Virginia stands to feel the most pain from defense cuts

By Rosalind S. Helderman, The Washington Post

RICHMOND — Virginia officials reacted with bipartisan dismay on Monday to Defense Department budget shifts that will cost the state thousands of jobs in coming years and will dramatically impact the economies of the Norfolk area and Northern Virginia.

Most of the immediate reaction revolved around Defense Secretary Robert M. Gates’s proposal to close the U.S. Joint Forces Command. It is a major employer in Hampton Roads, including Norfolk and Virginia Beach, whose elimination could translate into the loss of 6,100 military, civilian and contractor jobs in the region.

But a proposal to slash the Pentagon’s budget for military contractors over the next three years could also be as significant to the economy of the Washington region.

“Virginia is more vulnerable to this kind of policy shift than any other state,” said Stephen Fuller, director of the Center of Regional Analysis at George Mason University. “Defense spending was our strength during the downturn. It kept unemployment lower here than in most other states. It kept the economy from crashing as far as other states’. It’s also our Achilles’ heel.”

Virginia received $35 billion in defense contracts, supporting more than 530,000 contracting and associated jobs in fiscal 2008, Fuller said. About 70 percent of those dollars flowed to Northern Virginia.

He said three years of 10 percent cuts to military contracting, as announced by Gates, could swallow up as much as half of the economic growth projected for Northern Virginia in coming years.

“This is big stuff, and it’s going to disproportionately affect Northern Virginia,” he said.

Sharon Bulova (D), chairman of the Fairfax County Board of Supervisors, said the decision “would definitely have an impact” on her contractor-rich county. “I wouldn’t say this would halt our recovery, but it’s not going to help,” she said.

To read more, visit: http://www.washingtonpost.com/wp-dyn/content/article/2010/08/09/AR2010080906083.html?hpid=topnews

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