Nudge List--Points to Local Business

The post to which this refers was originally written on September 20, 2011. It lists a number of goals I want to nudge the next mayor into pursuing. This focuses on one of those. The original can be viewed by scrolling down to September 20, 2011.

As the campaign comes to a close, I see that I will not get through the Nudge List drawn up in September, by November 8. Here's one that will make it before the deadline: Point system for local producers and vendors.

The notion of a point system to favor local producers and vendors is one of the easiest steps we can take to revive and strengthen the local economy. As is no surprise, local governmment is a large buyer of goods and services. It is foolhardy to simply take the lowest price for such purchases without considering the multiplier effect those purchases can have on the local economy. In fairness to those who purchase goods and services for the City, many of those purchases are made through local producers and vendors.

However, I recall vividly an incident which occurred shortly before I joined the City Council. The proprietor of the dive shop on State Street had been bypassed when the fire department needed the type of equipment he sells. Someone from the fire department called and got prices from the shop, but didn't identify themself as being from the fire department. Maybe if the fireman had identified himself as a fireman, he would have been offered special pricing. Apparently he didn't do so, and so the business was given somewhere in Louisville and a tiny bit of money leaked out of our local economy.

That may not be a particularly on-point example of how the local economy is disadvantaged through governmental purchasing misses, but we can still do better in structuring a framework that bouys local producers and vendors.

Local shops, producers, and vendors are the heart of our local econnomy. The new mayor should pursue a policy of awarding prefence points to these businesses. I have obtained prices from large national retailers that are as low or lower than the local retailer pays at the wholesale level. That type of pricing makes it difficult to sustain the elements of a local economy against such stiff (possibly predatory) pricing power.

The rationale, and value, of establishing a formula or framework to give locals a preferred position is that, because of past experiences, some local vendors may have given up on participating in government sales. Some may recognize that their wholesale price would not be competitive in a one-on-one matchup with a national chain, so they don't even try to sell to local government. But local government has an obligation to take the extra steps to ensure that local businesses are favored over national chains, if the product or service meets the city's needs.

One method could be a point system by which locally-produced goods - or items produced elsewhere but sold by local vendors - have a rating to put them on a more even level. Back to the dive shop example. Perhaps the equipment needed was available for $2,500 in Louisville but the local vendor needed $2,800 to cover his costs and make a profit. Using a point system formula that would give a slight advantage to the local vendor could have put his equipment just a few dollars away from the Louisville price. The dive shop owner could then have taken advantage of the incentive and come off his price slightly to win the business - and possibly a longer term relationship. He is a winner in this situation, but so are the citizens of New Albany who benefit from a prosperous local economy, which builds a vital functional, and sustainable city able to attract and maintain other local businesses.

I hope the Mayor is on board with this concept and is willing to work with the Council to make it happen. I'll be nudging him to do so if I'm fortunate enough to win another term on Tuesday.