According to the Madison Chamber of Commerce Janaury newsletter, Senator Russell Olson has joined the Chamber board. Olson says his goals while serving on the board are to increase membership and retention and to "have Madison's sales tax revenue grow to be in the top 10 in South Dakota per capita." The former is ambitious; the latter is ambitious and wonky! Let's run some numbers:
- Madison's population in 2009 was 6,605, 13th in the state.
- Madison's municipal tax due in 2009 was $2,454,096.80.
- Per capita, that's $371.55.
- Looking just at the 58 South Dakota towns with more than 1,000 people, Madison's municipal tax due per capita ranked 34th.
Now municipal tax due depends on local rates. Let's broaden the scope and look at total taxable sales, which if I were a Chamber dude is the number I'd really want to see increase:
- Again, Madison population: 6,605.
- In Fiscal Year 2010 (i.e., July 1, 2009, to June 30, 2010), Madison's total taxable sales were $125,078,116.30.
- Per capita, that's $18,936.88.
- Out of the 58 towns in the 1000-plus league, Madison's taxable sales per capita rank 35th.
Table 1 below lists the 58 largest towns in South Dakota in order of highest municipal tax revenue per capita. Table 2 lists the same towns in order of highest taxable sales per capita. There are some surprising differences.
Table 1: Calendar Year 2010 Municipal Taxes Due in 58 Largest South Dakota Towns:
|City||pop||2009 muni tax||per capita||percap rank|
|North Sioux City||2,601||1724878.71||$663.16||4|
Table 2: FY2010 Taxable Sales in 58 Largest South Dakota Towns:
|FY2010 Taxable Sales||per capita||percap rank|
|North Sioux City||$52,772,289.10||$20,289.23||32|
For the remainder of this discussion, let's look just at the taxable sales. To meet Olson's Chamber goal (and I think it's a heck of a goal) of reaching the top ten for per capita taxable sales, everybody in Madison would have to buy 58% more stuff in Madison---$11,000 more. Or we'd have to get a whole lot more visitors to come spend money here the way tax-per-capita leaders Deadwood, Rapid City, and Custer do.
The numbers above show that Sioux Falls is our key taxable sales nemesis. The only towns in the top half of this list that are within an hour's drive of the Empire Mall are Brookings, Freeman, and Garretson (I'll bet Palisades State Park helps their numbers). Salem and Beresford are close in rank to Madison. Nine of the bottom fifteen towns in this survey, like quasi-suburbs Brandon, Tea, Lennox, Hartford, and Harrisburg, get sales-tax hammered by their proximity to Sioux Falls shopping. In general, that one-hour range to Sioux Falls is like the event horizon of a big retail black hole: inside it, everything falls to the shopping center.
Now part of Madison's challenge is to compete with five surrounding cities that outrank us in taxable sales per capita:
Even with destinations like Prairie Village, Lake Herman, and Lake Madison, we compete in every direction with other commercial centers that offer at least a little more to buy and do for not much more driving.
So how do we help Olson and the Chamber meet that goal? The easiest way might be to get everyone in Madison to move out to Wentworth with Russ. Then Madison's official population would drop and per capita sales figures would jump.
But to make a real difference, we need to attract more core retail competition. Prime targets:
- Hy-Vee? In Madison, food stores make up an eighth of taxable sales. Bring Hy-Vee in, and Jubi-Shine will respond by stocking more selection and competing on price and service. Madison shoppers will see less need to stock up in Brookings and Sioux Falls, and folks will come here knowing they can shop around in one town for deals.
- Walmart? Readers have discussed this retail nuclear option as a way to draw more shoppers here. A quick CORREL check on my spreadsheet shows a slightly positive correlation between Walmart presence and per-capita taxable sales. But there are a number of towns at the top of the taxable sales per capita list (Britton?!) doing good business without Walmart. Besides, the retail giant already has stores in South Dakota's eleven largest towns. Is Walmart interested into expanding to Madison, which ranks 13th by population?
- More outdoor recreation? I'd like to take Mike Knutson's advice and extend the bike trails. Build the Madison Central Greenway. Get the ball rolling on expanding the new Lake Madison public access area into Semiquincentennial Park. But looking at places like Platte, Miller, and Winner in the top ten makes me wonder if we just need to hatch more pheasants and expand the airport for hunters.
- Find that signature event? The Chamber and LAIC are banking on Motongator Joe, but I still wonder if hillbilly, testosterone, and outlaw are really the best branding for a community trying to broaden its market. Hmm... now that there's a Bug in my driveway, I might have to update that Beetle Days plan. But how well does the signature-event strategy work? Sturgis has the archetype of signature events, the Sturgis Rally. Sturgis has 9% less population but 15% better per-capita taxable sales. But Madison still generates 1% more taxable sales with its nice, steady year-round business cycle.
More suggestions to help Russ and the Chamber meet their sales-tax goal are welcome in the comment section here and at the Chamber!