Economic fallout from Fort Carson troop cuts could be 'devastating' - if the worst plays out
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Fewer home sales and home construction. Lower housing prices. Declining apartment rents. More than 21,000 jobs lost. A nearly $1 billion reduction in wages, which would have a ripple effect of lost sales at stores, restaurants and other businesses. And a decline in tax revenue.

The fallout from a worst-case scenario of up to 16,000 military and civilian positions eliminated at Fort Carson could have a punishing effect on the economy in El Paso, Pueblo and Fremont counties, according to community and business leaders as they reacted to potential troop reductions outlined in Pentagon documents released Thursday.

"Clearly, that kind of reduction would have a devastating effect on our community," Colorado Springs Mayor Steve Bach said.

Yet, community and business leaders and an economist cautioned against pushing the panic button. The reductions laid out by the Pentagon might never happen, they said. While smaller Fort Carson reductions also could have an impact, they'd be less painful than the worst-case scenario.

And, if the reductions are phased in over several years - as one economist anticipates - the effect on the local economy could be diminished if the community develops private sector jobs to offset the Fort Carson losses.

"I can't imagine the Army coming in and eliminating them overnight," said Fred Crowley, a University of Colorado at Colorado Springs economist.

The possible Fort Carson cuts were spelled out by the Pentagon as part of a so-called environmental assessment of troop reductions - studying their potential effect on the environment as well as local economies. Up to 16,000 troops could be cut from each of the Army's nine largest bases, according to the Pentagon documents.

In the case of Fort Carson, the cuts would be felt in the surrounding areas of El Paso, Pueblo and Fremont counties, the Pentagon said.

According to the Pentagon, the worst-case scenario could translate into:

- A total loss of 21,331 jobs in the three counties. That number includes the elimination of up to 16,000 Fort Carson positions - 15,295 soldiers and 705 civilians. It also includes 1,782 job cuts by contractors and suppliers who do business at Fort Carson. Also, there would be 3,550 additional jobs lost because of a reduced demand by soldiers for goods and services at restaurants, shopping centers, convenience stores, gas stations, movie theaters and the like. Crowley, however, said the loss of spin-off jobs might be understated by the Pentagon; a more realistic number using a standard multiplier could result in the loss of 12,000 jobs beyond those eliminated at Fort Carson.

- The three counties would see a $969.5 million annual reduction in incomes as a result of the lost jobs.

- Area sales activity would fall by an estimated $1.1 billion a year. At the same time, local governments would lose $13.6 million in sales tax receipts.

- The three counties would see a population loss of 40,288 people - the 16,000 Fort Carson employees and an estimated 24,288 family members. But the Pentagon document says the population loss probably is overstated, since some people who lose Army jobs would continue to live and work in the area.

The housing industry - both single-family homes and apartments - would be one of the biggest segments of the economy to feel the effects of any reductions.

Areas near Fort Carson, including the south side of the Colorado Springs and the city of Fountain, would likely see a slowdown in homebuilding, said Joe Loidolt, president of homebuilder Classic Communities and board president of the Housing and Building Association of Colorado Springs. The reductions would be particularly felt among builders who construct first-time and move-up homes, he said.

Gary Winegar, chief investment officer for Springs-based Griffis/Blessing Inc., which manages 6,000 apartments, said rents on the south end of the metro area could fall and vacancy rates rise with troop reductions - much as what happened when Fort Carson troops were deployed to Iraq a decade ago. Still, the impact on the multi-family market could be minimal if troop cuts take place over five to six years, he said.

Bach and Crowley said the potential cuts are a reminder to community and business leaders of the need to continue efforts to diversify the economy. Studies have shown that military spending is responsible for about 40 percent of local economic activity.

"I want the military here, but we need to have more private job growth, private sector job growth - particularly in new technologies, ideally the manufacture of new technologies," Crowley said. We need to find out where the younger mind is going in our culture and we need to tap into that for economic development."

Business writer, Colorado Springs Gazette

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