Not even military’s might can stop economic peril

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Just in case you hadn’t noticed, the military presence in Colorado Springs isn’t enough to prevent economic downturns.

While much of the economic stability in the Pikes Peak region is a result of the military, and the 54,000 jobs — a significant percentage of the community’s 330,000 — created by military expenditures, falling sales tax revenue is something that neither the Army, Navy, Air Force nor the Marines can conquer.

That’s the word from Fred Crowley, senior economist, to the audience at the 13th Annual Southern Colorado Economic Forum last week at the Antlers Hilton.

More than 500 executives, academics, small business owners and professionals gathered to hear the latest global, national and local economic news, presented by the University of Colorado at Colorado Springs and the College of Business and Administration Graduate School of Business.

Crowley’s presentation was entitled “Current Economic Conditions in the Pikes Peak Region and Prospects for the Next 12 Months.”

“The military is responsible for one out of every five dollars generated in the community,” Crowley said.

And El Paso County unemployment is 7.4 percent, versus the national rate of 9.8 percent.

“The good news with the military is that we don’t have all those tech jobs to lose — we can only lose them once, I suppose,” he said, as the audience laughed.

The region has lost 17,000 high-paying, but volatile, jobs in manufacturing and technology sectors since 2000.

These losses were replaced by jobs in the service sector, which are more stable, but pay lower wages.

The region will not have a rapid recovery, “but it will be a recovery without a double dip — we hope,” Crowley said.

From 1998 to 2005, The Citadel area lost dozens of retailers and Monument, Falcon and Fountain — Crowley calls them “the Big 3” — gained about 90 retailers, which is a boon to those communities but detrimental to the City of Colorado Springs.

“The city is moving to the county, and this flight to suburbia, in retail, employment and housing,” he said, will cause the city to continue to deteriorate, as long as it depends on sales tax revenue to fund more than half of its general fund.

“The city has failed to make itself attractive,” Crowley said.

On average, the city has lost $20 million per year in sales and property tax since 2000, because of the migration. During 2010, that will increase, because, “They’ve permitted $32 million in lost sales tax to escape the city limits,” Crowley said.

And service sectors don’t create many jobs — “a piece of paper versus making cars, rubber, plastic, electronics, etc,” he said. “We need manufacturing sectors here or job growth will be slow.

But economic development is not limited to primary jobs, he said.

“For the financial well-being of the community, the tax base needs to be stable.”

Compared to the nation, “the local economy really does look like it’s improving,” Crowley said. The Business Conditions Index for El Paso County increased 12 percent from the first to the second quarter, holding steady during third quarter.

But a survey shows that local consumers plan to spend most of their holiday money online or out of the county.

So, with a stern voice and a smile, he told the crowd to raise their right hands and repeat after him: “I promise to spend more money — in Colorado Springs.”

Rebecca Tonn covers banking and finance for the Colorado Springs Business Journal.