Berkeley merchants, fighting tooth and nail to survive tough economic times, say it’s time for the city to give them a fair shake.
“We have small businesses in Berkeley saying they can’t get city contracts,” said Lisa Bullwinkel, executive director of Solano Avenue Associates, a North Berkeley business alliance.
Bullwinkel has teamed up with other city business districts to pressure the city to follow its own law that requires it to buy local when Berkeley businesses can do the job for less than five percent more than an outside vendor.
The business districts first united to lobby Berkeley’s 10 biggest employers to buy from Berkeley merchants, but Bullwinkel said they decided they couldn’t urge private companies to buy local while the city continued to spurn its merchants.
City officials acknowledge that the Buy Local Ordinance was not well known among the employees who actually make the purchases, and that most departments bought office items from national chains.
Moreover, Berkeley participates in a regional purchasing consortium of cities that steers most office supplies sales to Office Depot and all computer sales to Dell.
The consortium is a sore spot for local retailers because they never had a chance to compete for the business. Prices are fixed by Los Angeles County, which negotiated the Office Depot deal and then offered the same prices to other cities. Because L.A. officials demanded any contractor be able to deliver goods next day to Los Angeles, Berkeley merchants, like the office supply store Radston’s Office Plus, say they never had a chance.
Buying local could have important consequences for local shops that sell books, office supplies and computers, said Dave Fogerty of the city’s Office of Economic Development, but the city benefits as well.
One penny from every dollar of sales tax revenue collected by a Berkeley merchant goes into the city’s general fund. Sales tax revenues comprise about $13 million of the city’s roughly $200 budget—the city’s second biggest source of revenue after property taxes. Sales tax revenues have dropped steadily every fiscal quarter since the end of 2000, exacerbating the city’s budget shortfall.
Cody’s Bookstore owner Andy Ross calculated the percentage of revenue his shop pumped back into Berkeley. He found that for every $10 spent, $4.97 went back into the Berkeley economy in the form of taxes, wages, purchases and charitable donations.
Office Depot has a Berkeley branch, so the city does recoup sales tax on purchases with the chain, but online retailers such as Dell evade state sales tax—so not only do they have an advantage over local computer sellers who must charge 8.25 percent on every sale, but the city also gets no tax revenue back for its computer purchases.
Berkeley officials have promised merchants they will seek out local bids, but caution that for many items the regional consortium offers “phenomenal” prices.
Tom Myers, Acting Manager of Economic Development, said the city’s strategy would be to find items that the consortium doesn’t discount and offer those bids to local merchants.
“We have to strike a balance between keeping costs down and making sure the city gets revenue from tax dollars,” he said.
Local business leaders say they are pleased by the city’s response. They met twice with former city Purchasing Manager Andrew Carey, who assured them that he was getting the word out to individual departments to consider buying local. Carey’s sudden resignation this week after less than two months on the job could be a blow to the program, but merchants remained confident they finally had a shot at city business.
“A door is open to us that has been slammed shut for 20 years,” said Diane Griffin, president of Radstons.