COAST CITIES — While the unemployment rate continues to rise and consumer buying power shrinks, two local governments are urging shoppers to spend what money they have locally.
Solana Beach’s “Shop Solana First” campaign and Encinitas’ “Buy Local E” are both targeted at keeping coveted sales tax dollars in local coffers while boosting the business economy.
The city of Solana Beach joined various local business groups including the chamber of commerce, American Assets, Cedros Design District and Highway 101 Village Walk Association to form a partnership aimed at encouraging residents to shop locally in 2009. At a cost of approximately $25,000, the group surveyed residents and merchants, plastered banners around town and sent direct marketing materials to the city’s 13,000 residents.
Steve Didier, assistant to the city manager, said that while there is no data available, anecdotal evidence shows the idea is catching on after just a couple of years. “I believe there is a wide awareness of the program by both the merchants and consumers,” he said.
Jan Sterling said the benefits of buying locally outweigh the potential savings in another location. “I could get in my car, fight the traffic and maybe save a few bucks to buy some gas or go out to eat,” the Solana Beach resident said. “But then the city doesn’t get the tax revenue, I’ve burned up a bunch of time and energy and there isn’t any real savings at all.”
Sean MacLeod of South Cedros Associates said the effort is gaining momentum as more of the city’s 1,200 businesses actively participate in the program. While the notion makes practical sense, Didier said there are also unintended intangible consequences.
“Shopping locally creates a sense of community,” he said. “It creates a stronger relationship between the businesses and residents where loyalty plays a big part.”
The city of Encinitas is catching on to the benefits of encouraging that same loyalty. The City Council voted unanimously in February 2009 to fund an effort aimed at encouraging residents to visit local merchants. The so-called “Buy Local E” campaign comes at a cost of up to $10,000 from the general fund to develop a website and marketing materials.
Richard Phillips, assistant to the city manager, said that increasing local sales tax revenue was important because it is the second largest source of funds for the city’s day-to-day operations.
While the state gets the lion’s share of the 7.75 percent sales tax that is charged on certain goods, Phillips said the city’s portion is substantial. In fact, the city brought in $11 million in sales tax revenue during the 2007-2008 fiscal year.
Councilwoman Maggie Houlihan said she views the campaign as a partnership with the local merchant groups and chambers of commerce. “We all want to work together on this to make sure folks buy locally,” she said.
Like many municipalities across the country, the city has seen a decline in revenue from sales tax. In fact, sales tax revenue for fiscal year 2008-2009 was sluggish and came in 5 percent lower than projected. According to the city’s budget documents, several factors contributed to the decline including low consumer confidence and the closure of several large retail outlets that year.
The year the buy local program was implemented, the revenues fell an additional 8 percent. However, the decrease remained steady in fiscal year 2010-2011. Sales tax, the second largest revenue source, represents approximately 19 percent of the city’s general fund revenues.
The campaign specifically targets residents with information about the importance of shopping local. Approximately 40 percent of sales tax revenue funds public safety services, with an additional 10 percent going to city parks and recreation programs according to Phillips.
Highway 101 Corridor Coordinator Peder Norby said the shop local efforts have an economical, cultural and environmental impact.
“It’s clear that where people shop makes a difference in a city’s budget,” he said. “But we also realize that it takes less energy to shop closer to where you live and work, increased sales purchases help retain local jobs and that local businesses contribute far more to the cultural activities of the city.”
Norby said the initiative to educate residents and merchants about the benefits of shopping local underscores the connection between purchasing power and the city coffers.
“The consumer has a choice, we’re not trying to take that away from them,” he said. “If we could move that choice from 50 percent local purchases to 60 percent that could mean an additional $1 million in revenue for the city.”
Merchants are offering valuable discounts and specials to incentivize shoppers to keep their dollars spent locally. By mentioning the “Buy Local E” campaign, customers can save a percentage at retail outlets and restaurants around town.
For more information, visit buylocale.org.