What Happens To A One-Industry Town When The One Industry Is The Military?
A 2013 report by the Island County Economic Development Council celebrates Naval Air Station (NAS) Whidbey Island in Washington State as “four times the size of the next nearest employer” in the region.
According to that report, NAS Whidbey contributed $726 million to the economy of Island County in 2011, in addition to other ways the military base benefited the community where it is located, such as bringing in funding to local schools and retirement and disability payments to the local economy.
However, a large number of residents from the community surrounding NAS Whidbey — — both civilians and people with military backgrounds — have complained about the negative impacts of the Naval base for years. They’ve cited issues ranging from extreme jet noise to environmental and economic concerns.
Because of these concerns, in 2016 they hired Michael Shuman, a nationally recognized expert on local economies, to investigate whether the Naval base was really bringing economic advantages to the community — and what burdens the base was placing on taxpayer-supported services and infrastructure. In his study, published last year, Shuman also investigated how the Navy’s programs at the base were impacting local health and property values.
Shuman is an attorney, economist, and author of four widely used books on local economies, who has written for The New York Times, Washington Post, Weekly Standard, and Foreign Policy. He told Truthout that the studies which had claimed NAS Whidbey only had positive economic impacts on the community where it is located “are outdated and incomplete” and “say nothing about the costs.”
And the “costs” found by Shuman’s study, The $122 Million Price Tag for The Naval Air Station Whidbey Island, are staggering.
The community members who hired Shuman originally did so in order to have him look into the Navy’s jet noise, of which Truthout has reported previously.
When Shuman came to the area to begin working on his report, he did indeed find the jet noise to be “shockingly loud.” He told Truthout that, prior to coming to Whidbey Island, he assumed the critics of the jet noise were exaggerating the impacts.
The weakest local economies are one-industry towns controlled by a nonlocal company, and it’s the same thing with militarily-dependent areas like Island County.
“However, I stood under one of the pathways of the jets for a few minutes, and my ears were ringing and insides felt nauseated for the next few hours,” he said. “I couldn’t believe this level of noise was being inflicted on sleeping residents, school children and hospital patients.”
Moreover, when Shuman began investigating the hidden impacts of NAS Whidbey, he was astonished, and said, “Honestly, all the cost numbers we uncovered in the report were surprisingly large.”
The report found, according to Shuman:
• Island County is losing $5.7 million per year in lost property and sales taxes because of the special privileges enjoyed by the military.
• Military spending generates such a poor local multiplier and that, if instead, we converted every military job into a private sector job, the Island could enjoy 3,900 more jobs and a half billion more in annual economic output.
• The best estimates of the jet noise costs to human health are $2.8-3.3 million per year.
• Jet noise has already depressed private property value by at least $9.8 million.
• Huge additional costs may be occurring — from groundwater contamination, from potential mass-casualty accidents, and from the loss of the tourist industry — though we don’t have enough data yet to be sure about them.
His report also found other myriad costs to the local community that had previously been largely invisible to the public. These costs included the fact that Navy personnel and their families use the same services as other businesses on Island county, but if they live or shop on the base they are exempt from local taxation.
“That means that other residents wind up underwriting a significant part of the Navy’s presence,” Shuman explained. “For example, the County is losing an estimated $5.7 million per year in sales and property taxes that it would otherwise collect from employees of an equivalently sized private industry.”
Shuman explained how, compared to private sector jobs, Navy jobs yield relatively small economic impact on the communities within which the bases are located. His study found that if you converted all of the existing Navy jobs into civilian jobs in the local community, it would create 3,909 additional jobs, beyond the converted jobs themselves. It would also expand the economy by $503 million, and generate $153 million more in taxes (mostly to state and local governments).
He also found that while the loss of military pay and benefits would bring down net labor income by $78 million, this figure was more than compensated for by way of expanded proprietor income from businesses, rents, and tax revenues.
Shuman explained to Truthout how, generally speaking, the weakest local economies are one-industry towns controlled by a nonlocal company. “Everyone knows that mining towns are boom and bust, and it’s the same thing with militarily-dependent areas like Island County,” he said. “If the president, the Congress, or the Pentagon were to shut down the Whidbey Air Station tomorrow, the Island County economy would plunge into a death spiral.”
Speaking from the position of his expertise in diversification and sustainability Shuman sees that as “the ultimate cost of military dependency,” and explained that “any intelligent community that finds itself in this situation must work assiduously to diversify its economy with local businesses and reestablish local control over its well-being before any such closure occurs.”
The study found that NAS Whidbey’s largest program, that of training pilots to fly the “Growler” aircraft that are used in electronic warfare, “has exposed more than 11,000 residents to harmful levels of noise.”
“An economic assessment model used to assess every high-noise project in the United Kingdom suggests that the health costs to Island County residents are currently $2.8 million per year, and will grow to $3.3 million if the Growler program expands as planned,” the study says. Since that time the program has expanded by adding dozens of more of these aircraft to NAS Whidbey.
Local residents are picking up the bill for Navy personnel.
“Additionally, the program has depressed property values by $9.8 million thus far, and this damage will almost certainly grow as that program expands as planned,” the study adds.
The burden upon the local area’s public services is both an external and hidden cost.
The Navy has federal supremacy under the US Constitution, which means that many of its activities are exempt from both federal and local taxation. This means that Naval personnel stationed at NAS Whidbey enjoy the same public services as Island County residents (schools, police, social services, roads, trash collection, etc.), but only pay a fraction of the cost that civilians pay for them.
In other words, local residents are picking up the bill for Navy personnel.
This is made worse by the fact that since Washington State does not have an income tax, the state and its sub-jurisdictions rely particularly heavily on sales and property taxes. Island County loses out on both of these due to the heavy Navy presence at NAS Whidbey.
Plus, given that Navy personnel do much of their shopping on the base and in commissary stores, where all purchases are exempt from state and local taxation, the resulting loss of local revenue is quite significant.
In 2015, out of Washington’s 39 counties, Island County ranked 34th in county and local sales taxes per capita. The three counties below Island County that year had populations of under 12,000 people, and these populations were able to shop non-locally.
Another hidden cost of NAS Whidbey is property tax loss for the county.
Navy-owned land is tax-exempt, and the federal government owns 59 parcels of property across Whidbey Island that are exempt from property tax. The assessed valuation of these properties is approximately $216 million.
According to Shuman’s report, “Were the Navy paying the average property tax rate of 0.68% per dollar of valuation, the County would receive another $1.5 million per year.
Additionally, there are property taxes that might be paid by base personnel. Most personnel live off base and do pay property taxes directly through mortgages or indirectly through rents. However, the most recent statistics available from the Navy show that 1,518 family units are living on the base and paying no property taxes.”
Individual housing for Naval families also contributes to tax loss. In 2010, 3.8 percent of Island County’s housing units were located on the Naval base, hence not paying property taxes. If on-base families were occupying households on the tax rolls and paying an average level of tax per household, they would be paying the county another $678,000 per year.
Adding the three aforementioned items together yields about $5.7 million per year. If Island County was able to collect appropriate sales and property taxes from military personnel, the county budget could be expanded by nearly 7 percent.
Another hidden cost of the Naval base to the community around it is found within the water treatment system.
“For several years, Oak Harbor [the city nearby NAS Whidbey] struggled to get the Navy to contribute to the $122 million upgrade and expansion of its sewage system,” the report reads. “The Navy ultimately declined to participate and, instead, chose to continue to dispose of its sewage in an outdated system of lagoons. That system is inadequate now—raw sewage has spilled occasionally into the Oak Harbor Bay—and sooner or later either the Navy or the city must undertake a multimillion-dollar capital project to remedy the problem.”
Shuman’s report found that, over the period from 2010 to 2021, all of the invisible costs combined will end up costing Island County a staggering $122 million.
The study proposes a set of solutions: “Public officials should seek to minimize them by pressing the Navy: to begin serious conversion planning; to pay the County at least $5.7 million per year in ‘payments in lieu of taxes’ (PILOT); to increase the Navy’s level of local contracting; to modify the Growler program (perhaps by moving its training to a less populated area); and to compensate victims of adverse Growler noise or toxic chemicals impacts.”
The Navy’s reaction to the report, at least thus far, has been to discount or dismiss the costs pointed out by the study, according to Shuman.
At the time of this writing, the Navy had not responded to Truthout’s request for comment on Shuman’s report.
Implications for Communities Nationwide
Island County is not alone: There are hundreds of military bases within the continental US, and many of the communities they occupy face similar struggles. More than half of the US’s federal discretionary spending goes to the military – which is the equivalent of the total military budgets of the next seven largest military budgets in the world, combined — and that money goes not only toward murderous wars abroad, but also toward domestic military expansion.
So, how can communities fight back?
“The best recourse is to lobby public officials,” Shuman told Truthout. For example, community members can push for officials to request payments from the military to make up for the tax revenue loss.
However, sometimes lobbying public officials feels futile. Shuman brought up another problem that Truthout reported on recently: Politicians across the entire political spectrum in Washington State are already deeply embedded with the US military.
“Nominally progressive politicians are unwilling to challenge the military,” Shuman explained. “The governor [Jay Inslee], for example, speaks out against federal immigration policies but will not support thousands of Island County residents who are literally fighting for their lives. We have to hold politicians at all levels — national, state, county, and local — accountable, irrespective of party.”
Remember the story of the Trojan Horse and beware of generals bearing gifts.
The implications of this call to action resonate far beyond Washington State. Shuman has a warning for those living in an area where the military is planning to either build another base or make expansions to one.
“Remember the story of the Trojan Horse and beware of generals bearing gifts,” he said. “Short-term benefits are likely to be accompanied by long-term costs to the tax base, the local economy, health, ecosystems and the political environment. As Benjamin Franklin once said, anyone who is willing to trade freedom for security is likely to wind up with neither.”
Shuman said that, regardless of what the Navy does in the future in Island County, the community — like communities anywhere — needs to refocus its economic development efforts towards diversifying its economy. In this way, communities can reduce their dependence upon the military.
Under President Trump’s budget, by 2023, military spending will make up 65 percent of the federal discretionary budget. Thus, the military’s practice of overrunning communities and handing them a hefty price tag is not likely to go anywhere. Over the next few years, communities will have ample opportunity to practice detaching themselves from the economic siphons of military bases.