Budgeting for Outcomes - Kem C. Gardner Policy Institute

Budgeting for Outcomes - Kem C. Gardner Policy Institute

Utahs Defense Sector: Economic Impacts of the Military and Veterans June 7, 2017 Salt Lake Chamber Military Affairs Committee Outline Study Methods Economic Impacts Fiscal Impacts Historical Trends Hill AFB Forecast and Simulation Economic Context Measuring Economic Impacts What would happen to Utahs economy if an activity ceased to exist? Measuring Economic Impacts Economic indicators we measure: JOBS EARNINGS

STATE GDP Measuring Economic Impacts DIRECT activity + INDIRECT activity + INDUCED activity = TOTAL ECONOMIC IMPACT Measuring Economic Impacts DIRECT Employment

Consumer Industries Input Industries INDIRECT Employment INDUCED Employment Data Collection and Analysis Meetings at installations Detailed jobs, payroll and spending Federal defense contracts REMI economic model Fiscal impact models Economic Impact Results Hill Air Force Base Dugway Proving Ground Tooele Army Depot Utah National Guard Reserves, Recruiting and ROTC

Veterans Additional Contracts and Grants Utah Defense Totals Combined Economic Impact of Defense in Utah: 109,000 jobs and $9.2 billion in economic activity Defense was responsible for 5.8% of Utahs jobs, 7.1% of its earnings, and 6.2% of its GDP in 2015. Category Jobs Earnings Gross Domestic Product Jobs Earnings GDP 0% Table 1: Economic Impact

of Utah's Defense Sector, 2015 (Millions of Dollars) 10% Grants & Contracts 20% 30% Veterans 40% Impact 109,02 1 $6,384. 3 $9,212. 7 Source: Gardner Policy Institute analysis,

REMI PI+ 50% 60% 70% 80% 90% 100% Reserves & Other Guard Tooele Dugway Hill Air Force Base supported over 47,000 jobs and about $4.6 billion in GDP for Utah in Table 2: Statewide2015. Impacts of Hill Air Force Base, 2015 (Millions of Dollars) Category Jobs

Earnings Gross Domestic Product Direct Indirect Federal & * Induced Total 16,732 30,609 47,341 $3,202. $1,825.2 $1,377.1 3 $4,569. 8 * Does not include jobs of contract civilian or private Hill AFB employed military personnel andand DoD civilians. businesses on 16,732 base. These are included

in the indirect induced jobs. Including contractors, nearly 20,000 people worked on base. Source: Kem C. Gardner Policy Institute analysis using the Hill AFB $2.1 billion inonUtah 2015, including REMIspent PI+ model (see Table 2.3 p. 11 during of the report) employee earnings, DoD contracts, and other expenses. Utah Veterans Items included: Veteran compensation Veteran benefits

Military pensions VA employment VA contracts & grants Source: U.S. Department of Veterans Affairs, U.S. Department of Defense, U.S. Census Bureau (see Figure 7.1 on p. 22 of the report). Defense Contracts and Grants in Utah Amounts in 19 Counties Top Three Counties: Salt Lake $831.4 million Davis $387.5 million Weber $111.5 million Three Others Selected: Summit $15.3 million Washington $6.5m San Juan $259,000 Source: Gardner Policy Institute analysis, USASpending.gov (see Figure 8.2 on p. 28 of the report). Top 10 Defense Contractors Table 3: Ten Largest DoD and VA

Contractors in Utah, FY 2015 (Millions of Dollars) Company L-3 Communications Orbital ATK Northrop Grumman Boeing Utah State University Rio Vista Management Unisys Corp. BioFire ImSAR Sverdrup Technology Total Amount $334.6 $240.7 $82.5 $36.8 $32.7 $29.6 $29.6 $28.9 $24.1

$21.9 $861.5 Share 22.1% 15.9% 5.5% 2.4% 2.2% 2.0% 2.0% 1.9% 1.6% 1.4% 56.9% Note: Shares are of total FY15 DOD and VA contracts of $1.5 billion. Source: Gardner Policy Institute analysis of data from USASpending.gov. (see Table 8.5 on p. 29 of the report) Fiscal Impact Results Fiscal Impacts: The defense sector

directly and indirectly generated $146.3 million in net state revenue. Table 4: State Fiscal Impacts of Utah's Defense Sector, 2015 (Millions of Dollars) Category Revenue Operating Expenditures Net State Revenue Impact $387.7 $232.4 $146.3 Source: Kem C. Gardner Policy Institute analysis. (see Table 2, p. 3 in report) Components of $146.3 Million in Net State Revenue from the Defense Sector in 2015 Tooele; 1.7% Guard; 7.9%

Dugway;Reserves 4.1% & Other; 3.3% Veterans; 2.9% Hill AFB; 58.7% Grants & Contracts; 21.4% Source: Figure 3 on p. 4 of the report. Historical Trends in Federal Defense Employment 45,000 40,000 35,000 Civilian Defense Military 30,000 25,000

20,000 15,000 10,000 5,000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

2009 2010 2011 2012 2013 2014 2015 N um ber of Jobs Defense employment has been fairly stable in Utah for 15 years, with a slight decline in military personnel and a somewhat larger increase in civilian defense jobs. Source: Bureau of Economic Analysis, Bureau of Labor Statistics (see Figure 4 on p. 4 of the report or Figure 9.1 on p. 33). D e f e n s e Jo b s a s a % o f A ll U t a h Jo Utahs non-defense employment has grown faster than its defense employment. 1990 1991

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Source: Bureau of Economic Analysis, Bureau of Labor Statistics (see Figure 5 on p. 4 of the report or Figure 9.2 on p. 33). Economic Impact of Hill Air Force Base through 2040: Forecast and Simulation Statewide Losses Without Hill AFB Table 5: Statewide Economic, Demographic and Fiscal Impacts from Hill AFB Closure Scenario (Millions of Constant 2015 Dollars, Percent of

State Total) Category Employment Earnings GDP Population State Tax 2023 -35,678 -1.7% $2,926. 5 -2.6% $3,899. 5 -2.1% -30,616 -0.9% 2040 -28,712 -1.1% $2,644. 3 -1.8% $3,770. 5 -1.5% -53,830 -1.2% 2,750,000

2,650,000 Closure Period 2,550,000 Baseline 2,450,000 2,350,000 2,250,000 2,150,000 2,050,000 1,950,000 Source: Gardner Policy Institute analysis using REMI PI+ model and Utah GOMB 2012 baseline employment projections (see Figure 10.1 on p. 37 of the report). 2040 2038 2036 2034

2032 2030 2028 2026 2024 2022 2020 1,750,000 2018 1,850,000 2016 Employment Statewide employment without Hill AFB:

more than 35,000 jobs in 2023 and 28,000 jobs in 2040. Losses in Davis County Without Hill AFB Table 6: Davis County Economic, Demographic and Fiscal Impacts of Hill AFB Closure Scenario (Millions of Constant 2015 Dollars, Percent of County Total) Category Employment by Place of Residence Earnings by Place of Residence GDP Population State Tax Revenue State Expenditures 2023 -20,004 $1,670. 6 $2,877. 3 -20,604

-$39.1 -$13.4 2040 -9.4% -19,077 $1,799. -13.5% 9 $2,899. -17.7% 7 -5.6% -40,594 NA -$47.9 NA -$34.7 Source: Kem C. Gardner Policy Institute analysis (see report Table 10.7, p. 41). -7.9% -11.3% -13.4% -9.5% NA NA

250,000 Closure Period 240,000 230,000 220,000 Prebase 210,000 closing 200,000 Source: Gardner Policy Institute analysis using REMI PI+ model (see Figure 10.8 on p. 41 of the report). 2040 2038 2036 2034 2032 2028

2026 2024 2022 2020 180,000 2018 190,000 2030 Return to pre base closing level 2016 E m p lo y m e n t b y P la c e o f R e s id e

Davis County employment without Hill AFB: 20,000 jobs in 2023, 19,000 jobs in 2040 For the report PDF and to contact researchers Utahs Defense Sector: Economic Impacts of the Military and Veterans by John Downen and Levi Pace, Kem C. Gardner Policy Institute, March 2017, 45 pages http://gardner.utah.edu/wp-content/uploads/DefenseReportFinal.pdf Research team contact information: Juliette Tennert, Director, 801-581-3362, [email protected] John Downen, Author, 801-581-3366, [email protected] Levi Pace, Author, 801-587-9890, [email protected] Utah Defense Alliance 450 Simmons Way, Suite 400 | Kaysville, UT 84037-0967 801-593-2113 | www. utahdefensealliance.com Kem C. Gardner Policy Institute David Eccles School of Business | 411 E. South Temple Street Salt Lake City, UT 84111 | 801-585-5618 | gardner.utah.edu Facebook.com/gardnerpolicyinstitute | Twitter.com/KemGardnerInst | LinkedIn

Additional Slides Details on direct, indirect and induced economic impacts for each defense component, similar to the slide for Hill AFB with Table 2. Dugway Proving Ground supported nearly 2,500 jobs and $225 million in GDP for Utah. Table 7: Statewide Impacts of Dugway Proving Ground, 2015 (Millions of Dollars) Category Jobs Earnings Gross Domestic Product Direct Feder al* 689 $78.9 Indirect

& Induced 1,790 $96.9 Total 2,479 $175.9 $225.0 * Does not include jobs of contract civilians or private businesses on base. These are included in the indirect and induced jobs. Source: Kem C. Gardner Policy Institute analysis using the REMI PI+ model (see Table 3.3 on p. 14 of the report) Dugway Proving Ground employed 689 people and spent an estimated $135.1 million in Utah during 2015. Including contractors, over 1,500 people worked on base. Tooele Army Depot supported 1,100 jobs and $114 million in GDP for Utah in 2015. Table 8: Statewide Impacts of Tooele Army Depot, 2015 (Millions of Dollars)

Category Jobs Earnings Gross Domestic Product Direct Indirect Federa & l Induced Total 550 614 1,164 $41.0 $34.0 $75.0 $113.8 Source: Kem C. Gardner Policy Institute analysis using the REMI PI+ model (see Table 4.3 on p. 15 of the report) Tooele Army Depot employed 550 people and spent $56.8 million in Utah during 2015. The Utah National Guard supported over 13,000 jobs and $840 million in GDP for

Utah in 2015. Table 9: Statewide Impacts of the Utah National Guard, 2015 (Millions of Dollars) Category Jobs Earnings Gross Domestic Product Direct Indirect Federa & l Induced Total 9,280 3,896 13,176 $245.7 $231.6 $477.3 $841.9 Source: Kem C. Gardner Policy Institute analysis using the REMI PI+ model (see Table 5.3 on p. 18 of the report) The Utah National Guard employed 2,383 people full-time, as well as 6,897 Guard members, in 2015.

The Guard spent an estimated $251.3 million in-state. Reserves, recruiting, and ROTC supported over 6,700 jobs and $340 million in GDP for Utah in 2015. Table 10: Economic Impacts of Reserves, Recruiting and ROTC, 2015 (Millions of Dollars) Category Jobs Earnings Gross Domestic Product Direct Federal 4,462 $73.7 Indirect & Induced 2,284 $125.5

Total 6,746 $199.2 $339.8 Note: This slide does not include 1,128 military and 214 civilian reserve employees at Hill AFB or 106 military and 6 civilian recruiters at Hill AFB and the Utah National Guard. They are all included in Hill and Guard impacts, respectively. Source: Kem C. Gardner Policy Institute analysis using the REMI PI+ model (see report, Table 6.2, p. 11 for reserves; Table 6.5, p. 20 for recruiting, Table 6.9, p. 21 for ROTC) Reserves: 3,978 reservists and active-duty, 185 civilians Recruiting: 183 military and 47 civilians ROTC: 54 military and 15 civilians Federal spending for veterans in Utah supported 24,000 jobs and $1.9 billion in GDP for Utah in 2015. Table 11: Economic Impacts of Federal Spending for Veterans in Utah, 2015 (Millions of Dollars)

Category Jobs Earnings Gross Domestic Product Impact 24,480 $1,437.8 $1,891.9 Source: Gardner Policy Institute analysis using REMI PI+ model (see Table 7.6 on p. 25 of the report) During 2015, the VA employed 3,010 people in Utah. VA and DoD spending for Utah veterans was $1.8 billion, including employee earnings, health care, pensions for veterans and military retirees, federal contracts & grants, and other expenditures. Additional contracts and grants supported 13,600 jobs and $1.2 billion in GDP for Utah in 2015. Table 12: Economic Impacts of Other Contracts and Grants to Utah Recipients, 2015 (Millions of Dollars)

Category Jobs Earnings Gross Domestic Product Impact 13,635 $816.8 $1,230.4 Only includes DoD and VA contracts and grants that were not included in the analysis for veterans, Utah National Guard, or any military installation. Source: Kem C. Gardner Policy Institute analysis using the REMI PI+ model (see report, Table 8.9, p. 30 for grants; Table 8.13, p. 32 for contracts) The DoD and VA provided $891.4 million in contracts and grants to Utah recipients in 2015, in addition to those included in economic impacts for veterans, the Guard or any Utah military installation.

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