Economic Development Assistance for Communities Affected by Employment Changes Due to Military Base Closures (BRAC)

[Excerpt] This report is intended to discuss the geographic impact of base closures and realignments; provide an analysis of federal economic assistance programs for communities and individuals affected by military base closures and realignments (BRAC); and analyze possible policy issues for Congress. Unlike previous rounds, the 2005 BRAC round is focused on creating the infrastructure needed to support a transformed, expeditionary armed force—concentrated more on shifting forces and installation assets to promote the centralization of units in places from which they can be deployed rapidly. Thus, the 2005 BRAC round is characterized much more by realignment than closure. In 20 communities, an estimated increase of 170,000 workers is expected. In addition, estimated construction costs are anticipated to increase by 80% from $17 billion to$32 billion. These communities identified transportation, schools and affordable housing as their top infrastructure challenges. Some communities, however, will be affected by job losses, and job creation and unemployment were cited as key concerns. Economic development programs for communities affected by BRAC include the Office of Economic Adjustment (OEA); the Economic Development Administration (EDA); the Community Development Block Grant (CDBG) program; Historically Underutilized Business Zones (HUBZones) under the Small Business Administration (SBA); and programs such as the Homeowner’s Assistance Program (HAP), the Defense Access Road (DAR) program, Recovery Zone Economic Development Bonds, and Economic Development Conveyances (EDCs). Understanding the process to access funding under these programs is important for communities impacted by job losses and those affected by growth. EDA, for example, allocates funding to groups of counties organized as Economic Development Districts (EDDs), based on a plan known as a Comprehensive Economic Development Strategy (CEDS) and communities affected by BRAC must contact an EDA regional office and EDD to understand if competitive grant funding may be available. In contrast, CDBG allocates funding to one of over 1,100 entitlement communities based on a formula and on a plan known as the Consolidated Plan; BRAC funding is available primarily to help the homeless population near a base. The local communities must establish a Local Redevelopment Authority (LRA) to access assistance. The LRA serves as the primary link between the Department of Defense, the current installation, the local community, and the Federal and State agencies responsible for all BRAC matters. In the 111th Congress, the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5) provided $555 million for the Homeowner’s Assistance Fund under the Housing Improvement Program (HAP), for military personnel affected by the 2005 BRAC round. P.L. 111-117 provided an additional$323 million for the HAP program. ARRA also provided $10 billion for Recovery Zone Economic Development Bonds for areas designated as economically distressed under previous BRAC round closures. The 112th Congress may consider amendments to federal economic development programs to assist communities affected by the 2005 BRAC. This report will be updated as events warrant

Economic Development Assistance for Communities Affected by Employment Changes Due to Military Base Closures

Under the Base Realignment and Closure (BRAC) process, military facilities were closed and realigned in 1988, 1991, 1993 and 1995. A fifth BRAC round was authorized in late 2005 and must be completed by September 15, 2011. Under the BRAC process: (1) the Department of Defense (DOD) prepares a list of military bases to be realigned or closed; (2) an independent BRAC Commission reviews the list, makes changes and sends a revised list to the President; (3) the President approves and transmits the list to Congress; and (4) the BRAC recommendations are implemented, unless a joint resolution is passed in Congress disapproving the recommendations for closures and realignments. The 2005 BRAC round includes the closure or realignment of 837 facilities and involves an additional 160 facilities that will gain missions or resources, for a total of 997 changes nationwide. Most of these changes are on a smaller scale, each involving fewer than 300 direct job losses or gains, including military, civilian, and contractor jobs. Unlike previous rounds, the 2005 BRAC round is focused on creating the infrastructure needed to support a transformed, expeditionary armed force — concentrated more on shifting forces and installation assets to promote the centralization of units in places from which they can be deployed rapidly. Thus, the 2005 BRAC round is characterized much more by realignment than closure. In 20 communities, an estimated increase of 170,000 workers is expected. Important policy issues before Congress include (1) the impact of military base closures and expansions on local employment; (2) the possible elimination of the of the BRAC Commission and the resulting impact on federal economic and community development programs — such as the Community Development Block Grant (CDBG) program and the Economic Development Administration (EDA) — that currently provide a preference for communities affected by BRAC; (3) the adequacy and flat level of funding for federal assistance programs while anticipating an 80% increase from $17 billion to$32 billion in construction costs; (4) housing for military staff amidst the mortgage crisis; (5) funding for communities experiencing growth through the defense access road program; (6) delays in environmental cleanup that may cause difficulties in the economic redevelopment of military facilities; and (7) redevelopment of military bases as refineries to promote economic growth. In the 110th Congress, Title I of the Military Construction and Veterans Affairs Appropriations Act of 2009 (H.R. 6599) and Title I of the parallel Duncan Hunter National Defense Authorization Act (H.R. 5658), would allocate funding for BRAC-related activities for road construction, military facilities, and housing assistance. This report is intended to discuss the geographic impact of base closures and realignments; summarize federal economic assistance programs for communities and individuals affected by BRAC; and highlight issues for Congress. The report will be updated as events warrant

Washington Dollars and the Puerto Rican Economy: Amounts, Impacts, Alternatives

By examining the Washington to Puerto Rico flow of funds in some detail and comparing it with the flow of federal funds to the states, this paper demonstrates that the island’s receipt of funds is not uniquely large and cannot be viewed as representing the “largess” of U.S. taxpayers. The funds coming from Washington to Puerto Rico cannot bear the weight of responsibility for the island’s economic problems that various sources have placed upon them. Puerto Rico’s economic ills have to be explained by a larger set of factors. Nonetheless, some of the Washington to Puerto Rico transfer programs may create a set of incentives that are not in the interests of Puerto Ricans. As a result, the policy prescriptions offered here have much in common with those of analysts who see the transfer programs as a major problem, in particular with regard to the Earned Income Tax Credit. The policy prescriptions offered here, however, go beyond others in suggesting a more favorable treatment of Puerto Rico with regard to federal procurements and the Child Tax Credit. An overall message of the analysis is that the flow of federal funds could be changed in a positive rather than punitive manner to improve the operation of the Puerto Rican economy

U.S. Tax Imperialism

This article uses historical and legal analysis to demonstrate how U.S. domination over Puerto Rico\u27s tax and fiscal policies has been the centerpiece of a colonial system and an especially destructive form of economic imperialism. Specifically, this article develops a novel theory of U.S. tax imperialism in Puerto Rico, chronicling the sundry ways in which the United States has used tax laws to exert economic dominance over its less developed island colony. During the colonial period, U.S. officials wrote and revised Puerto Rican tax laws to serve U.S. economic interests. In more recent years, U.S. tax laws have disadvantaged Puerto Ricans, who still lack voting rights and full democratic representation in Congress. A theory of tax imperialism may also have application far beyond the U.S.-Puerto Rican experience. For instance, it may help us understand the relationships between the United States and its other possessions and territories throughout history, and between the United Kingdom and its British Crown dependencies, overseas territories, and newly-independent colonies

U.S. Tax Imperialism

This article uses historical and legal analysis to demonstrate how U.S. domination over Puerto Rico\u27s tax and fiscal policies has been the centerpiece of a colonial system and an especially destructive form of economic imperialism. Specifically, this article develops a novel theory of U.S. tax imperialism in Puerto Rico, chronicling the sundry ways in which the United States has used tax laws to exert economic dominance over its less developed island colony. During the colonial period, U.S. officials wrote and revised Puerto Rican tax laws to serve U.S. economic interests. In more recent years, U.S. tax laws have disadvantaged Puerto Ricans, who still lack voting rights and full democratic representation in Congress. A theory of tax imperialism may also have application far beyond the U.S.-Puerto Rican experience. For instance, it may help us understand the relationships between the United States and its other possessions and territories throughout history, and between the United Kingdom and its British Crown dependencies, overseas territories, and newly-independent colonies

Why Don't More Puerto Rican Men Work? The Rich Uncle (Sam) Hypothesis

Puerto Rico has an extraordinarily low employment rate for men. We document the low employment rate using Census of Population and labor force survey data and offer "the rich uncle (Sam) hypothesis" that the connection of the relatively poor economy of Puerto Rico to the wealthier US has created conditions that generate low employment. In support of the hypothesis, we show: 1) that GNP and GDP have diverged on the island, distorting the relationship between GDP and employment, due potentially to federal tax benefits to companies operating in Puerto Rico; 2) transfers to Puerto Rican families funded mainly by the federal government, which account for about 22 percent of personal income; 3) open borders to the U.S. that give men with high desire for work incentive to migrate to the US, and potentially creates a lower bound to wages on the island; (4) a wage structure with relatively higher earnings in low paid jobs; and (5) employment in the informal sector, which is unmeasured in official statistics. We note that other regional economies with rich "uncles", such as East Germany with West Germany, Southern Italy with Northern Italy, have comparable employment problems.