels for these programs and policies already underway," Prosper said.

Some environmentalists said they're supporting the governor's effort to revive the Public Goods Charge.

However, Sierra Club lobbyist Jim Metropulos lamented that Brown did not push earlier and more energetically to get enough bipartisan legislative support to pass the bill.

"We were disappointed that the governor put [his bill] out late, if it was one of his priorities," he said.

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-- Marc Lifsher

Photo: A man looks at energy efficient washing machines at a mall in Baldwin Hills. Credit: Katie Falkenberg / For The Times

Gov. Jerry Brown signs Amazon sales tax collection law

Saying it would save existing jobs and create new ones, Gov. Jerry Brown signed into law legislation to require Amazon.com and many other out-of-state Internet retailers to collect sales taxes on purchases by California customers.

The new law will "create tens of thousands of jobs and inject hundreds of millions of dollars back into critical services like education and public safety in future years," Brown said Friday at a ceremony held at the San Francisco headquarters of clothier Gap Inc. The event was attended by the lawmakers, who sponsored the bill, and and retail industry executives.

Experts predicted that the new law would help bricks-and-mortar stores that have sales staffs compete with e-commerce companies that need fewer people to fill orders. They also predicted that new jobs would flow into the state if Amazon, as expected, opens some large distribution centers to better serve California, which is estimated to represent as much as 20% of the company's market.

Although the bill, AB 155 by Assemblyman Charles Calderon (D-Whittier), takes effect immediately, it doesn't require that sales taxes be collected from Californians until Sept. 15 of next year. The delay was part of a compromise put together by Amazon with representatives of national retailing chains, including Wal-Mart Stores Inc. and Target Corp., as well as local, independent store owners.

As part of the deal, Amazon agreed not to go forward with a planned referendum to ask voters to overturn an earlier sales tax collection law that took effect July 1.

Proponents of the bill argued that Seattle-based Amazon received an unfair competitive advantage over stores because many Internet buyers did not include sales tax on top of the purchase price of the goods.

California law requires consumers to pay a "use tax" that is equal to the sales tax if the merchant doesn't collect the levy for the state. However, tax collectors generally do not enforce that obligation on non-commercial transactions, and less than one-half of 1% of taxpayers voluntarily pay, state officials said.

"The new law is a big victory for Main Street retailers that have battled to close a loophole that gives Amazon and other e-tailers special treatment in the tax code," said the Retail Industry Leaders Assn., a trade group that has lobbied across the country for laws similar to California's, in a statement.

Paul Misener, Amazon's vice president for global public policy, said his firm plans to bring 10,000 new jobs to California and invest $500 million over the next few years.

 

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 --Marc Lifsher

Photo: An Amazon fulfillment center in Phoenix. Credit: Joshua Lott/Bloomberg

Gov. Jerry Brown expected to sign Amazon sales tax collection bill

A bill that would require Amazon.com and many other out-of-state Internet retailers to collect sales tax on purchases by Californians is expected to be signed into law by Gov. Jerry Brown, according to people in the Legislature familiar with plans for the event.

The governor has scheduled a signing ceremony for Friday at 11 a.m. at the San Francisco headquarters of Gap Inc., a clothing manufacturer and retailer that lobbied along with other California companies for passage of the bill, AB 155 by Assemblyman Charles Calderon (D-Whittier).

The governor's office would say only that Brown would be in San Francisco to "take action on legislation critical to job creation in California."

The so-called Amazon bill is expected to boost employment in a number of ways. Proponents said it would save jobs at shopping malls and on Main Street by creating "a level playing field" between bricks-and-mortar retailers, such as Gap, Wal-Mart Stores Inc. and Target Corp., and Amazon and other Internet sellers.

Amazon would no longer be able to artificially offer lower prices because they do not include California's base 7.25% sales tax plus additional local levies.

Brown's signature on the bill, which would take full effect Sept. 15 of next year, could also boost employment if Amazon follows through on a tentative plan to open new distribution centers in California that would be staffed by thousands of new hires.

To date, Amazon has avoided opening offices and warehouses in California because it did not want to have any physical presence in the state. Such facilities would have forced Amazon to give up its past exemption from being required to collect sales taxes as laid out in a 1992 U.S. Supreme Court ruling.

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-- Marc Lifsher

Photo: An Amazon distribution center in Goodyear, Ariz. Credit: Ross D. Franklin / Associated Press 

Got alcohol? Gov. Brown legalizes flavor-infused drinks

Aficionados of cocktails infused with fruit, vegetable or spice flavors won a political victory when Gov. Jerry Brown signed into law a bill making them legal.

Although the Prohibition-era restriction on the practice of flavoring vodka, gin and other distilled alcoholic beverages with flavors had largely been ignored, proponents of the bill argued that the old law needed to be changed.

State Department of Alcoholic Beverage Control regulators argued that bartenders who infused the flavors into the spirits violated state statutes designed to keep the three functions of the liquor industry -- distilling, distributing  and serving -- separate.

The updating of the law was sought by a coalition of business and tourist industry groups including the Golden Gate Restaurant Assn., the California Chamber of Commerce, the Family Wine Makers of California and the California Restaurant Assn.

"I'm pleased that the governor has recognized the need to update an unnecessary regulation that has prevented businesses across California from making infused beverages available to their customers," the bill's author, state Sen. Mark Leno (D-San Francisco), said Wednesday.

"In San Francisco and other cities where tourism is critical to the local economy, restaurant owners have been asked to stop serving infused cocktails in the name of an outdated law written decades ago."

The bill sailed through the state Legislature without receiving a dissenting vote.

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-- Marc Lifsher

Photo: Ricardo DeAratanha / Los Angeles Times

Unemployed? Party City hiring thousands for Halloween season

Party City Holdings Inc., which operates dozens of stores in Los Angeles and Orange counties, announced that it plans to hire 14,000 seasonal workers to staff its stores during the busy Halloween shopping season.

The party-goods store operator said Thursday that the average Party City store would be hiring 15 to 50 seasonal employees to help customers as they shop for costumes and other Halloween party supplies, the Associated Press reported.

The privately held retailer said it would be hiring cashiers, stockroom workers and sales-floor associates. Employees may have the opportunity to continue working past Halloween based on staffing needs at individual stores, company President Lisa Laube said.

Anyone interested can apply through the company's website or in person at local stores. The company operates 800 stores across the United States, including many Southern California locations.

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Photo: Halloween decorations Credit: Los Angeles Times

Online sales tax proponents move to invalidate Amazon referendum

A coalition of giant, brick-and-mortar retailers and their legislative allies have come up with a new strategy to try to head off Amazon.com's referendum to overturn the state's new Internet sales tax law.

On Thursday, lawmakers amended a bill in the Senate Appropriations Committee and sent it to the full Senate for a vote next week. If the bill gains approval from the Senate, the state Assembly and the governor, its passage would have the effect of nullifying Amazon's current drive to qualify a referendum for the June 2012 budget.

The original law requiring Amazon and other large Internet retailers to collect sales taxes on purchases by California customers took effect on July 1. Within days Amazon announced that it was bankrolling a referendum campaign to collect 505,000 signatures of registered voters to put the question of repealing the law on the ballot. As of this week, Amazon said it was close to turning in the needed signatures.

But the campaign to repeal the law is now threatened by the latest legislative maneuver. Passage of a new law would supersede the old law, making the referendum invalid.

Supporters of the new law, including Wal-Mart Stores Inc., still  have a major challenge: The new bill is a so-called urgency measure and needs support from two-thirds of the membership of both houses of the Legislature.

According to the state Constitution, urgency bills are not subject to being repealed by a referendum.

Consequently, the large retailers, which provide financial support for many Republican candidates in the Legislature, have to persuade at least three GOP members in the Senate and two in the Assembly to vote for the Internet sales tax collection.

That's doable, said Bill Dombrowski, president of the California Retailers Assn. The latest bill, he noted, has raised a threshold for exempting small Internet sellers from collecting the California sales tax. The increase from annual sales of $500,000 to $1 million was sufficient to get EBay Inc. to remove its opposition, Dombrowski and state Sen. Loni Hancock (D-Berkeley) said.

Neither Amazon nor its referendum campaign consultants responded to requests for comment at midday.

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-- Marc Lifsher

Photo: Amazon fulfillment center in Phoenix. Credit: Joshua Lott / Bloomberg