Buy Local

Since the beginning of the recession, economic downturn or whatever you may want to call the current state of the economy, legislative leaders from local governments, statehouses and national politicians have begun touting “Buy Local” campaigns. Even before the economic downturn, cities like Las Vegas and Baltimore were experiencing shrinking tax revenue from on-line sales. In response, large “buy local” campaigns were started to urge local residents to keep tax dollars in the community.

In December 2008 and January 2009 Louisiana Governor Bobby Jindal and Baton Rouge Mayor Kip Holden hit the airwaves to launch buy local campaigns. These public service announcements were possible with free airtime provided by Cox media. Suddenlink Communications and local Alexandria stations teamed up to run ads touting the message that now is a great time to purchase a car. Noticeably absent, however, were any local elected officials leading a buy local movement. I do understand, however, that Alexandria is now launching some type of campaign called “Smartalex” under the direction of Mayor Roy’s community development team.

Why the sudden interest in buy local campaigns? With the downturn in the economy, cities are seeing tax revenue dry up from lost tax dollars generated from sales taxes. Car dealers are major contributors sales tax revenues nationwide simply by virtue of the dollar value of the items they sale. Simply put, car dealers generate millions in tax dollars every year for the state and local communities. In 2007 (the most recent year numbers are available), Louisiana car dealers put up some staggering numbers:

Average Dealership sales: $31.6 Million
Total Sales from New vehicle dealers: $10.6 Billion
Dealership sales as a percent of retail sales: 21%
Total number of new vehicle dealer employees: 18,210
Average number of employees per dealership: 54
Average annual earnings per employee: $43,342
Annual average payroll of dealerships: $2.33 Million

Slow car sales mean decreased tax revenue flowing to the city and local governments from sales tax revenue, corporate tax revenue, and payroll tax revenue.

Studies show that for every dollar spent locally the recirculation rate of that dollar in the community is many times higher than if the dollar is spent in another community. In other words, purchasing outside your community is supporting another’s tax base. Locally, automobile dealers employ several hundred people in sales, administrative jobs, as technicians, and managers. Average salaries at local dealerships are higher than the median wage in other industries. Moreover, local automobile dealers give generously to local charities. When local citizens go out of town to purchase automobiles, local tax revenue dries up, employment opportunities at dealerships shrink, wages go down and charitable contributions shrink.

Why is this important now? As you drive around the city look at the advertising license plates on the front and back of your friends and neighbors vehicles. Then look at your local politicians – police jurors, mayors, city council members, and school board members. Look also at your local business leaders – real estate agents, local shop owners, entrepreneurs, and corporate executives. What do you see? Are they are driving a car that they purchased out of town or from a local dealer? If from out of town, calculate the dollar impact this has on your community. How many direct and indirect jobs are affected by a single automobile purchase outside the community?

According to Donna Andries at the Rapides Parish Sales Tax office, tax revenues in 2007 from motor vehicles sales totaled $10,122,639. That number decreased 10% in 2008 to $9,051,975. Automobile sales in the Alexandria area year to date 2009 from 2008 are down 31.5% for domestic cars, 28.6% for import cars and 32.6% for trucks. Of course, a decrease in sales in 2009 is expected. However, the impact locally can be drastically reduced if those people who are going to buy this year do so locally instead of out of town.

On Tuesday, March 24, 2009 the Alexandria City Council debated a measure to use surplus funds to balance the budget for this fiscal year. Councilman Chuck Fowler noted that the reason for the buildup in the surplus was because of the increased tax revenue over the last several years. Councilman Fowler then specifically noted that usually sales taxes would increase, but this year an increase is unlikely specifically due to the decline in new car sales. This may mean decreased funding from the city for Mardi Gras, Downtown Rocks, the Alexandria Zoo, Art Walk and other discretionary programs that make our community unique.

Alexandria needs a buy local campaign and it needs it now. All of our public officials need to get behind the movement and support all of our local retailers regardless of size. Simply put, support you local business, their employees, and the charities that they support. Support those people and politicians in your community who buy local and keep tax dollars in the community to pay for the services we need and enjoy.