Colorado Springs economy remains at mercy of the military

Colorado Springs is unique not only in the size of its military presence, but in its diversity.

No other city in the nation hosts a major Army post (Fort Carson), two Air Force bases (Peterson and Schriever), a crucial national security installation (NORAD/Cheyenne Mountain Air Station) and a service academy (the Air Force Academy).

These facilities are home to more than 30,000 active duty military personnel, and provide jobs for about 16,500 civilian employees.

So powerful and pervasive is the city's military-industrial complex that one of every three residents of the Pikes Peak Region depends directly or indirectly upon the military.

According to the Colorado Springs Chamber of Commerce, the total economic impact of the military in Colorado Springs is $4.58 billion. This represents more than one third of the total regional economy.

Direct military payrolls totaled $2.32 billion in 2006. Construction, services, and procurement of materials, equipment, and supplies injected $1.3 billion into the regional economy and, according to the chamber, the dollar value of jobs created was $960 million.

Fort Carson alone accounts for 10 percent of the region's economy -- and that's before the scheduled troop increases. The local economic impact of Fort Carson is nearly $1 billion annually, including $662.1 million in military payroll, $147.4 million in civilian payroll, $60 million in operations, $13 million in utilities, $167.1 million in military procurement, and $40 million for TriCare health insurance.

After the expansion, Carson's impact will increase dramatically, according to a study by Springs economist Dave Bamberger of Bamberger and Associates. An additional 10,000 troops will be stationed at Carson, and the post's economic importance will increase correspondingly.

Statewide, the post will account for 52,600 jobs, almost all in the Pikes Peak region, including 25,000 troops. Employee compensation will increase to $2 billion and gross business income will increase to $1.9 billion. State and local tax revenue attributable to the post will increase from $87.4 million to $192 million.

Air Force impact

Peterson Air Force Base also is a major contributor to the regional economy. The base is manned by 5,955 active personnel and employs 5,723 civilians. The annual payroll amounts to $431 million. The Air Force estimates that Peterson indirectly generates 5,113 jobs, with a total value of $202 million, and that the base's overall local impact is $1.2 billion.

The Air Force Academy and Schriever Air Force Base are powerful economic engines, if not on the scale of Peterson or Carson, together contributing more than $1 billion to the economy of the Pikes Peak region.

However, although the military is still a dominant force, it is far less important than it was during the mid-1970s, when it accounted for more than 70 percent of the Colorado Springs economy.

Well aware of the potential downside of such a one-dimensional economy, business and political leaders worked to diversify the economic base, and cushion the region from possible military cutbacks. They focused on attracting high-tech firms and religious or sports-related nonprofit organizations.

Their efforts were successful, resulting in the military share of the economy shrinking by about a percentage point annually.

Since 2001, the military component has been about 35 percent of all local economic activity.

In addition to the military installations, Colorado Springs also is home to scores, even hundreds, of defense-related businesses, as well as 19,000 military retirees, more than 40 percent of all such retirees in the state.

Retiree benefits, in the form of cash payments, amount to $460 million annually.

Life without the military?

Imagine Colorado Springs without its military presence.

Tens of thousands of jobs would disappear. Most workers thus displaced would be forced to leave town and seek employment elsewhere. As many as 30,000 houses would flood the market. Thousands of businesses would either close or shrink drastically. The population of El Paso County would decline by 30 percent.

The impact upon local governments would be equally dramatic.

City and county sales tax collections would drop by a third. Hundreds of workers would be laid off and services would be correspondingly reduced.

Many functions of government would be severely curtailed or simply abandoned. Other than providing public safety through police and fire, as well as minimal road maintenance, city and county governments would effectively disappear, as Colorado Springs became, once again, a sleepy little tourist town.

The future

Clearly, that's not going to happen. The military will remain the single most powerful economic driver in this community for the foreseeable future, impacting virtually all economic activity in the region.

Mike Kazmierski, the executive director of the Colorado Springs Economic Development Corp., believes that the military component will remain strong, but decline as a share of the regional economy.