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Creating Local Economic Resilience to Military Base Closures

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Daniel Hummel
August 4, 2017

Many declining cities in the United States began their long road of decline by relying on one large industry which either relocated or collapsed along with changes in the economy. Similarly, changes at the state and federal levels of government exacerbated or even precipitated this decline. The lesson learned from this experience is the importance of having a diversified economy with more local autonomy and diversified own-source revenues.

In this regard, the prospect of military base closures with their thousands of enlisted and civilian personnel along with the thousands of connected jobs in the surrounding communities is a threat to the local economy. President Trump’s first Defense Department budget proposal for 2018 has called for a new round of base closures and realignments beginning in 2021. This would be following a series of base closings that started in the late 1980s and ended in 2005 with the passage of the Base Realignment and Closure Act (BRAC). The goal in the Defense Department is saving money by closing bases and reallocating those funds to other areas in the Department.

The literature on this subject has considered the economic impact on the local economy of these closures. For example, a 2012 study by Andy Hultquist and Tricia Petras looked at counties with bases and neighboring counties between 1977 and 2005. They found that base employment had a significant and positive effect on other county employment within the county of the base. The closure of these bases had a negative effect on local employment with varying levels of impact on the local economy and ultimately the financial stability of the host community.

For example, in 1996 during the third round of base closures, the Mare Island Naval Shipyard closed in Vallejo, CA. The closing led to the loss of tens of thousands of jobs which significantly contributed to its bankruptcy in 2008. In contrast, the closing of K.I. Sawyer Air Force Base in Marquette, Michigan also in the third round of closures has not had this effect on the city despite losing about 5,000 jobs associated with the base. The difference in these effects indicate some communities are more vulnerable than others.

Recognizing a vulnerability is the first step towards addressing it and building resilience. An entire economy should not be built around a military base, but all sectors of the economy should be encouraged to flourish. Significant investments should be committed to developing human and social capital in the community in addition to attracting entrepreneurs and the creative class. In addition, a local government should not focus its revenue generation on one primary source especially a source that will be directly affected by a base closure. Those in financial administration should calculate the possible impacts from a base closure to provide the elected leadership with recommendations for preemptive steps.

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The evidence for the negative effects from a base closure on a local economy is well-established, but it is not known how best to minimize and avoid these loses. In addition, there have been four rounds of base closures with very little gained in policy learning as noted by Hultquist and Petras. A lack of policy learning indicates most communities are unprepared for a base closure. This is especially relevant to the most vulnerable communities despite the BRAC Commission having certain criteria for selection of bases to close which considers the ill-effects of closure on the local economy.

Certainly, the worst approach for a local government is to react to a base closure after it has been announced or simply do nothing. This usually entails short-term solutions which have long-term consequences. On a positive note, economic distress brought on by a base closure could clear the way for innovative approaches to economic development and public finance and budgeting. For example, Vallejo became the first city in the United States to implement a city-wide participatory budgeting effort in 2012 following their bankruptcy.

The lessons from previous base closures need to be learned by all communities that currently have bases within proximity. Vulnerabilities need to be clearly identified along with viable solutions in cooperation with community stakeholders. A community that is prepared for all known exigencies will lessen the blow from a prospective base closure. This is important to consider not only for military bases but other large employers. The federal government has been interested in closing more bases since the last round and apparently, the Trump Administration supports this effort pending Congressional deliberation.

Author: Dr. Hummel is an assistant professor in the Management, Marketing and Public Administration Department at Bowie State University. He teaches classes on public policy analysis, inter-governmental relations and public administration. His research interests are urban resiliency / sustainability and right-sizing cities. His office # is 301-860-4003. His email is [email protected]

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