A Community Impacts Associated with Army Personnel Reductions (CIAR) study seeks to understand how the reduction in military personnel living on and off post is projected to impact the surrounding community. US military installations act as powerful economic engines for the communities in which they are located by pumping hundreds of millions of dollars in federal funding into the community. However, as the military reduces its footprint, their host communities feel the impacts associated with reduced federal funding. As military personnel and their families leave the area, so too will the federal funding tied to each service member. From an economic stand point, this is important as these funding dollars significantly impact the region’s economy in a variety of ways. In order to understand the significance of federal funding flowing into and out of communities, an understanding of how regional economies grow is important.
The exporting base component consists of local industries which export goods and services from the region and, in turn, import new dollars into the region. These exporting industries provide the core demand for the local supporting economy which develops in “support” of the exporting industry – an example of this is Fort Riley. The installation attracts, or imports, federal dollars into the region by way of the following:
The military personnel, contractors, veterans and military retirees who move to the area as a result of Fort Riley, spend their salaries in the local economy. These expenditures mostly consist of buying homes or paying rent, dining/shopping at local establishments and a number of other activities in which these residents participate. In response, the supporting economy, which consists of the local real estate market, retail establishments, restaurants, gas stations, hotels, schools and other public services, develops in order to provide the goods and services necessary to support the growing population.
As a result, when federal funding is reduced, such as with military personnel reductions, the supporting economy feels impacts in the short and long term. The CIAR study will estimate the economic impacts that ripple through the regional economy affecting a number of economic measures, including the impacts to Employment, Gross Regional Product, Personal Income, Personal Consumption and the value of the local housing market. Estimating the impact to the local housing market is important as many public services are funded, in part, on property assessments. Both local governments and school districts receive significant portions of their local funding from property taxes, or what’s known as ad valorem taxes. Local schools are also funded by specially designated Local Option Sales Taxes (LOST). These taxes are typically a 1/2 to 1 cent tax added to the current sales tax. As sales will be impacted by the loss of military personnel, so too will the school funding tied to LOST revenue. Accordingly, this study will estimate the impacts to these tax revenues, whereby assisting governments located within the study area with budgetary planning.