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Campaign encourages local shopping

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Written by Shannon Colletti Wednesday, 07 November 2007

In preparation for the holiday season, the City of Taylor and the Taylor Main Street Program kicked off the “Why Taylor? Buy Taylor” shop local campaign, a new movement to encourage Taylor residents to buy within their city limits.

The motivation behind the campaign, Taylor Main Street Program coordinator Tracy Terry said, is to get residents to change their spending habits by shopping locally more often. This will increase the city's sales tax revenue, provide promotional support for the businesses and serve as a retention tool. The campaign will also educate the population on the benefits of keeping their dollars in town.

She said this campaign is not just for the holidays, but something the city hopes continues year round.

“The first thing we’re going to have to do is give the people of Taylor a reason why they should shop at home. We have to educate them, not only on why they have to shop at home, but what you can actually buy at home,” Terry said.

Shop local campaign

Merchants can still join into the program, which began in early November. They will receive a big box, complete with a green bow, to put in their store.

Every time someone makes a purchase, the customer can put his name in the box to enter a drawing to win cash prizes, up to $1,000, tentatively planned for early January. The more purchases made, the more chances to win.

Participating businesses will also put green bows on their front doors for easy recognition. Both local merchants and chain stores can take part, although more money stays in the local economy when shoppers buy from a local storeowner. For every $100 spent at a national chain store, about $13 stays within the city, whereas when the same amount is spent at a local merchant, $45 stays local, Terry said, adding that $13 is still better than nothing.

“If you spend [the money] in Hutto, however, it’s $0. We get no money,” Terry said. “So we want to promote the national retailers as well because it’s keeping some sales tax and property tax money here.”

Benefits to the local businesses are apparent: They get more advertising, courtesy of the city, and more customers spending money in their stores.

Sales tax benefits citizens

When people buy something, they typically expect a small charge in addition to the price of the item at the bottom of the receipt: the sales tax.

Sales tax is added to most purchases as well as a number of services, such as admission into movie theaters and sporting events, Internet access, dry cleaning, carpet cleaning, massage services and burglar alarm system installation.

The Texas state sales and use tax rate is 6.25 percent, but local taxing jurisdictions — cities, counties, special purpose districts and transit authorities — may also impose sales and use tax up to 2 percent, making the maximum combined rate 8.25 percent.

This 2 percent local sales tax, therefore, can be divvied up as city officials see fit. In other words, for every $100 spent on taxable items, the city receives $2 to put back into itself.

In Taylor, the city further breaks down its 2 percent revenues: 1.5 percent goes to the city, and 0.5 percent goes to the Taylor Economic Development Corporation.

City’s use of sales tax revenue

The 1.5 percent generated is mostly used to fund the operating budget of city services, including fire, police and administration as well as toward improving streets and beautification efforts.

Of the city’s 1.5 percent portion, one third, or $0.005 of every $1, also goes toward reducing the city’s ad valorem, or property tax, Assistant City Manager Jim Dunaway said. Approved by voters in 1994, this reduction keeps the ad valorem tax rate $0.20 lower. Since Fiscal Year 1997/1998, the $0.005 sales tax has generated $6.2 million.

“The bottom line is the sales tax allows us to keep ad valorem rates down,” Dunaway said.

How TEDC uses its portion

TEDC is a 4A sales tax corporation that voters approved in 1993 to promote economic development that came into being the following year.

Since its inception, TEDC and its community partners have assisted dozens of projects in starting up, relocating to and expanding in Taylor.

The organization typically partners with other entities, such as the city or school district, to attract new business by giving incentives. New business means new job opportunities.

This year alone, TEDC assisted A Moment in Time Photography & Restoration; Austin Aqua Farms; Austin Ornamental, Inc.; Durcon Laboratory Tops, Inc. and Gary Williams Trucking at a total cost of $123,000.

The sales tax revenue trend

As the new fiscal year began Oct. 1, the new budget went into effect. In Taylor, 22.9 percent of the city’s estimated general fund revenues is from sales tax.

In FY 2007, sales tax went up 35 percent from the previous year, with the city’s share increasing to $3.28 million.

“It did go up significantly,” finance director Rosemarie Dennis said. “What happened this year is that there were a lot of one-time purchases done on computer software and hardware, and that’s why we saw a spike in revenue for sales tax.”

Even if last year’s significant increase was an anomaly, city officials obviously want the sales tax revenue to continue to increase — which is why the shop local campaign is important.

“It’s a win-win for everybody locally: it helps the merchants, it helps the residents, it helps the city,” Dunaway said.

Participating Merchants

Several businesses currently participate in the "Why Taylor? Buy Taylor" shop local campaign, and more join every day. These are just a few of the participants and sponsors — a complete list can be found at www.ci.taylor.tx.us/index.asp?nid=537.

Dreams to Treasures
First State Bank Granger
For Paws Only
Hair Trendz Salon & Spa
Louie Mueller BBQ
Moss True Value
Patschke and Patschke Real Estate
Power Mart - Diamond Shamrock
RiCoco's Latin Restaurant*
Sears Authorized Dealer Store *
Taylor Sporting Goods*
Terra Properties, Inc.
Yours Truly

*sponsors

Hutto’s FY 2007/2008 sales tax:

1.00% is used for general operating purposes
0.50% is used for property tax reduction
0.50% is for Hutto Economic Development Corporation, the city's 4A EDC, to attract economic development and create jobs
6.25% is collected for the State of Texas
8.25% total sales tax rate

Sales tax makes up 17% of the general fund revenue in Hutto, which has increased by 442% in the past five years.

Although some new businesses, such as Lowe’s Home Improvement and Firestone Automotive, have opened in Hutto in the past year, city officials are looking to planned mixed-use development The Crossings of Carmel Creek to give the local economy a much-needed boost. The Crossings is anticipated to open in 2010.

Finance director Laurie Brewer said city officials are excited about the expected sales tax revenue increase the Crossings will provide.

“We don’t have a huge sales tax base now,” she said. “It will allow us to capture some of the sales tax leakage that is occurring because our residents are spending money outside of Hutto.”

In addition, Brewer pointed out how the development will lift the city’s property tax base.

“It lessens the city’s future dependence upon the residential property tax for services in this growing community. While the city did a sales tax performance agreement, we did not rebate any property taxes, so 100 percent of the property taxes will be coming into the city.”

Hutto budget analyst Micah Grau agreed with Brewer. "Sales tax is a volatile source," he said. "If the economy goes south, obviously the sales tax will slow down a little bit. You want a good mix in your revenue stream. That's what we're aiming for, but we're not quite there yet."

Georgetown’s FY 2007/2008 sales tax:

1.00% is used for general operating purposes
0.50% is used for transportation improvements through the Georgetown Transportation Enhancement Corporation (GTEC), the city’s 4B EDC
0.125% is for Georgetown Economic Development Corporation (GEDCO), the city’s 4A EDC
0.125% is for property tax relief
0.250% is for street maintenance
6.25% is collected for the State of Texas
8.25% total sales tax rate

Sales tax makes up 24% of the general fund revenue in Georgetown, which is the same percentage it was five years ago.

“Our sales tax revenue has continued to grow in the last five years on an average of between 5- and 10 percent per year,” finance director Micki Rundell said. “There are several factors that make Georgetown unique.”

Among these, Rundell cites the establishment of Sun City, which opened its first residence in 1995 and currently has more than 7,500 residents. She also noted the addition of the Wolf Ranch shopping center two years ago.

“Because of Sun City, there’s a higher disposable income in Georgetown. So we’ve been a little bit insulated from some of the economic downturns that have impacted other communities,” Rundell said.

As the city’s population continues to grow, the need for more retail became apparent.

“Wolf Ranch is providing [Georgetown citizens] the opportunity to spend their dollars locally. Before we had Wolf Ranch, most of their dollars were going outside the community. We didn’t have a Kohl’s or an Old Navy or a Target. Now the accessibility of having those outlets locally is allowing them to spend those dollars here, and I think that’s great,” Rundell said.