Military spending has $4.5B impact in S. Ariz. Bases also create tens of thousands of jobs, new state study says

Carol Ann Alaimo

Jul. 22, 2008 (McClatchy-Tribune Regional News delivered by Newstex) -- More than 50,000 Southern Arizonans -- including 23,000 in the Tucson area -- owe their livelihoods to the U.S. military in the post-9/11 world, a new state study says.

From troops to tire dealers, from real-estate agents to restaurateurs, nearly every segment of the populace benefits from the local military presence that now generates nearly $4.5 billion a year in the region, the report says.

That's a 60 percent increase from a similar study in 2002, which determined that local bases pumped $2.8 billion into Southern Arizona's economy.

The local statistics are part of a statewide assessment culled from 2005 data, released Monday at Davis-Monthan Air Force Base by Gov. Janet Napolitano.

Across Arizona, the military has an economic impact of $9.1 billion a year, and creates 96,328 jobs, directly and indirectly, said the $200,000 study funded by the state Commerce Department. Of those 96,000-plus jobs, 45,568 are held by service members and civilians working on military installations.

Direct jobs are those linked to military payroll. Indirect jobs are created by spinoff spending when the military and its employees purchase goods and services off-base.

The financial estimates are said to be conservative because the study excluded the impact of military contractors such as Raytheon (NYSE:RTN) , along with most income from military pension checks for retirees. Both were left out for fear they could skew calculations.

Phoenix consultant Alan Maguire, who authored the 2002 study and the latest study as well, said the 60 percent increase in military economic impact is partly attributable to better data collection during the second study, though the percentage due to that factor is hard to pin down, he said.

Most of the growth seen in Southern Arizona, and statewide, can be traced to the fact that, in wartime, military entities are "spending a lot more cash than they used to," he said.

"Since 9/11 everything has geared up," Maguire said. "They are training more pilots, flying more missions, using more fuel and equipment. And all of that has a ripple effect."

The head of the D-M 50, a booster group comprising local firms that support the Tucson base, said the study results come as no surprise to the city's business community.

"I think it reinforces what we already knew," said Glen Kerslake, a local land development consultant and president of D-M 50.

One of the most important findings, Kerslake said, is that the military's financial contributions tend to be recession-proof, which helps insulate the regional economy during economic downturns.

Napolitano said the findings should send a message to Arizonans that "they cannot take, and should not take, the military presence here for granted."

The governor said the study highlights the need for the state to be aggressive in protecting military bases from possible future rounds of federal base closings.

State efforts in that regard recently faltered when Napolitano and Senate legislative leaders opted not to make this year's $4.8 million contribution to Arizona's Military Installation Fund. The budget also removes another $3 million already in the account.

The fund, created by lawmakers in 2004, provides cash to buy up land or development rights near military bases to protect flight routes and avert conflicts with urban neighbors.

Napolitano said the new report gives legislators with "a much better environment in which to make decisions" on military matters.

The study also noted that the military is a major generator of tax revenue in Arizona, providing $401 million to state and local coffers through sales tax, payroll tax and property tax.

Southern Arizona jobs and dollar impact*

Direct jobs Total jobs Impact

Davis-Monthan Air Force Base, Tucson 10,519 19,179 $1.75B

Fort Huachuca, Sierra Vista 9,537 26,921 $2.38B

Arizona Air National Guard, Tucson 1,946 2,947 $279M

Silver Bell Army Heliport, Marana 854 1,102 $83M

TOTALS 22,856 50,149 $4.5B

*Based on 2005 data. Does not include local Army National Guard units, statistics unavailable.

comparing employment

Here's how the Defense Department's direct employment in Arizona -- the number of troops and civilians working on bases -- compares with some other state industries and firms.

--Military: 45,568

--Wal-Mart: 28,800

--Wells Fargo: 11,800

--Fry's: 11,780

--State government*: 49,000

--Raytheon: 10,750

--Hospitality: 67,138

*excludes universities

SOURCE: Arizona Commerce Department report

PDF: Final report on the military's economic impact in Arizona

--Howard Fischer of Capitol Media Services contributed to this story. --Contact reporter Carol Ann Alaimo at 573-4138 or at caalaimo@azstarnet.com.

Newstex ID: KRTB-0014-26825699