Like federal, state, and local policymakers across the country, Colorado Springs officials are worried about, and preparing for, the effects of budget cuts emanating from Washington.
As lawmakers in the nation’s capital struggle with the sequester, allowing the government to continue running, and other budget issues, cities and states have also had to begin making tough choices and preparing their citizens and programs for the ripple effect that comes with cutting the federal budget.
This is especially true in Colorado Springs, where much of the economy is sustained by military personnel and military-related programs, including Fort Carson, Cheyenne Mountain, and the Air Force Academy.
“Due to the concentration of military installations in the community, sequestration is a concern, but it is difficult to predict the impact,” said Principal Analyst Bob Cope, the city’s chief economic analyst.
Cope added that pure budget cuts were not the only factor that could hinder the city’s economic strength. “Uncertainty created at the federal level has hampered economic progress,” he said. “This uncertainty is the result of a series of events such as the fiscal cliff, sequestration, the debt ceiling, and a real or perceived looming debt crises.”
Already, the President and Congress have taken steps to shield military programs and installations from the automatic spending cuts, instituted in a bipartisan deal in 2011. In addition, the city hopes that the new aviation brigade that Fort Carson will be receiving will help offset any downturn that may result from decreases in military spending.
Worry about budget cuts comes after four years of what has been, compared with the rest of the country, a slow recovery. Colorado Springs’ economic bounce back has been slower than both the national average and the average rate at which Colorado’s economy improved.
The past year has been better for The Springs than others, though. The U.S. Bureau of Labor Statistics (BLS) published a report this week showing that Colorado Springs’ unemployment rate in January to be 8.8 percent. In January of 2012, the rate was nearly 10.1 percent.
Although the city’s rate is higher than the state’s, it has dropped at a much faster pace over the past year: the Colorado unemployment rate dropped from 8.8 percent to 7.5 percent in the same period.
This follows a trend among U.S. metropolitan areas. The BLS reported that about 60 percent of metropolitan districts in the country experienced drops in their unemployment rates this year.
The most predominant factors that contributed to economic growth, according to a city spokesperson, were improvements in the housing market, including fewer foreclosures and renewed vigor in home construction, and overall increases in consumer spending.
The city is also trying to diversify the sources of its economic strength in order to make the city more of a hub for business and a place for consumer confidence. According to Cope, Mayor Steve Bach has worked to help the city attempt to improve its responsiveness to citizens and businesses, lower turnaround time on applications, and reduce regulations and fees that the city sees as interfering with growth.
Despite these efforts, substantial cuts in the Springs’ military establishment could have far-reaching effects, causing businesses to close, laying off workers, and forcing the economy to become stagnant once again—or even reverse course.
Cope said that the city is hopeful Congress will pass legislation to lessen the blow to the armed forces and related enterprises. However, no matter what action is taken in Washington, the city says it will not engage in any type of stimulus program.
City officials believe that the proper role of the local government is to create a business-friendly environment, not use the city budget to boost the economy simply through in investment.
Colorado Springs finds little help at the state level. Government spending on capital investment in Colorado is low, due to a complex set of restrictions that the state constitution places on lawmakers’ ability to tax and spend.
Much statewide economic growth, then, is a result of private industry. Major contributors include tourism, the utilization of natural resources, and the production of certain specialized goods, including, perhaps unsurprisingly, beer.