Good Deals Just Across the Border
Gov. Gray Davis has proposed increasing California’s sales tax by 1 cent to help ease the budget deficit. But for the businesses and residents of Siskiyou County in Northern California, this could mean only one thing: the further erosion of their local economy, as residents stream north to shop in the tax-free haven of Oregon.
In southern Oregon where the timber industry once sprouted, retail and service industries now flourish. To support its local economy, the commerce-wealthy area of Medford depends on the “ribbon of concrete” -- Interstate 5 -- that snakes up from Northern California, crosses the Klamath River and enters the blue-gray peaks of the Siskiyou Mountains.
If Medford is the winner in attracting consumers, then Siskiyou County is the loser. Any increase in California’s sales tax would mean an increase in the number of people crossing the border to evade the consequences of the increase, some border residents and officials say.
The calculus of taxes, combined with the wider product selection that Medford’s retail giants offer, deals Northern California businesses a double whammy. Siskiyou County’s unemployment rate stands at 11.3% -- even higher than Oregon’s, which is among the nation’s highest.
California state officials, however, aren’t too worried about the potential fallout from the proposed tax increase.
“I’m sure in the border regions people do cross the border to get more favorable prices,” said Hilary McLean, spokeswoman for Davis. “But we think people will shop nearby. We think the impact will be minimal.”
But Northern California residents such as Tammy Schumacher of Yreka, Calif., see no alternative.
“There’s no sales tax and there’s choice,” said Schumacher, as she stood in the parking lot of Medford’s Rogue Valley shopping mall. She makes the 60-mile trek up I-5 a couple of times a week to shop. She fills three red jerrycans and her truck’s tank with gasoline, which she says costs 40 cents less a gallon in Oregon than in California.
“Eureka, the pretty town on the coast, means ‘I found it.’ Yreka,” she said -- pronouncing the name of her hometown “WHY-reka” -- “means ‘You gotta go to Oregon to get it.’ ”
Although hard numbers are unavailable, some officials estimate that Californians spend $10 million annually at Medford stores, said Brad Hicks, president and CEO of the Chamber of Medford/Jackson County. Californians looking to shop rent about half of the town’s rooms on Friday and Saturday nights, innkeepers say. Californians park their cars at Medford’s many auto repair shops for service while they shop at Medford’s Target, Nordstrom, Wal-Mart, Circuit City and grocery stores.
“Other than appealing to people’s best instincts, I don’t know how you’d stop it,” said Richard Martin, president of the Siskiyou County Economic Development Council. “Other than by having a checkpoint at the border, which would be a police thing, and un-American, if you ask me.”
Martin volunteers at the Scott Valley Fire Protection District, which buys its helmets, hoses and other equipment in Oregon but reimburses California for lost sales taxes. Government entities must reimburse California for any lost sales taxes when they buy supplies outside the state, Martin said, but California residents don’t face the same requirement.
For Northern California residents such as Martin, the rush to buy supplies across the border could have dire consequences. California’s Proposition 172 increased sales taxes by 1/2 cent, with revenues going directly to police and public safety. Any loss in sales taxes could impair Siskiyou County’s ability to protect and serve its residents, Martin said.
To be sure, border sliders have gone to and fro for as long as there has been comparison shopping. “Why spend an additional 45 bucks on a computer when you can just drive up to Medford?” asked Martin.
Last week, Yreka residents Ralph and Nancy Wentworth hitched a trailer to their truck and drove into Medford’s Costco, eager to buy a new washer and dryer. They, like other residents from Siskiyou County interviewed, said their savings from shopping in Oregon exceed or meet the cost of the extra gas needed to get there.
“We buy everything up here,” Nancy Wentworth said. “But,” her husband added, “we don’t want to alert the state senators in California so they start charging taxes at the border.”
