State Senator Bill Holzclaw

On June 20, I commented about  a gathering of faith-based groups that had gathered in Huntsville to discuss the frightful implications for them of the Alabama Anti-immigration Bill. As part of that post, I critiqued the apology of the bill’s sole defender,  State Senator Bill Holzclaw, who had attended the meeting. Surprisingly, that post elicited a response from the Senator. I then provided my own response to his blog post on June 22.

However, on June 22, the same day as my response to him, I also suggested Alabama follow the lead of Oregon which had recently passed a bill to strengthen their local economies by supporting locally-owned businesses.   Oregon HB 3000 allowed state agencies and local governments to give preference to goods made in Oregon and services perfomed by local businesses, even if it entails paying up to 10 percent more than the cost of out-of-state suppliers. (Alabama only allows a three percent local preference rule currently.) I cited a State Senator from Oregon:

“This bill will help Oregon businesses by encouraging the development and growth of our local supply chains, which will help create local jobs and revitalize our state’s economy.

In addition to reading my response to his blog post, the Senator must have kept reading other parts of Keating’s Desk and liked what he saw; for today this appeared in the Huntsville Times:

State Sen. Bill Holtzclaw told local business leaders Thursday that the state needs to spend more money with Alabama businesses.

As chair of the Legislative Oversight committee, Holtzclaw, R-Madison, said he discovered that half of the $88.4 million the state spent on personal service contracts – architects, legal services, consulting and the like – was paid to out-of-state companies.

I am concerned about the number of dollars not being kept in the state,” Holtzclaw told the monthly gathering of the Madison Chamber of Commerce Thursday at the Holiday Inn West.

Though only 59 of 332 personal service contracts went to out of state companies, the cash value of the out-of-state contracts was $44 million.

“Half is flowing out of the state,” he said. “We can do the work (in Alabama). We’ve just got to figure out how to connect you (local business owners) with the state.

These numbers are impressive, especially considering the number of architects, lawyers, and consulting firms in Alabama. These types of contracts are not limited to out-of-state, single source providers; firms in Alabama can do these projects. (I would also point out that most of these types contracts are not subject to competitive bid laws.)

Remember: that extra $44 million could go a long way in Alabama. Combine this $44 million with the greater monetary velocity of money spent locally, the economic impact quadruples to $176 million.  Remember: for every $100 dollars spent locally,  about $68 stays in the area while only $43 of that same $100 stays in the local economy if spent on a out-of-state firm.

Closing these leaks in these service industries is a great first step, we cannot limit the review to mere services, though. Our contract review especially should include goods and products as well. What Oregon State Senator Clem stated of Oregon is true of Alabama.

Oregon government purchases a lot of goods and services. We should be buying Oregon products first. We think as many of these products as possible should be purchased from small businesses within our state, particularly when the price of those products is very similar. This bill allows Oregon companies to take advantage of the state’s purchasing power to grow their businesses and create more Oregon jobs.

As I reiterated on the June 22 post,

A balanced approach should be adopted which encourages the development of home-grown, import-substituting local manufacturers. We must identify the leaks of investment out of our local economies and enact policies which catalyze the local production of many items we now import.

Sen. Holzclaw, I hope you can convince your colleagues to support your position here. It is good policy: good for a resilient economy and great for job creation.

Hey, Democrats, it is also good politics.  Relocalizing the economy should be a primary plank of our platform.