What does buying local mean for you?

By Susan Odum
Extension Educator
Community & Economic Development
University of Illinois Extension

How does the local population impact you as a resident?  The US Census Bureau estimates the per capita income for each county in the US, based on the population.  Counties and local communities, in turn, receive per capita income disbursements based on the number of residents within their jurisdiction.  If the population declines, in turn, so will the per capita income tax revenue your taxing district receives to support its budget.  Similarly, if the population is on the decline, then new homes are not typically being built, and existing structures age or become derelict, resulting in a decline in real estate taxes to support the local taxing district’s budget.   

Similarly, your county’s population and income levels demonstrate potential local “buying power”, i.e., the amount of money available to circulate within the county as residents receive wages, government payments, and/or other income sources, and in turn, purchase needed goods and services.  Historically, local residents supported local businesses, which in turn, supported local employment, while simultaneously generating revenues (real estate taxes, income taxes, sales taxes, and/or motor fuel taxes) to support the taxing district’s budget.   If the population of the county declines, in turn, the county’s “buying power” also declines.                         

How do local businesses closures impact you as a resident?  While some businesses remain; the majority of our rural counties have experienced some level of business closures and/or the contraction of business offerings available within the county, resulting in vacant buildings scattered throughout the community that begin to age or become derelict, resulting in a decline in real estate taxes to support the local taxing district’s budget.  For example, there may be one grocery store where there used to be two; or one of three car dealerships may be all that remains; or the lumber yard may have closed its doors; suggesting that less monies are being generated and retained in the local economy resulting in less revenues to support the local taxing district’s budget.  Similarly, given that local businesses are the major supporters of local charities, athletics programs, fundraisers and school activities, the contraction and/or loss of local businesses diminishes the monies available to support local schools and non-profit organizations. 

How do buying patterns impact you as a resident?  The impact of local business closures are magnified for rural economies as a result of the advent of “big-box stores”, regional shopping destinations, and online shopping venues, as local “buying power” that was historically circulated and re-circulated in rural economies to support local businesses, local employment, the local economy, and local taxing district’s budgets, is now leaving rural economies in large numbers.

Shopping local supports the local business, but what does it mean for YOU, the local resident?  The answer depends, of course, on where you live, where your kids or grandkids go to school, and what is important to you.  Stagnant or declining revenue streams as a result of buying patterns that no longer support local businesses, are placing increased pressure on local governments and other taxing districts to provide essential services while maintaining their aging infrastructure.  The resulting dilemma is to identify new ways to balance the budget.  This can mean increasing revenues (i.e. raising taxes), cutting expenses, or a combination of the two.  Either way, rural county residents lose, as they either pay higher taxes and/or have fewer services available.  In recent years, counties and school districts in the State of Illinois have been requesting permission from local voters to assess a special retailer’s occupation tax (sales tax) to support Public Safety and School Facilities in an effort to increase revenue in rural counties, as they simultaneously deal with business closures and the loss of local buying power as buying patterns no longer support local businesses.

So again, what does it mean for you, the local resident? If you live in one of the counties experiencing population decline coupled with business closures, your real estate taxes (or the rent you pay on leased facilities) may increase, while monies may be limited for infrastructure improvements, like roads, streets and sidewalks; or public safety, like police, ambulance and fire.  Similarly, less monies may be available to support local schools resulting in the need for real estate tax increases coupled with program cuts or staff layoffs.

University of Illinois Extension Educator Susan Odum says, “In a nut shell, if essential public services, such as: roads, streets, sidewalks, police, ambulance, and fire protection are important to you, and if you value the arts, athletics, vocational and technical program offerings in our schools, then shopping local SHOULD be important to you, because it provides the resources for all of these things to happen.”   

Read more of her articles here.