Which do you think is better for your community...having your local government spend $10000 in your community or having them spend it in some other community? Seems like a pretty basic concept, right? If local money stays local, it should be more beneficial locally.
Here's an example. Let's say your city government receives a pamphlet or a phonecall from a "health screening" company 100 miles away and it toutes the longterm savings of getting "health screenings" for all your city employees. Sounds good, right? So your city government agrees to have them come and they do a great job of finding any potential problems. They, then leave and your city government pays the $2000 fee.
Doesn't seem like such an unbeneficial decision until you realize that there was the option of hiring another local company that could have performed the exact same service. So, would you rather your local government spend $2000 with a local company or $2000 on an outside company?
I think one of the best ways to stabilize and encourage a local economy is to ensure that city officials and local governments are spending your tax dollars as close to home as possible.