D-M economic impact falls to $973M

2014-04-11T00:00:00Z D-M economic impact falls to $973MBy David Wichner Arizona Daily Star Arizona Daily Star
April 11, 2014 12:00 am  • 

Davis-Monthan Air Force Base reported an estimated local economic impact of $973 million in the 2013 fiscal year, down from about $1.14 billion in the prior year as Pentagon budget cuts took their toll.

The decline in the base’s economic impact was the first since at least 2007.

The D-M economic analysis, released Thursday, also found that, including the effect of local military retirees, the base pumped $1.47 billion into the local economy in the fiscal year that ended Sept. 30. That’s also down, from $1.63 billion in 2012.

“The overall reduction in the economic impact of Davis-Monthan from FY 2012 to FY 2013 was due to reductions throughout the Air Force in FY 2013 to include a reduction in personnel and construction projects due to sequestration,” Maj. Gerald Stevenson, commander of the 355th Comptroller Squadron at D-M, said in an emailed statement.

D-M had a net reduction of $90 million in total payroll, including both military and civilian personnel and civilian furloughs, Stevenson said.

Additionally, there was a net loss of $58 million in construction spending on the base, he said.

More than 10,000 military personnel and civilians worked at D-M last year, including more than 7,500 service members and nearly 3,000 civilian employees and contractors, the base said. While military jobs dropped marginally, the base shed nearly 450 civilian jobs, including contractors.

Davis-Monthan was Southern Arizona’s third-largest employer in the 2013 Star 200 survey of the region’s major employers, with about 9,100 employees excluding contractors.

D-M’s annual economic impact figure includes the base’s payroll and other direct spending, plus a multiplier to estimate indirect effects such as job creation.

D-M reported payroll spending totaling $554 million and spending on equipment, supplies and construction totaling $232 million. The base helped create an estimated 4,403 jobs in fiscal 2013, translating to an estimated impact of $187 million, D-M said. The report used a standard multiplier developed for the federal government in 1995 to assess the economic impact of military installations.

A University of Arizona economist said it’s not surprising that D-M showed a decline in economic impact last fiscal year, given the cuts to the defense budget, including those forced under sequestration — a series of automatic cuts that began last year.

“I think we will see pressure on military spending as we go forward, so it’s going to be a concern,” said George Hammond, director of the Economic and Business Research Center at the UA’s Eller College of Management.

Hammond expects federal spending in general to decline gradually over the next couple of years.

Major defense program cuts — such as the proposed retirement of the A-10 Thunderbolt II close-air-support jet by 2019 — could have a cascading effect on the local economy, he said. Mothballing the A-10 — one of D-M’s biggest missions — could cost the base some 2,000 jobs, base and local officials have said.

Cuts of that magnitude would have a noticeable effect on the Tucson-area economy, Hammond said, noting that Tucson saw a net gain of just over 2,000 jobs in 2013.

“A significant decline in employment at Davis-Monthan would have a similarly significant negative impact on employment, population and income levels in the county,” he said. “Whatever happens is going to have an effect in the short run, and we all live in the short run.”

Hammond said he plans to dig a little deeper into federal procurement spending data and include some of his findings in the UA economic center’s next forecast in June.

In other findings, D-M’s analysis shows:

  • D-M had 6,450 active-duty military jobs last year, down from 6,595 in fiscal 2013. That was partially offset by an increase in the number of reserve and Air National Guard members and trainees, which rose by 134 to 1,076 last fiscal year.
  • The number of civilians working under programs supported by federal appropriations fell by about 200 to 1,407. The number of civilians working in so-called “nonappropriated” fund positions, which includes contractors, fell by 251 to 1,477.
  • D-M operates and maintains 476 buildings, comprising more than 4.7 million square feet of space.
  • The base’s footprint includes 5,952 acres of government-owned land and 4,578 acres of easement, rights of way and leased land, totaling 10,530 acres.
  • Of the 7,526 military service members assigned to D-M, 75 percent live off base.

Contact Assistant Business Editor David Wichner at dwichner@azstarnet.com or 573-4181.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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