2010 State Budget Shortfalls and Affiliate Tax

Posted onLeave a commentCategoriesAffiliate / Advertising Tax, Affiliate Program Management, Online Marketing, Thoughts for Affiliates

Gary Kibel of Davis & Gilbert LLP has tweeted:

Gary Kibel's tweet on affiliate tax

I’ve just finished reading the Puget Sound Business Journal (Seattle) article he has linked to. While the article seems to  view the affiliate tax as primarily Amazon’s trouble, it provides a good recap of what has happened on the affiliate tax front so far, and talks about the things to expect in 2010.

The Business Journal writes:

on California:

In California, which has enacted painful spending cuts and faces another massive budget shortfall, one lawmaker is signaling she’ll revive efforts to force internet retailers to collect sales tax.

State Assembly Member Nancy Skinner (D-Berkeley), who co-sponsored a so-called “Amazon bill” last year that Schwarzenegger threatened to veto, plans to push the notion again in budget negotiations in the new legislative session, which starts in early January [underlining mine].

on New York:

New York state, which kicked off the internet sales tax push, recently gave an indication of how much revenue its “Amazon law” has generated — data that may inform debates in other states this year.

The New York state Department of Revenue says it brought in $53 million in sales and use tax from 30 newly registered e-commerce companies during the fiscal year that began in April 2008 and ended in March 2009. The agency expects that revenue to reach $70 million in the current fiscal year, which ends in March 2010 [underlining mine].

Had Amazon withdrawn from the state of New York, I am sure we would’ve witnessed a very different picture.

on 2010 Expectations:

Daniel Schibley, a Chicago-based analyst who tracks state and local tax issues … said he expects New York-style legislation to turn up again in states that continue to face grim fiscal scenarios. “States are very much in need of revenue,” Schibley said. “You’re going to see it showing up a lot in 2010.” [underlining mine]

Exactly my words spoken and written last year.

Looking at the state budget shortfall data by the Center on Budget and Policy Priorities, we see that 2010 is actually the worst year of this century, and it isn’t expected to improve fast either:

2002-2012 state budget shortfall

Looking at state-by-state breakdown, we see the following picture:

Alabama – $1.6 billion
Alaska – $1.3 billion
Arizona    – $5.2 billion
Arkansas – $253 million
California – $45.5 billion
Colorado – $1.6 billion
Connecticut – $4.7 billion
Delaware – $557 million
DC – $800 million
Florida – $6.0 billion
Georgia – $4.3 billion
Hawaii – $1.2 billion
Idaho – $562 million
Illinois – $14.3 billion
Indiana – $1.4 billion
Iowa – $1.2 billion
Kansas – $1.8 billion
Kentucky – $1.2 billion
Louisiana – $1.8 billion
Maine – $849 million
Maryland – $2.8 billion
Massachusetts – $5.6 billion
Michigan – $2.8 billion
Minnesota – $3.4 billion
Mississippi – $850 million
Missouri – $1.5 billion
Nebraska – $305 million
Nevada – $1.2 billion
New Hampshire – $288 million
New Jersey – $9.2 billion
New Mexico – $995 million
New York – $3.2 billion
North Carolina – $4.6 billion
Ohio – $3.6 billion
Oklahoma – $1.3 billion
Oregon – $4.2 billion
Pennsylvania – $5.2 billion
Rhode Island – $990 million
South Carolina – $1.2 billion
South Dakota – $32 million
Tennessee – $1.1 billion
Texas – $3.5 billion
Utah – $1.0 billion
Vermont – $306 million
Virginia – $3.6 billion
Washington – $6.0 billion
West Virginia – $284 billion
Wisconsin – $3.2 billion
Wyoming – $32 million
TOTAL – $192.6 billion

Only Montana and North Dakota have not reported budget shortfalls, and two neighboring states reported the smallest budget gaps: Wyoming ($32m), South Dakota ($32m). The largest shortfalls have been reported by California ($51.8b), New York ($21.0b), Illinois ($14.3b), and New Jersey ($9.2b).

As I wrote back in July 2009, “if the issue isn’t yet knocking on your door, it’s just a matter of time” and “you better start preparing (and acting) now.”

Here are some good resources both to follow the news on the affiliate tax, and to learn what you can do:

Stay informed. Stay prepared.

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