Who’s On First

It might surprise many in this region to know that the Defense industry sector of military installations, has been an unqualified growth sector. Can you name one job site that has gained 13,000 jobs since 2004?

If you’re having trouble naming just one, here it is: Fort Lewis.

Just last week, a delegation from Washington composed of members from the Governor’s office, the Pierce County Executive’s office and Economic Development Dept. as well as the City of Lakewood and the Tacoma-Pierce County Chamber attended the Office of Economic Adjustment’s (OEA) Partnerships for Success conference.

Among many matters of import learned and exampled at the OEA Conference was the Executive Order 12788. In addition to setting up a Defense Economic Adjustment Program and an Economic Adjustment Committee composed of the Secretary of Defense and inclusive of virtually all the cabinet positions as well as major executive branch offices and administrations, the act mandates a prioritization among communities:

Sec. 5. (b) (2) Afford priority consideration to requests from Defense-affected communities for Federal technical assistance, financial resources, excess or surplus property, or other requirements that are part of a comprehensive plan…

The City of Lakewood is now lead for a regional effort to develop a plan to address the impacts associated with the growth at Fort Lewis.

That Makes Me Feel Recovered Already!

You always hear folks talking about how Washington is on its own economic cycle…usually six months later going down and six months later coming back up. And the down cycle part seemed to be relatively accurate this time around. But some people think that we’re going to actually be one of the first back out!

Predicting economic cycles is about 75% guesswork, so I’m not sure I’m going to go put all my money in Boeing and Microsoft stock this afternoon, but I think what’s interesting about these predictions are some of the underlying assumptions in them. Essentially, Moody’s Economy.com thinks we have two things going for us: a housing market that hasn’t taken as much of a hit as other places and a great tech sector (how great is it?) which they think will lead the recovery.

The 2% Solution

Amidst all the hoopla and competition for ARRA dollars, an amount just a little less than 1% has been overlooked.  That percentage of the $787 billion stimulus package is about $7.4 billion in Defense-related appropriations.

Of that, Washington State is slated to receive about $150 billion. The Defense-cash will flow to about half the state’s  counties, from Island County’s over $20 million who gets almost nothing from any other ARRA source to Pierce County at almost $75 million, almost half the state’s Defense-cash.   Go here if you wish to see what’s planned for your county. 

True, that’s only about 2% of the total Defense-appropriated ARRA funds, but it’s a total of over 14% of the state’s total ARRA funds.

Just Like the Village People Predicted

Where can you find investment in clean technology? In the Navy!

People have been pointing out for a while now that the U.S. military is an excellent source of innovation in clean technology. Not only because of Congress’ 2007 mandate that Department of Defense agencies generate at least 25 percent of their power from renewable sources by 2025, but also because it makes sense in terms of the energy efficiency, cost reduction and flexibility that the military needs to conduct its activities.

Here in the Pacific Northwest, we have one of the highest concentrations of military personnel in the entire country (The State of Washington ranks seventh in the nation for the number of military personnel claiming residence in the state.) So, in addition to the billions of dollars in economic impact that the military presence in the Puget Sound generates, there is real opportunity to connect our state’s thriving clean technology industry cluster with the Department of Defense’s gigantic budget for research and development.

The chair of the Greater Seattle Chamber of Commerce just identified investment in clean tech as one of his top recommendations for helping our economy out of the current downturn. The state doesn’t have a lot of money right now, as you may have heard, and a lot of venture capital has dried up, so it’s time to get creative in finding funding, and this may be a great opportunity.

A Rose by Any Other Color

 

As the counties outside King are finding out again, King imports jobs and exports unemployment. This is not entirely King’s fault.  Employment statistics count employment as the county where the job is, and unemployment as the county where the unemployed reside.

What the three counties sharing King’s economy are finding out, is that their economic foundation is colored navy blue, camo green and sky blue. The foundation in Pierce has relied on camo green (Ft. Lewis) since the ‘teens and sky blue (McChord AFB) since the ‘thirties.  Yet, now, that foundation has proved to be a growth platform. 

Blogging from Leadershp Conference #2 – Global Health

The Conference topic this year is Global Health.  As in, how can we capitalize on the list of great things going on in our region, from Gates, to PATH, to SBRI, to of course UW and WSU?

BTW, if you don’t know it, Seattle is rapidly becoming the center of Global Health on worldwide scale.  This has all grown organically, some would say “by accident.”  But I always think when someone says that it just means that they weren’t the ones that planned it.  I say it grew up because talented people executed their vision.  And because we have UWMC and the Gates Foundation.

So, recognizing that it is hard to say what should be done when we haven’t wrapped up the preceedings yet, my vote goes to a little planning and a lot of doing. 

Fort Lewis and McChord: $2+ billion into our economy

On Friday, about 40 or so folks from around the region toured Fort Lewis, home of the legendary I Corps, and McChord AFB, home to the 62nd Airlift Wing and other units.

We learned a great deal about how much these institutions contribute to our region’s prosperity. Consider a few facts, as presented to us by the bases in their briefings:

• Fort Lewis’ annual civilian payroll is $317.78 million
• Fort Lewis’ annual military payroll is $1.7 billion
• Fort Lewis’ annual military contractor payroll is $312 million

Total annual payroll at Fort Lewis is over $2 billion. Almost all of that goes right into our region’s economy. Actually much of that goes right into Pierce County’s economy, but more than you might think goes elsewhere too.

McChord employees 10,000 people, with an annual payroll of $368 million, and does another $69 million in direct contracting with businesses throughout the region. McChord has post a more complete look at its economic impact.

In Defense of a Budget

Our region gets good support and communications from our Congressional delegation and their local staffs, but it’s still interesting to get the perspective from someone else’s congressman.

I had that opportunity at last week’s Summer Conference of the ADC when George Schlossberg, Partner/Attorney with Kutak Rock LLP (WA, DC) and Rochelle Dornatt, Chief of Staff, Rep. Sam Farr (CA, 17th District) gave their appraisals of the status of the Defense Authorization and Appropriations bills for the budget. What follows is my hopefully accurate synopsis.

Firstly, it is observed that BRAC is no longer an issue in Congress. They (as a group) are no longer paying attention to the details. It is up to affected losing and growth communities to engender Congressional attention to their issues.

Also, the $500 billion Defense appropriations and the $200 billion supplemental budget are not enough. There is an estimated $400 billion deficit. And, it is beginning to be acknowledged there is not enough money to provide bases, housing, training facilities to bring the troops home from Europe, Asia or other deployments.

Please note the Defense budget is actually divided into two bills:

REPI Similar to RIP

Acronyms have a habit of soothing us or causing us stress, depending on whether we’re in the know or not.  Sometimes both.

Most of us would say RIP, a very grave term, does both.  But “resting in peace” is also a somewhat tongue-in-cheek goal of the REPI, aka the Readiness & Environmental Protection Initiative.  In this case, resting in peace means having the mitigation in place for adjacent property owners to benefit from the quiet enjoyment of their properties.

Referenced in 10 US 2684a, REPI, is an effort by the services to prevent themselves from becoming islands of eco-diversity and to prevent urban encroachment from hampering their military missions.  The Army has been the most successful user of the REPI program which focus the leverage of funds for either fee simple or economic development rights for targeted properties.  Ft. Lewis has been a stellar participant second only to Ft. Bragg.  The Nature Conservancy has been a repeat partner with the Army, according their Bob Barnes, Senior Policy Advisor.  

There were more requests for REPI funding than any other fund in DoD in the last year.  The services are asking for $211 million for FY 2007.  The Air Force is playing catch-up, claiming just $5 million from that total.  However, the Air Force’s intention is to leave the decision making up to local bases, but McChord AFB has been picked as a winner this year to match Washington State, Pierce County and City of Tacoma funds.

Panetta’s Panacea

Leon Panetta, now Director of the Panetta Institute in Seaside, CA spoke yesterday to the ADC’s luncheon of an estimated 600 federal civilian and uniformed defense leaders, defense industry leadership and state and local officials and representatives.

Panetta, former Congressman for the Monterey district, and Chief of Staff to President Bill Clinton, offered advice to states, regions and communities with defense installations.  Panetta’s words were not without weight as he was involved in the losing effort to prevent the major closure of Fort Ord and successful in the retention of its defense language school and other high quality programs, as well as fending off raids during subsequent BRAC rounds as others wanted these assets.

His advice:

1. Undertake coordinated planning and actions with all key players including your leaders, your chambers of commerce and your military
2. Form innovative partnerships
3. Better coordination and planning at a higher level (or it doesn’t happen)
4. Work together, or as Hancock and Franklin exchanged:  Hang together or you’ll surely hang separately.  Besides, that’s what gives you political impact, he said.

Army Dollars are Green

Our community is late getting into competition with other growth communities that are gaining soldiers, civilian workforce and dependents.  But, thanks to the City of Lakewood, we are getting there.  Lakewood is signed on the provide the Office of Economic Adjustment with application for impact dollars.

The challenge is that there are no federal dollars to help with growth according to Patrick O’Brien, Director, Office of Economic Adjustment, speaking at a forum today at the ADC Summer Conference.  O’Brien says that communities are reduced to Congressional advocacy for line items or earmarks.

It is true the DoD has Defense Access Roads (DAR) program for roads directly associated with defense installations.  However, O’Brien says a recent compilation of 62 identified projects revealed a gap of $1.5+ billion – not including Guam, a very special case.  If you combine water & sewer projects and education needs for students of warfighters, you get $145 million and $92 million additional gaps.  The real kicker is that DAR dollars are competitive with milcon dollars.

O’Brien says the OEA is developing an identified list of projects for the next administration that will determine where this growth impacts issue will go and what the priorities will be.  He encourages communities to get their act together and be ready to tell their Congressional delegation their needs.

Military Installations and Communities

This week I’m attending the Association of Defense Communities Summer Conference.  The ADC focuses on growth installations (Ft. Lewis) and closing installations (Ft. Lawton) and the community interaction.

Already this morning, I’ve heard from Geoffrey Prosch, Principal Deputy Assistant Secretary of the Army (Installations & Environment).  In later days, three other acquaintances from the Tacoma-Pierce County Chamber’s annual Washington-to-Washington, D.C. trip are  James Holland, Deputy for Installation Policy, Air Force (Installations), Joseph Calara, Deputy Assistant Secretary of the Army, Installations & Housing, and Kathleen Ferguson, Deputy Assistant Secretary of the Air Force, Installations.

During Prosch’s session, he was asked how he anticipated the forthcoming change in administration’s would impact BRAC implementation and other Defense initiatives to modernize and restructure the Army.  His reply was that four of the three principal assistant secretaries were careers rather than appointees.  And, he would willingly serve as long as anyone let him.

Now, back to sessions for the “Legislative Update” focusing on the National Defense Authorization Act for 2009!