Losing military funding forces Colorado Springs new economic diversity
In the June 15th Colorado Business Journal, Cameron Moix reports that Colorado Springs new economic diversity must be developed, changing income reliance from our 5 military bases to other business sources. This has become increasingly important because the DOD plans to cut $27 billion from the state’s economy. The article reads:
Even as Colorado Springs businesses wait for word from the federal government about potential personnel cuts at the city’s five military bases, business leaders are working to diversify the city’s economy, easing its reliance on military bases.
The grim news is that the Department of Defense has a $27 billion impact on the state’s economy, and cutting personnel to the numbers currently being considered by the federal government could deal a devastating blow to Colorado Springs.
“You don’t ever want any one region to be dependent on any one section — for us, that has always been the military,” said Tatiana Bailey, executive director of the Southern Colorado Economic Forum. “It seems like we’re doing OK, but 40 to 50 percent of our gross metropolitan product comes from the military… so even a 5,000 personnel cut would be pretty catastrophic.”
Then-Secretary of Defense Chuck Hagel suggested even deeper cuts, downsizing the U.S. Army by 70,000, including up to 16,000 at Fort Carson. His plan could equal a loss of 40,000 residents in the Springs and $1 billion from the local economy during the next five years, according to reports from the Colorado Springs Regional Business Alliance.
In order to highlight the state’s dependence on the military and to spur action to maintain high levels at all the state’s military bases, Gov. John Hickenlooper released an 82-page report (available at colorado.gov) last month that outlines the military value and economic impact of Department of Defense activities in Colorado. Most of those activities are centered in Colorado Springs — Fort Carson, Peterson Air Force Base, Schriever Air Force Base, Cheyenne Mountain Air Station and the U.S. Air Force Academy.
The report outlined the military’s enormous impact on Colorado and the state’s value to the Department of Defense — the Piñon Canyon Maneuver Site and Fort Carson’s high-altitude training facility provide much needed space for training troops before they head off to deployments around the globe. But it also outlined advice for safeguarding nearby installations against future cuts and closures — focusing on continued investment in transportation infrastructure.
“This report quantifies service, not only in terms of the service members, civilians and contractors who work to advance our national security, but also in terms of what Colorado has done to provide the infrastructure and transportation necessary for mutual success,” said Colorado Adjutant General H. Michael Edwards. “The pages of this report touch on the history that has brought us to the present, but more importantly, there are insights into the ways in which we can improve going forward.”
In Colorado Springs, transportation infrastructure — namely, the city’s streets and bridges — are the topic of conversation in nearly every venue. Recently elected Mayor John Suthers has promised to address the backlog of problems, from potholes to bridge repairs, in his first year in office. At a recent meeting for the Colorado Springs Small Business Development Center, Deanne McCann, economic development manager for El Paso County, acknowledged that infrastructure is key to economic development.
“We all know that we need great streets and great infrastructure, that we need them for economic development,” she told the crowd at the Small Business Week meeting about local government resources. “It’s a problem that’s hasn’t been addressed in years, and it’s going to cost hundreds of millions to fix.”
Potholes and traffic aside, the area bases have controlled airspace that serves as an asset to the region. The Air Force Academy has training space for both piloted flights and unmanned vehicles, while Peterson has access to the airfield at the Colorado Springs International Airport. Fort Carson also has its own airspace for training.
Making positive strides in transportation could aid the state in keeping its 170,000 jobs associated with the military, 7.5 percent of the state’s total labor force. Total labor income for the military industry in El Paso, Arapahoe and Weld counties is around $10.5 billion annually.
Those jobs kept Colorado Springs moving forward during the Great Recession, when it had the largest number of federal job postings outside Washington, D.C. The state noted that even during rough economic times, the DoD provided stability.
“When DoD funding is increasing during poor overall economic conditions, a degree of downside stability is created,” the report said.
But times have changed since 2008, and threats from federal sequestration and plans to exit foreign campaigns make the Springs a target for both troop reductions and Base Realignment and Closure.
“The specter of sequestration beginning in FY16 is a shadow hanging over most internal DoD planning and programming deliberations,” the report said. “Colorado should be pro-actively monitoring the Washington political climate on DoD budget reductions, force structure realignments and strategy changes.”
If Congress agrees, the plan will go into effect later this year, with a final draw down complete in 2020. Atop the list is Fort Carson, one of 30 U.S. installations targeted for cuts unless Congress moves to discard the 2011 Budget Control Act, known as sequestration. The worst-case scenario: Fort Carson loses two-thirds of its soldier and civilian population of 25,702, dropping it to about 9,702 by 2020.
There’s time, Bailey said, for Colorado Springs to prepare for the worst. She says the city has already started to diversify economically, slowly moving the way of Denver, Boulder and Fort Collins with their focus on technology industries and startups.
“I can honestly say there is a huge momentum shift that is happening here,” she said. “We have so many qualified professionals working in so many diverse industries across the state … and there is a lot of talk about how we foster some of those non-defense businesses here.
“Yes, I think we’re vulnerable — there’s no question — but I do think we’re sort of at a launching point. If we can really drive hard in the next five years, putting in place favorable business conditions for companies to grow and new companies to start, we will be well poised and prepared.”
Read this article on CSBJ: http://www.csbj.com/2015/06/15/proposed-military-cuts-could-lead-to-economic-diversity-for-springs/