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Published: Saturday, 2/9/2008

Spending tax rebate locally is a stimulus

BY LARRY P. VELLEQUETTE
BLADE BUSINESS WRITER
Using tax rebates to buy services or locally made goods keeps money in the area. Using tax rebates to buy services or locally made goods keeps money in the area.
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Next week, President Bush will sign a $168 billion stimulus package, sending $600 for individuals, $1,200 for couples, and $300 per child to taxpayers across the country to light a fire under the economy.

The checks will be distributed beginning in May and will mostly go to those who fall below certain income levels - $75,000 for individuals, $150,000 for couples.

But to fire up the local economy, area residents will have to figure out where to spend the money to keep themselves and their neighbors working.

Those who practice fiscal discipline are likely to just save the money for a rainy day. Economists predict many more people will take the money and catch up on bills: pay down the credit card, catch up on a delinquent home loan, maybe even pay some of the costs to refinance out of an adjustable-rate mortgage.

But to best stimulate the economy of northwest Ohio and southeast Michigan requires spending on local services and locally made products. And to multiply the economic impact, they'll have to buy them at locally owned stores and businesses.

"Mostly, it ends up better [as a stimulus] if people buy services more than if they buy goods," explained Don Grimes, an economist with the University of Michigan's Labor Institute.

"If you hire a painter to paint your house, that money's probably going to stay local. But if you buy something that might be assembled locally, a lot of those parts are coming from China."

For instance, local residents could use their rebates to purchase a Whirlpool washing machine or dishwasher from a local retailer such as the Appliance Center in Maumee or Durocher's TV & Appliance in Monroe.

The store benefits from the sale, and employees at Whirlpool's plants in Clyde and Findlay, where those appliances are made, keep working - and keep spending their wages.

"We'll get five or six people a week that want to buy American, and anytime a person wants something like that, that's where we take them," said Chuck North, sales manager for the Appliance Center.

The same principle would apply to purchases of Sauder Woodworking Co. furniture at a store such as The Andersons - the store, the factory, and the employees all benefit.

There will be no shortage of opportunities to spend the rebate checks. And businesses will gear up to attract customers.

"We're developing a marketing program that we'll design to capture those dollars to help stimulate our local economic growth," said John Hoover, marketing director with The Anderson's corporate retail group.

"We've got a pretty good assortment, from food and outdoor lawn maintenance and plant material to home improvement products and furniture that are produced here locally."

Using a rebate check to help buy a Toledo-made Jeep Liberty or Wrangler might help keep Chrysler LLC workers employed, but a rebate check will cover only a small portion of the cost of those vehicles.

Residents could take their rebate check and dedicate it to filling out their music collection at a locally-owned record store like Culture Clash Records in West Toledo.

"Anytime somebody comes in specifically and says I like to shop at local places, we treat them like a king among kings," store owner Pat O'Connor said. "That's how you create and keep a local economy."

An art enthusiast might wander out to Waterville for a visit to Carruth Studio Inc. to buy a Garden Smile sculpture or two.

Ken Boerger, vice president and treasurer for Libbey Inc., said buying glassware would best help his company's more than 1,000 employees in Toledo.

"If people bought all new wine glasses, or iced tea glasses, or beer mugs - all those things would be helpful," he said. And if they purchase those items at Libbey's outlet store downtown, he said, "that's going to keep our factory running full, which will allow us to maintain employment levels where they are."

One great way to beat the local economic blues would be to invest in a summertime of fun.

The rebates would pay for season passes to Cedar Point, at $109.95, or for Cedar Fair LP's platinum pass, at $150, which includes access to all 11 amusement parks the company owns, plus parking.

"You could easily buy passes for the entire family, where you can go all summer long, and still have lots of money left over," company spokesman Bryan Edwards said.

Many other products are made locally, such as ice cream, tires, candy, and more. Also, the checks could be used for a variety of services, from lawn care to Toledo Mud Hens tickets to local nursery items.

Perhaps the best way to revive a moribund local economy, the University of Michigan's Mr. Grimes said, may be to do what's worst for the waistline.

"Go out to eat," he advised. "That money tends to be all spent locally."

Contact Larry P. Vellequette at: lvellequette@theblade.com or 419-724-6091.



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