The average Clark County shopper spends nearly 40 percent less in Washington than shoppers throughout the rest of the state, according to the Washington State Department of Revenue.
In the third quarter of 2008, per-capita retail spending in Clark County was figured at $1,178, about $700 less than per-capita spending statewide.
“State and local governments lose about $80 million in sales tax annually to cross-border shopping in Southwest Washington, with most of that affecting Clark County,” said DOR Spokesman Mike Gowrylow in an email.
While $80 million is only 0.72 percent of the $11 billion collected in Washington’s annual state and local taxes, Gowrylow said the loss is still significant because it is mostly localized to Clark County.
“Either they spend less or they’re spending it in Oregon,” Gowrylow said. “Technically, people owe taxes on goods they buy in Oregon, but it’s almost impossible to enforce.”
A changing trend
Such sales tax leakage affects the livelihood of Clark County businesses and public agencies their tax money supports, said Eric Hovee, principal of E.D. Hovee and Co., a Vancouver-based economic research and development firm.
Oregon’s lack of sales tax is one reason local consumers cross the Washington-Oregon border to shop, but so are Clark County’s gaps in retail, Hovee said.
“Even though there’s been a lot of retail growth, there are still some types of retail missing in Clark County,” he said.
Those include specialty dining, urban street retail and lifestyle retailing.
In spite of that, Hovee said sales tax leakage has slowed in the last five to eight years, partly because of increased traffic congestion and gas prices.
“It no longer makes as much sense to drive to an Oregon mall,” Hovee said.
While retail has slowed across the board this year, Hovee said retail sales are inching up in some sectors, and that local businesses have something to gain from national stores’ losses.
“Because of the number of national retailers that have gone out of business, I think, at least temporarily, there may be some new opportunities for local independents to gain a foothold in the market,” Hovee said. “Whether that lasts, who knows?”
Banding together
In an effort to strengthen Vancouver’s retail scene, Vancouver’s Downtown Association has formed a Downtown Retail Strategy Team. The group is collecting data and commentary from downtown property owners, retailers and other business owners to determine what kind of commercial space is available and what types of businesses are best suited for recruitment to the area.
“We’re looking for businesses that are homegrown with employees, creativity and financing all coming from our local area,” said Lee Rafferty, chair of the team and owner of Vancouver-based Spanky’s consignment shop. “It can’t be one big developer coming in to make it all happen.”
Erik Runyan, owner of 92-year-old Runyan’s Jewelers, is one Vancouver retailer who competes for big-ticket sales with Oregon’s sales-tax-free jewelers.
“We had a terrible Christmas – absolutely couldn’t have been worse,” Runyan said. “So I need to have something to last through the year. If we somehow gather together around the common thought of surviving together, we stand a much better chance.”
In January, Runyan rallied about 25 independent Vancouver retailers to create a symbol – which has yet to be identified – to physically recognize local businesses and their community involvement. He hopes the grassroots effort will boost local spending and help develop community identity.
“Whether it’s a flag or a sculpture or a cow, whatever it is, we’d have something that’s recognizable…to remind people of what we are,” Runyan said. “With each purchase at a participating merchant, the buyer and the city itself benefit.”
Spreading the word
After opening the first Vancouver franchise of Texas-based FastSigns International Inc. in March 2008, Teresa Kung sensed a general air of economic pessimism.
So in January, her shop made bumper stickers in-house reading, “I refuse to participate in the recession. Support your local businesses.”
“I decided to do something simple that people could use, like a bumper sticker, to (tell) people to band together,” Kung said.
Production costs for the bumper stickers were minimal and have more than paid off, Kung said.
“We have gained some new customers because of other customers passing the stickers out to their friends and employees,” Kung said. “We have more traffic and walk-ins with people coming for the bumper stickers.”
As a franchisee, Kung gives 8 percent of sales to her parent company, but the rest of her sales go back to the local economy, she said.
SALES TAX REVENUE BY THE NUMBERS
38,542 businesses in Clark County collect sales tax, mostly in retail and service industries
35 percent have between $100,000 and $1 million in annual taxable sales
28 percent have less than $100,000 annually in taxable sales
18 percent have between $1 million and $5 million per year in taxable sales
19 percent have more than $5 million in annual taxable sales
4.5 percent have annual taxable sales topping $50 million, providing the bulk of the state’s sales tax revenue
Source: Washington State Department of Revenue
Charity Thompson can be reached at cthompson@vbjusa.com.
