MuskogeePhoenix.com, Muskogee, OK

Local News

April 27, 2014

Shopping plan draws questions

Marketing sales tax solution prompts mixed response

Some consumers are questioning the wisdom of spending $1 million to educate residents about the connection between shopping locally and the city’s ability to provide services.

Dan Mullins said most people already know sales tax revenue is used to “fix our streets,” provide city services, and help “pay employees.” The main thing keeping residents from spending their money in Muskogee and others from traveling here to shop is the lack of available choices, Mullins said.

“When I take my wife shopping she can’t find anything she wants, but we can go to Tulsa and they have rack after rack of things,” Mullins said. “Anything we can buy here, we buy here. But Muskogee just isn’t big enough to have something for everybody, and spending a million dollars for somebody to come in and tell us what to do isn’t going to change that.”

Mayor Bob Coburn said the situation described by Mullins could change if residents demonstrate their support of local retailers. The mayor, who secured a $1 million grant from the City of Muskogee Foundation to fund his proposed campaign, said that support could “attract outside retailers.”

“A slight increase of even 1 (percent or) 2 percent in tax revenue on local purchases could help us recuperate lost earnings from citizens shopping outside of the city,” Coburn said, noting an additional loss for which sales tax is not collected. “This type of continual growth raises the possibility of adding additional retailers to our community, which would not only benefit citizens needs, but also the city and greater community as a whole.”

The public awareness campaign was recommended by Cubic, a Tulsa-based company. The consultants were asked to research the loss of local sales to retailers in other municipalities, outline a plan to reverse the trend, and create a presentation outlining their findings and objectives.

Consultants estimated Muskogee loses about $77 million per year as a result of area consumers spending money outside Muskogee. They predicted the effort could boost annual local retail sales by $55 million, which would put an additional $2.1 million a year in city coffers.

The consultants’ study has not been presented to the other eight city councilors. Nor has Coburn’s plan been submitted to councilors for approval. Councilors will get a chance to discuss the public awareness campaign next month.

Ward IV Councilor Marlon Coleman said recovering sales tax revenue lost to other cities “is a concern that cannot go on unaddressed.” But he expressed some reservations about the proposed three-year campaign as it has been explained and questioned whether it would produce the desired results without something more.

“If anyone believes that we have a problem now with water lines, potholes, street repair, lighting and darkened areas of the city, or any basic infrastructure deterioration, those problems will only intensify and grow in capacity if we don’t do something to address the sales tax leakage problem,” Coleman said. “The more sales taxes decline, the more the city of Muskogee is unable to address these issues and many others that are important to the citizens of Muskogee.”

City Manager Howard Brown Jr. said the goal of the program is “to increase the level of awareness” among residents “that we have a problem in Muskogee.” A retail analysis of the Muskogee primary trade area, Brown said, shows most retail sales occur outside the city limits.

“This is the single initiative that I know to increase the retail sales leakage awareness of people who work here or live here,” Brown said, adding he is anxious to present the proposal to city councilors. “We are trying to encourage our employees and residents to spend in the city — hopefully, that will occur, and they will change some of their spending habits.”

 If city councilors sign off on the mayor’s plan, they would have to select a company to oversee the program. Russ Andis, the city’s acting purchasing agent, said requests for proposals were sent to seven companies, and a public notice was published in the Phoenix, but only two companies responded to the city’s request.

Those companies include Cubic, which recommended the city conduct the proposed campaign, and NetGain SEO, a Canadian company with an office in Muskogee. Andis said the proposals will be reviewed by a committee before a recommendation is forwarded to city councilors.

Coleman said since foundation board members have approved funding for the program, he and his colleagues must exercise “due diligence by vetting the current proposal.” His primary concern is that there be some degree of certainty the proposed campaign “accomplishes the long-term goal of stopping the sales-tax leakage problem.”

“Whatever the final product is, it must contain a component that addresses retail development in our city,” Coleman said. “It’s one thing to advertise and encourage our residents to shop local, which I believe they should do when they can. But in parallel we have to run a business and economic development campaign that recruits and solicits retailers to locate to Muskogee.”

Brown said he expects the campaign will produce positive results within a year if city councilors sign off on the proposal. Coburn said if at the end of the first year there are no measurable results, the campaign will be terminated, but he believes something must be done.

“If we continue to do nothing, then why would we expect anything to change?” Coburn said.

Reach D.E. Smoot at (918) 684-2901 or dsmoot@muskogeephoenix.com.

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