It's Happening: Closing of Brick and Mortar Retailers Affecting City Revenues

By Julie Perine on April 09, 2018 from It’s Happening via Connect-Bridgeport.com

Of all the stories we write and post on Connect-Bridgeport, it seems nothing creates as much hype as a new business story. Sometimes, thousands of reads are generated by a single story of a new store going into Meadowbrook Mall or along Bridgeport’s Main Street Corridor.
 
That’s ironic because as excited as people get about a new retailer, retail stores in general are struggling. Many – including some big-box retailers - have been forced to close their doors over the past year. Among the latest are Sears, Toys R Us and Claire’s, all located at Meadowbrook Mall. The problem is widespread, across the region, state and country. While visiting Charleston a few weeks ago for the state high school basketball tournament, I couldn’t believe the site at Charleston Town Center. Several storefronts were empty and the popular meeting place did not have the hustle/bustle it used to.
 
In this fast-paced world where we seem to not have enough time, many have become accustomed to online shopping. There’s no need to get in the car and go to a shopping establishment, then look for the right item. A click of the mouse and the nine-digit number of a credit card gets the job done. And the item arrives right on your doorstep. Mission accomplished, right?
 
Not so fast.
 
The online shopping trend – the one that has Amazon projected to close in on retail giants like Walmart, Target and Costco – is affecting communities in a big way. That’s because businesses pay business & occupation “B&O” tax to the city where they are located. When sales are down – or worse yet, stores close – B&O tax revenue is decreased and cities operate on less money.
 
Collected from retailers, restaurants, hotels, movie theaters and vending companies, B&O taxes, in general, make up 41 percent of the city of Bridgeport’s budget and about 12 percent of the city’s general fund budget, said Bridgeport Finance Director Monica Musgrave.
 
“Therefore, when retail B&O taxes go down, it drastically affects our budget,” she said
.
During the 2014-15 fiscal year, Bridgeport yielded $1,888,141 in business tax and the following year, $1,694.106 – an 11 percent decrease. Not as big of a drop – but still down – the 2016-17 fiscal year brought in $1,674,388 – a two percent reduction from the previous year. Figures for this fiscal year are not completed.
 
At the city’s initial meeting to work up the 2018-19 fiscal year budget, it was mentioned that between Jan. 1 and March 1, four Bridgeport businesses had filed Chapter 11 bankruptcy. The revenue deficit created had to be configured into the budget process early, Musgrave said.
 
With that in mind, I hope this provides food for thought about the importance of spending some of those dollars at retailers located in your own city; brick and mortar companies which are licensed to do business and are supporting the cities in which they are located. Some who jump on the ‘small business” bandwagon are not licensed and do not contribute to the funds which enable our cities to operate.
 
We’re not in any trouble yet, but as the trend continues, it’s likely that cities across the nation and beyond will be in a financial jam.



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