December 6, 2005

Commentary: The economy of Somewhere, USA

Locally owned businesses keep money in the city and prevent our quirky town from disappearing into the amorphous muck

By Rebecca Jo Dakota, Executive Director, Albuquerque IBA
Tribune Columnist

"The Beast" had to go. As the oversized staghorn fern was known, "The Beast" was moved from its 46-year residence at Rowland's Nursery to its new home at the Albuquerque Zoo. Many of us applauded the rescue.

But how sad that it needed to be rescued.

As Rowland's this fall rolled up its pathways through the plants, pots and arbors of its five retail locations, our community lost a resource that's hard to replace: a place nearby to get pansies in the spring, vegetable seedlings in the summer, chrysanthemums in the fall and, just as importantly, good advice from professionals.

We lost a place to greet a neighbor or friend while pulling a red wagon full of plant treasures.

Many of us shop at big box discount stores, confident that we're saving by doing so. There are hidden costs as well.

What is it worth to have experienced professionals who can answer your specific questions and help you solve your problems? What is it worth to have businesses that support our local charities and civic organizations? What does it mean to Albuquerque's economy when we lose Baldridge Lumber, Bound to be Read or Rowland's? Why pay attention to saving our locally owned businesses?

Locally owned businesses are the engine for a local economy, recirculating dollars in the economy, generating jobs and economic activity. Research has shown that when money is spent at a locally owned shop or restaurant, rather than a chain, it circulates within the community.

The Institute for Local Self Reliance studied businesses in Austin, Texas. The institute found that local businesses create a "multiplier effect" of 3.5 for the number of additional times revenue changes hands in the local economy. This is because local businesses tend to spend their income locally on accountants, designers, printers and lawyers, thus recycling a larger share of their revenue back into the economy.

Plus, each time the money changes hands, the city gets another round of gross receipts taxes. Chains tend to send their revenue out of town to corporate headquarters for such services.

What would shopping locally mean for Albuquerque? Looking only at those sales that generated gross receipts taxes (retail, services, restaurants) in Albuquerque in November 2004 and assuming comparable sales for this year, a clear picture emerges of the financial advantage to Albuquerque if shoppers chose to shop locally owned for even one day.

Last year, one day's worth of taxable sales in Albuquerque (one-thirtieth of the total for November) were $1.3 million. Albuquerque's share of those gross receipts would be $17,202.

Using the multiplier effect of 3.5, Albuquerque would generate $60,207 more in additional gross receipts income in just that one day. That's a lot of money for libraries and parks, police and potholes, especially when you consider how that difference would mount up over time (annually, the difference would be $21.98 million).

Think about chile. Do you want your enchiladas smothered with red or green chile made by a chef who knows chile by heart or by someone following a recipe from corporate headquarters in the Midwest?

The second consideration in saving our locally owned businesses is about the character and charm of a place. Consider farolitos. Do you want little lights fluttering in paper bags around the shops and homes of Albuquerque or the sterility of generic holiday decorations looming back at you across a vast parking lot?

We can choose. At least some of the time. While the cost at the cash register matters when we make a purchase, the costs to the community also matter, and they might not be so apparent.

When we choose to make purchases at a locally owned store or business, the shop stays in business, the city benefits through increased expendable tax resources, and we, the citizens, benefit because we have the advantage of a unique place that feels like home.

When we choose to make purchases at chain stores and franchises where the money leaves town almost immediately, we all lose in the long run. We lose the multiplier effect of gross receipts tax gains, and we ultimately lose the character and charm that make Albuquerque quirky - represented in part by our locally owned businesses - as we morph into Anywhere, USA.

You can choose to keep our local economy thriving and the area's character intact by choosing to shop at locally owned and independent businesses this holiday season.

Let's keep it querque!

 

URL: http://www.abqtrib.com/albq/op_commentaries/article/0,2565,ALBQ_19866_4293215,00.html

© The Albuquerque Tribune 2005

 

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