Economic data highlights potential of increasing local spending
Steamboat Springs — The I Shop Steamboat campaign being sponsored by the Steamboat Springs Chamber Resort Association, Mainstreet Steamboat Springs, the Steamboat Mountain Village Partnership and the Steamboat Pilot & Today is only the first part of the effort to encourage more Routt County residents to spend money with local businesses.
During its annual retreat, the Chamber’s board of directors decided that a buy local campaign was a priority for 2014.
After the holiday season passes, the Chamber will start working on a sustainable, long-term campaign that will stress the benefits of shopping locally.
It’s likely to be a community awareness program, Chamber CEO Tom Kern said.
“I don’t think this is a campaign that we’re going to measure,” Kern said. “We have really no way to measure what the leakage is.”
Leakage is the amount of money that residents are spending outside of Steamboat Springs.
A consultant could be used to analyze credit card data coming out of Steamboat Springs, Kern said, but that’s not likely to be within the scope of any eventual campaign.
However, economic data can lend some insight into how Routt County residents already are spending their money and identify the areas a buy local campaign might be able to affect.
Steamboat economist and City Council member Scott Ford prepared an analysis of the how the personal income of full-time residents is spent based on data from the Bureau of Labor Statistics’ Consumer Spending Survey, the American Community Survey and a consumer preference survey conducted in Routt County in 2003.
The Consumer Expenditure Survey for 2012 was released in September. It’s national in scope, but Routt County doesn’t depart too much from national averages in terms of household size, earners per household, cars per household and has a slightly higher percentage of homeowners, according to American Community Survey data.
Using the national average for taxes, Ford estimated that $979,813,380 in disposable income was available in Routt County in 2012 from labor and non-labor sources (i.e. the job that cuts you a check biweekly and the investment portfolio that returns a profit, respectively).
Ford took that amount and allocated it to spending categories based on the percentages outlined in the Consumer Expenditure Survey.
For example, the biggest category is housing. According to the survey, Americans spend 34.4 percent of their disposable income on housing related items, including rent or a mortgage, furnishings, household supplies and operations and utilities. That percent applied to Routt County would mean full-time residents here collectively spent $337,208,633 on housing in 2012.
Ford then estimated the percent of each category that is spent locally using preference data from a survey conducted in Routt County in 2003.
All told, Ford estimated that $456,279,814, or about 47 percent of disposable income, is spent locally by residents.
The Routt County consumer preference survey identified areas where leakage was high, or items that residents were buying outside of the county. Categories where leakage is high are natural fits to target with a campaign to increase local spending. This includes categories such as home furnishings, apparel, car purchases, hard goods used for entertainment such as skis, reading material and non-religious charitable giving.
Kern said a buy local campaign would be primarily focused at the retail sector.
If a buy local campaign was able to increase spending in each of those categories by 10 percent, a lofty benchmark, Ford estimated that the increase in local spending would be $19,894,827. Assuming all of the increase in local spending occurred in Steamboat city limits, the increase in city sales tax collections from that amount would be about $945,000, based on the city’s 4.75 percent sales tax rate.
Even with a more conservative 5 percent increase in local spending across the categories above, that still would increase local spending by $9,947,413, resulting in a city sales tax collections increase of about $472,500.
Total sales tax collections for 2012 for Steamboat Springs was $17,586,036.
If Routt County residents spent 10 percent more in Steamboat Springs where they could, the city sales tax revenue for 2012 would have climbed by a little more than 5 percent. The impact for a 5 percent increase in local spending would be a 2.6 percent increase in sales tax collections.
Currently, Routt County residents spend about 50 percent of their disposable income locally. Increasing that amount by 10 percent in the categories where leakage is high would equate to between 80 and 100 additional full-time equivalent employees, Ford said.
That often would manifest itself in part-time employees gaining enough hours to reach full-time, he said.
What economic data and consumer surveys can’t show is what it would take to realize real gains in spending from a buy local campaign. Any campaign would have its own costs in planning hours and advertising.
If you’re looking for a way to immediately increase the amount of disposable income available in Routt County to be spent locally, tip your bartender a little more the next time you’re out.
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