Report shows military’s economic impact in region
Thursday, Sept. 26—The defense industry in San Diego County handled federal budget cuts known as sequestration relatively well, with the number of active duty, civilian and reserve personnel remaining steady and direct spending increasing slightly, according to the San Diego Military Advisory Council’s fifth annual Military Economic Impact Study released today.
But, the reports states, further challenges may lie ahead with the withdrawal of troops from Afghanistan and cuts in defense spending. About $24.6 billion brought into San Diego in fiscal year 2013 was the result of military compensation, defense contracting, benefit payments and military-related tourism, and had a heavy impact on the local economy, according to the report. The military sector was also responsible for about 302,000 direct or indirect jobs in the region, or 22 percent.
“The military and defense spending have long played a dominant role in San Diego,” the report stated. “Even as the region has diversified into other areas, including life sciences, telecommunications, alternative energy and heath care, the attention to national security represents a key economic driver.”
The ending of the military’s commitment in Afghanistan and reductions in national defense spending, however, were expected to affect the region, according to the report. Direct spending linked to the military may take a moderate dip in fiscal year 2014, and jobs for which the military is responsible could fall to about 295,000, with active duty, civilian and reserve personnel numbers dropping by around 3,000.
Procurement contracts are expected to take a hit,particularly in new construction.
“Defense and military-related activities will remain San Diego’s most important economic driver in 2014, but if budget cutbacks go forward, that impact could become somewhat diminished,” the report stated.
But San Diego could edge out over other regions competing for defense dollars, according to the report.
Shifting more Naval operations to the Asia-Pacific region, the need for air-training space, an emphasis on unmanned aircraft and a greater reliance on special operations forces were included in the report as reasons that elements of U.S. security strategy could work in San Diego County’s favor.
“San Diego will not escape pressures to shrink the national defense budget, but the region is expected to fare better than most other areas possessing significant defense clusters,” according to the report.
Also included in the report were figures from the last fiscal year that showed that around 139,000 active duty military and civilian Department of Defense employees worked in San Diego County, which represented about 19 percent of the nationwide total, according to the report. About 51,000 were members of the Navy and 54,000 were Marines or recruits.
Defense dollars also supported about 25,000 civilian employees and 8,200 reservists in fiscal year 2013.
Military and civilian salaries were estimated at $8.7 billion in fiscal year 2013, with another $2.3 billion in housing benefits. About $3.2 billion went out in retirement benefits and $10.1 billion came to regional defense contractors.
Another $115 million in tourism dollars went toward the county’s economy, with $49 million of that paid to restaurants, $42 million to hotels and another $24 million to entertainment facilities.
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