INCREASE ACCESS TO STATE ASSISTANCE FOR DEFENSE COMMUNITIES Defense communities in Texas may be eligible for two with General Revenue Funds and Other Funds from economic development programs administered by the Office the Economic Stabilization Fund. of the Governor, the Defense Economic Adjustment Since the Texas Military Value Revolving Loan Assistance Grant Program and Texas Military Value Revolving Fund was established in 2003, it has awarded three Loan Fund. The programs have similar missions: to assist in loans totaling approximately $49.6 million, and no enhancing the military value of a military facility in the applications have been submitted since calendar year community or assist with the effects of a U.S. Department of 2014. The program is financed through the sale of Defense decision or a federal Base Realignment and Closure General Obligation bonds with an authority of decision. However, the Texas Military Value Revolving Loan approximately $200.4 million. Fund has not been utilized during the past 10 years, and the applications for the Defense Economic Adjustment CONCERN Assistance Grant Program have exceeded available funding in recent years. By implementing strategies to increase efficiency The Seventy-eighth Legislature, Regular Session, of the revolving loan fund application process, decrease 2003, established the Texas Military Value Revolving reliance on the grant program, and provide an additional Loan Fund, which has not been utilized during the funding option for defense communities, the Legislature past 10 years. By contrast, applications for projects could help increase overall access to state assistance for in recent Defense Economic Adjustment Assistance defense communities. Grant Program grant funding cycles have exceeded available funding. Decreasing reliance on the grant FACTS AND FINDINGS program and decreasing the time to process loan applications could increase the use of the loan fund Texas has more than 232,000 uniformed and and increase overall access to state assistance for U.S. Department of Defense civilian personnel at defense communities. 15 military installations. In fiscal year 2015, the Comptroller of Public Accounts estimated the OPTIONS economic impact of Texas military installations to be approximately $136.0 billion. Option 1: Amend statute to authorize the Texas Military Preparedness Commission’s members A federal Base Realignment and Closure process has to participate by telephone or other means of not occurred since calendar year 2005. The past two telecommunication or electronic communication in U.S. presidential administrations have requested a meeting to consider an application for a loan from the process, but it has not been authorized by the the Texas Military Value Revolving Loan Fund. U.S. Congress. The Texas Military Preparedness Commission reports that, because of sequestration Option 2: Amend statute to require the Texas Military and the federal Budget Control Act, the U.S. Preparedness Commission to consider a Defense Department of Defense is providing about 40.0 Economic Adjustment Assistance Grant Program percent of funds needed for maintenance of military applicant’s eligibility for a loan program, specifically installations. the applicant’s credit-worthiness and ability to repay a loan, as part of the scoring matrix for awarding a Since its establishment by the Seventy-fifth Legislature, grant. 1997, the Defense Economic Adjustment Assistance Grant Program has awarded approximately $84.0 Option 3: Amend statute to provide defense million in grants, with more than half awarded since communities with a more flexible loan option by fiscal year 2016. The grant program does not have establishing a commercial paper program that offers a dedicated source of funding and has been funded short-term, variable-rate option loans. LEGISLATIVE BUDGET BOARD STAFF – APRIL 2019 LEGISLATIVE BUDGET BOARD STAFF REPORTS – ID: 4830 1 INCREASE ACCESS TO STATE ASSISTANCE FOR DEFENSE COMMUNITIES DISCUSSION and scheduled to increase their work force authorizations by The military presence in Texas is among the largest in the nearly 30,000 personnel. Figure 2 shows a timeline of how United States. Texas has more than 232,000 uniformed and BRAC has affected Texas military installations. U.S. Department of Defense (DoD) civilian personnel at 15 A military installation cannot be closed officially without a military installations across the state. Missions at Texas BRAC recommendation; however, DoD can decrease utility installations include cybersecurity, basic training, land assault, of an installation if it is not proving effective. Decreasing a pilot training, complex medical research, and intelligence, military installation to minimal operations and staff is surveillance, and reconnaissance through remotely piloted referred to as warm basing. To avoid warm basing and future aircraft.Texas consistently is among the top recipients of DoD BRAC closures and realignments, Texas has taken steps to contracts and has three of the largest active-duty military bases address these challenges. whether measured by organization, armored post, or training space. The Comptroller of Public Accounts (CPA) estimates TEXAS MILITARY PREPAREDNESS COMMISSION that Texas military installations contributed approximately The Seventy-eighth Legislature, Regular Session, 2003, $136.0 billion combined to the Texas economy during fiscal established the TMPC with a mission to preserve, protect, year 2015 and more than 800,000 total jobs. Figure 1 shows expand, and attract new military missions and assets into the location and individual economic impact to the state, Texas installations. It also encourages defense-related including total employment, of each of the 15 installations for businesses to expand or relocate to Texas. TMPC’s goal is to fiscal year 2015. make Texas the state of choice for military missions and defense contracts by ensuring the stability of defense FEDERAL DEFENSE BASE CLOSURE AND REALIGNMENT PROCESS communities. Texas military communities face ongoing challenges from TMPC is attached administratively to the Office of the prospective base closures, transfer of missions, and reductions Governor and is composed of 13 public members appointed of personnel. These challenges affect the economic vitality of by the Governor, and the following ex-officio members: communities and Texas as a whole. The U.S. Congress in • the chairs of the committees of the Texas House 1988 and again in 1990 passed statutory provisions of Representatives and the Texas Senate that have establishing a federal Defense Base Realignment and Closure primary jurisdiction of matters concerning defense (BRAC) process. Pursuant to these provisions, in 1988, affairs and military affairs; and 1991, 1993, 1995, and 2005, an independent BRAC Commission recommended the closure and realignment of • the Texas Adjutant General. more than 100 defense facilities throughout the U.S. According to the Texas Military Preparedness Commission TMPC has a director to serve as the chief executive officer (TMPC), Congress has not authorized recent requests for and one full-time staff to assist in performing the another round of BRAC. TMPC reports that another round administrative duties of the position. TMPC administers of BRAC is possible, citing a 2016 DoD Infrastructure two economic adjustment programs: the Defense Economic Capacity study that indicated that the department has 22.0 Adjustment Assistance Grant Program and the Texas Military percent infrastructure excess. Value Revolving Loan Fund. From fiscal years 1988 to 1998, seven major Texas military DEFENSE ECONOMIC ADJUSTMENT ASSISTANCE installations and activities were closed, and four were GRANT PROGRAM realigned as a result of the BRAC process. The process The Defense Economic Adjustment Assistance Grant removed approximately 35,000 active duty and direct-hire Program (DEAAG) was established in 1997 and transferred civilian jobs from Texas defense communities. Three military in 2003 to TMPC. DEAAG is an infrastructure grant installations have been closed as a result of BRAC in 2005, program intended to assist defense communities that have and eight others were affected negatively by realignment been affected positively or negatively by a federal BRAC, a actions. According to the BRAC 2005 report, approximately change in defense contracts, or an announced change from 23,000 direct and indirect jobs were removed by these DoD. DEAAG funding also can be used proactively to actions. However, some communities, including Ft. Bliss support installations in the event of a proposed or announced and Ft. Sam Houston, were realigned in a positive manner DoD decision. 2 LEGISLATIVE BUDGET BOARD STAFF REPORTS – ID: 4830 LEGISLATIVE BUDGET BOARD STAFF – APRIL 2019 INCREASE ACCESS TO STATE ASSISTANCE FOR DEFENSE COMMUNITIES FIGURE 1 TEXAS MILITARY INSTALLATION ECONOMIC IMPACT AND EMPLOYMENT, 2015 Sheppard Air Force Base Red River Army Depot Dyess Naval Air Station Air Force Base Fort Worth Joint Reserve Base Fort Bliss Goodfellow Air Force Base Fort Hood Ellington Field Laughlin Joint Reserve Base Air Force Base Joint Base San Antonio Naval Air Corpus Christi Station Army Depot, Kingsville Naval Air Station Corpus Christi ECONOMIC IMPACT TOTAL INSTALLATION LOCATION MISSION (IN BILLIONS) EMPLOYMENT Corpus Christi Army Depot Corpus Christi Helicopter Repair Center of Excellence $2.5 18,083 Dyess Air Force Base Abilene Bomb Wing and Airlift Group $3.7 20,208 Ellington Field Joint Reserve Houston