Photo by Jen Reel
Military vehicles on display during Camp Mabry's Muster Days.

The Economics of Texas Base Closures

By Kim Loop
AUSTIN – Kent Crow, a longtime engineer at Kelly Air Force Base in San Antonio, was startled when, in 1995, the Department of Defense’s Base Realignment and Closure commission targeted the base for closure. Crow had worked at Kelly since 1985, the year he graduated from college.

Crow continued to work at Kelly during its wind-down phase until his department relocated in July 2000. He started working at a telecommunications company the very next week, but other Kelly employees were not so lucky when the end finally came in 2001. Some were unemployed for years or switched fields to find work. “The closure was a shock to a lot of people, “said Crow. “Many were unprepared for it and probably not positioned—in terms of education, degrees, experience—to do anything else... It had a big impact economically on San Antonio.”

It’s not hard to see why. In the mid-1990s, Kelly Air Force Base was San Antonio’s largest employer with more than 20,000 full-time workers, including more than 15,000 civilians, who earned a total of more than $660 million dollars annually. The Base Realignment and Closure commission, or BRAC, predicted that Hispanic unemployment in San Antonio, a city that’s been dubbed “Military City, U.S.A.,” would increase by 73 percent as a result of Kelly’s closure.

And San Antonio isn’t the only Texas community that’s been effected by BRAC. Since the end of the Cold War, the commission has played a big role in changing the state’s military income landscape by closing bases, eliminating jobs and leaving cities scrambling for redevelopment opportunities. A significant portion of Department of Defense funds come to Texas, not from government contracts, but as a result of the large number of military bases and installations located across the Lone Star State, like the now-defunct Kelly Air Force Base.

Texas is home to nearly 195,000 active military personnel, reserve soldiers and National Guard members, or more than 8 percent of the 2.3 million U.S. military personnel. Many of these soldiers are stationed at the approximately 145 Army, Navy, Air Force and Marine bases in the state. They earned $4.6 billion in salaries in 2004, ranking third in the nation after Virginia and California, according to the National Priorities Project. Payments to civilian employees working for the military totaled $1.4 billion during the same period, putting Texas in fourth place after the same states and Maryland. Another half a billion dollars went to pay inactive retired military employees.

The state sees a large amount of money coming in through these bases. The Department of Defense spent a total of nearly $32 billion in Texas on salaries, contracts and other expenditures in 2005, according to Texas Governor Rick Perry’s office.

“Clearly, [military spending] plays a fairly large role, given its size,” said Daniel Hamermesh, an economics professor at the University of Texas at Austin. But military spending, especially in important cities like San Antonio, has changed significantly in the past 15 years.

More changes are on the way for Texas. In 2005, closures announced by the latest BRAC commission include: 21 United States Army Reserve centers in Alice, Amarillo, Abilene, Brownsville, Callaghan, Dallas, Fort Bliss, El Paso, Houston, Huntsville, Lufkin, Pasadena, Round Rock, San Antonio, San Marcos, Texarkana and Tyler; two United States Navy Reserve centers in Lubbock and Orange; the naval station in Ingleside; the Corpus Christi Army Depot; and Brooks Air Force Base in San Antonio.

Closure of the Ingleside base alone could result in the loss of more than 3,100 jobs and more than 3,600 indirect jobs, which currently account for more than 3 percent of Corpus Christi area jobs, according to a Navy estimate. The total economic impact of the base closing would be $135 million.

The Brooks base has had a yearly economic impact of around $483 million to the state, according to Ed Shannon, the director of public affairs for the 311 Human Systems Wing at Brooks City-Base. The base will be completely decommissioned and all Air Force units will leave by October 2011. Brooks’ closure will cause the city to lose more than 2,500 military and civilian jobs, according to an Air Force estimate.

In the meantime, more than $170 million worth of projects are underway or in the works for Brooks. Development groups hope to generate income for the state at former base locations in other ways. Brooks Air Force Base was handed over to the Brooks Development Authority in July 2002 in an attempt to save the military money and the area became known as the Brooks City-Base. Since then, the Air Force has leased its buildings. The development group hopes to reposition the base as a center for science and technology. DPT Laboratories, a locally-based pharmaceutical company, has already moved to Brooks City-Base. And at least one expert has said that the change at Kelly Air Force Base wasn’t all bad for the city.

“I believe employment at Port San Antonio actually exceeds the job levels when it was Kelly Air Force Base,” said Steven Nivin, a chief economist with the City of San Antonio’s Economic Development Department, referring Port San Antonio that has been established at the old Kelly base. The area is being redeveloped to accommodate incoming air, rail and highway traffic. By November 2006, the port’s approximately 60 businesses already employed more than 12,000 people and had an economic impact of more than $2.5 billion a year.

Other cities have also redeveloped closed bases. Bergstrom in Austin was closed by the 1995 commission. It reopened in 1999 as the new Austin Bergstrom International Airport and currently handles more than 600,000 travelers each month.

While development contracts in cities like San Antonio may actually serve to boost local economies, a major exodus of military spending may cause problems for the overall flow of cash into the state. “[A]nything that is cyclically stable, which the military certainly is, helps stabilize the economy,” said Hamermesh. “The trade-off, however, is that if the Iraq War is ever over, and military spending stops growing or even declines, we will be worse off than other states that are less dependent on it.”