SAN FRANCISCO -- Hailing the simple but often elusive notion of bipartisan compromise, Gov. Jerry Brown on Friday signed a bill consummating a deal to collect future sales taxes from online retail giant Amazon.

The deal was pieced together by an unlikely alliance of Republicans, Democrats and business competitors who only weeks ago were threatening to go toe-to-toe in a costly, bloody referendum battle. Instead, on Friday they heralded prospects of creating tens of thousands of jobs, generating billions of dollars in economic activity and filling state coffers with hundreds of millions of desperately needed tax dollars.

At the global headquarters of The Gap, where Brown's wife was once an executive, the governor called the moment a "place and time where we actually got something done with both parties and antagonistic forces. It gives me a lot of confidence that we'll solve even more problems.

"It is an example of how California leads the way in forging a bipartisan compromise," Brown said. "Hopefully, it'll set an example to our colleagues in Washington that they too can collaborate, that
Republicans can talk to Democrats and get something done."

Brown is in the midst of weighing 600 bills that the Legislature sent to him in the final weeks of the legislative session. He has until Oct. 9 to sign or veto the bills. If he does neither, they automatically become law.

The governor has vowed to disappoint legislators with a flurry of vetoes, but so far has used the early days to highlight legislation that he favors.


Brick-and-mortar retailers such as The Gap, Target and Walmart have argued bitterly over the years that Amazon was undercutting their sales -- thereby costing the state thousands of jobs and billions in economic activity -- by offering products for as much as 10 percent less because customers could avoid paying sales tax.

The Amazon legislation, Assembly Bill 155, requires the company to begin collecting online sales taxes beginning next September if the firm is unable to come up with a federal deal in which a uniform online sales tax policy is adopted by Congress by next July.

Because of the yearlong delay in the state's ability to collect online sales taxes, a $200 million hole has opened up. And that could push the state even closer to having to pull a trigger for even more cuts than the $11 billion the Legislature has already approved.

Brown, however, called the hole a "small part of the problem" that he will "handle relatively easily."
California wouldn't have been able to get its hands on Amazon sales taxes anyway if its referendum had gone forward. Once it qualified for the ballot, all sales taxes would have been stayed until next June, when the referendum would have been held.

"It doesn't create a $200 million problem," said Assembly Speaker John Perez, D-Los Angeles. "In fact, it solves the problem in the out years by creating the certainty" of hundreds of millions in revenue annually.
An Amazon official said there is a "real possibility" of getting a congressional deal quickly.

"I think we can take our case to Congress collectively in a way that we haven't until this day," said Paul Misener, Amazon's vice president of global public policy.

"The sales tax issue must be resolved in Congress," Misener said. "It's the only way California will be able to obtain all of the sales tax revenues available to be collected. We're committed to go to Washington working with the states, working with brick-and-mortar retailers to obtain that federal legislation we all seek."

Even if a federal deal isn't reached, the California deal means that Amazon subsidiaries will bring 10,000 jobs to the state over the next few years, along with $500 million in capital investment by building distribution centers throughout the state, Misener said.

Additionally, thousands of Amazon affiliates are expected to be reinstated. The company had severed ties with 25,000 affiliates after Brown signed a law requiring Amazon and other online retailers to collect sales tax earlier this year -- a move aimed at showing that the Seattle-based company had no physical ties to the state.

Bookstores were the first to fall victim to Amazon's original role as online distributor of books. Sen. Loni Hancock, D-Berkeley, who shepherded the bill through the Senate, lamented the demise of Cody's Bookstore, a Berkeley institution that shuttered its doors years ago because it was unable to compete with online booksellers.

But as Amazon moved to a wide array of other products, other retailers began to feel the pinch. Now, traditional retailers say, California will provide a level playing field.

"Today marks the end of out-of-state retailers using loopholes to skirt collecting sales tax revenues," said Bill Dombrowski, president and CEO of the California Retailers Association. "We can finally move forward.

We're glad Amazon agreed to do the right thing, and we also look forward to working with Amazon to get that national solution."

An irony to the bipartisan comity was that the Republican who brought the combative forces together for early negotiations, Sen. Bob Dutton, R-Rancho Cucamonga, did not appear at the bill signing. His spokeswoman complained that he was given only 2½ hours notice to travel from his home district to San Francisco.

"So much for bipartisanship!" Jann Taber, Dutton's spokeswoman, said in an email.

His Democratic counterparts cited Dutton for his role in bringing the warring sides together, but said everybody had late notice to get to the signing.

"Hey, we made up our mind late," Brown said. "So, what's the deal? You gotta be ready. You gotta be standing at your post ready to take your call when it comes."