The Obama administration’s proposal to cut military spending outlined this week by Defense Secretary Chuck Hagel has some giving dire predictions for Maryland, which is ranked as the seventh most dependent state on military spending in a Bloomberg Government study.
“The handwriting is on the wall,” said Bob Stewart, executive director of the United Food and Commercial Workers Local 1994, Municipal and County Government Employees Organization. The union represents about 10,000 county government employees in Montgomery and Prince George’s counties.
The proposed Pentagon budget cuts, which are expected to be presented to Congress on March 4 with the overall fiscal 2015 federal budget proposal, would shrink the size of the Army to the lowest levels since before World War II. It also calls for the retiring of some aircraft and naval ships, a reduction of Marine Corps troops and possible military base closures.
But the process still has to go through Congress and could turn out benefiting Maryland, said leaders of the Montgomery County Chamber of Commerce.
“Usually, cuts to defense and the federal government have not turned out well for us,” said Barbara Ashe, executive vice president of the chamber. “But it’s really too soon to know. There could be some benefits for our area, such as in research or cybersecurity.”
Ashe, who started the Veteran Institute for Procurement as president of the chamber’s community foundation, said the mood among government contractors she has heard from this week was good.
The VIP program has grown into a national program that has helped some 350 veteran-owned businesses win government contracts since 2009, with the earliest 146 graduates increasing the size of their businesses by an average of 44 percent in the year after completing the contracting program.
“They are glad to see that a budget has passed, and there is some certainty there,” Ashe said.
Maryland is home to about 29,000 active military service members and 16,000 National Guard and reserve members, according to a report from the Maryland Department of Business and Economic Development. Tens of thousands more work in civilian defense jobs and as contractors.
Military service members earned an average of $51,380 in 2010, which does not include housing and living allowances, according to state figure. Federal civilian workers residing in Maryland in 2010 earned an average of $84,458.
Defense spending in Maryland in 2009 of about $20 billion was 7 percent of the state’s gross domestic product, the seventh highest, according to the Bloomberg study. Two-thirds of the amount was for contracts with Bethesda-based Lockheed Martin Corp. and others.
Lockheed Martin executives are “reviewing the Pentagon’s spending plan as outlined by Secretary Hagel,” according to a statement a spokeswoman emailed. “We’ll continue to assess the budget once the President delivers it to Congress and they begin their appropriations process.”
Virginia was the most military dependent state in the Bloomberg study with $56.9 billion in defense spending.
A significant chunk of the 2009 defense spending in Maryland — about $1.4 billion — was in Montgomery County, according to Bloomberg. The county is home to not just Lockheed but Walter Reed National Military Medical Center, which has about 8,500 employees, and the Naval Surface Warfare Center, Carderock Division, which has some 1,300 employees.
About $1.4 billion also was spent in Southern Maryland, which has Patuxent River Naval Air Station, while $1.0 billion was spent around Fort Meade in Central Maryland. Some $648 million was spent in Frederick County, home to Fort Detrick.
The Pentagon has increased contracting in Maryland from $6.3 billion in 2000 to $12 billion in 2010, according to state figures. The Department of Health and Human Services was the second-largest federal contracting agency to Maryland in 2010, with about $5 billion.
Lockheed Martin was the top single government contractor in Maryland in 2010 with $1.7 billion, but only $287 million came from the Pentagon, according to the state report.
The state legislature is considering forming a commission to develop strategies to deal with declining federal military budgets. The commission would specifically focus on strategies noted as effective by the Office of Economic Adjustment of the U.S. Department of Defense, which include boosting clean-energy industries.
Connecticut formed a similar commission last year, and other states are in the process, said Miriam Pemberton, a research fellow with the think tank Institute for Policy Studies.
With national military spending expected to decline in the next decade by about $500 billion, there is likely to be significant loss in jobs and impact to the gross state product, said Del. Talmadge Branch (D-Dist. 45) of Baltimore, who filed the bill to form the commission in the House of Delegates. More than 30 delegates have signed on as co-sponsors, including several from Montgomery County.
“This commission will help us create a framework for the conversion process,” Branch said.