Vandenberg Air Force Base has the greatest impact on Santa Barbara County/s economy of any single entity in the area, accounting for 7 percent of the county/s economic output.

That/s the conclusion of the UCSB Economic Forecast Project/s first study of the base/s impact, prepared for the County Board of Supervisors.

Although the Economic Forecast Project/s computer modeling program and database don/t allow analysts to break down its impact to just the northern portion of the county, economists say it/s huge.

&#8220If northern Santa Barbara County 7 and when I say that I/m excluding the Santa Ynez Valley 7 if northern Santa Barbara County is, say, 30 percent of the county/s economy, then Vandenberg/s share of the North County economy is big 7 it/s quite big,C said Dan Hamilton, director of economics for the project and one of the study/s authors.

But Dave Richardson, chair of the Friends of Vandenberg AFB, said that/s what his organization is looking for, and the support group hopes the Economic Forecast Project can break down the impact by region and city.

&#8220We had conversations with UCSB and the county, and we said there/s a difference between data and information, effectively,C Richardson said.

&#8220To an economist, sure, it is meaningful there is ,1.7 billion in activity, but we said, >Put that in context. What/s that mean? Where does Vandenberg stand when compared to agriculture or the oil industry or to any of the other industries we have around here?/C

The report is based on figures from 2004 and took two years to complete, primarily because of the difficulty of getting information from the base itself.

Part of that was because there are so many entities at the base.

&#8220It took time to collect (the data) because there were a lot of separate elements there to pull together,C Richardson said, crediting the base planning office and its personnel for gathering the information.

Part of the delay was also because of security and secrecy at the military base.

&#8220Security was an issue,C Hamilton said, noting much of the information supplied by the base must be kept confidential. &#8220We actually can/t release the individual pieces of data.C

Goods and services

The report shows that in 2004 the direct impact on the county/s economic output was ,903.9 million, or about 3.7 percent of the total county output.

The combined direct, indirect and induced impact was just under ,1.74 billion, or about 7 percent of the county/s output.

Direct impacts are direct expenditures by the base; indirect impacts are other purchases required by those expenditures; and induced impacts represent money spent by those who benefited from the direct expenditures.

For example, Hamilton said, if Vandenberg decided to build a launch pad, it might purchase concrete from a local supplier 7 a direct impact. That supplier would, in turn, have to buy more materials to provide that concrete 7 an indirect impact.

Because the supplier and its employees make more money as a result of the purchase, they spend more money on a variety of goods and services 7 an induced impact.

The result is an output multiplier, Hamilton said, and in Vandenberg/s case, that multiplier is 1.92. In other words, every dollar directly spent by Vandenberg generates another 92 cents in indirect and induced economic activity.

In 2004, base contractors/ local expenditures were ,26.6 million, while independent contractors/ local expenditures were ,30.9 million.

The impact on jobs is even greater, with a multiplier of 1.97. Vandenberg directly accounted for 8,701 jobs in 2004. Applying the multiplier, the base accounted for 17,137 jobs.

That means for every job directly associated with the base, nearly one more position is supported in the county/s workforce.

Direct labor income from the base was ,555.3 million. With a 1.61 multiplier, the total labor income equaled ,895.9 million.

Nearly 93 percent of that was paid to workers, with the other 7 percent going to business proprietors.

Those jobs and salaries have a tremendous impact on the local economy, Hamilton said.

&#8220These are good-paying jobs,C he said. &#8220That/s an issue on the Central Coast. … How can you work at Albertson/s and afford a house in this part of California? You can/t.

&#8220But these are engineers (and so forth), and they can. They/re good paying jobs, and that/s good for the economy.C

Tax advantage

Besides pumping money into the general economy, Vandenberg gave city and county coffers a big boost through taxes.

Sales taxes alone generated by the base were estimated at ,21.9 million 7 roughly 5 percent of the total sales taxes generated in the county in 2004.

Overall, taxes generated by direct, indirect and induced activity at the base were estimated at ,210.2 million, with about ,93.5 million of that going to state and local governments.

Roughly ,3.7 million was paid to local school districts for the costs of educating the children of personnel who live on the base, the study found.

And visitors to the base alone pumped an estimated ,4 million in the county/s economy, according to the study.

All that makes Vandenberg Air Force Base the single entity with the greatest economic impact on the county.

&#8220We believe it/s the biggest,C Hamilton said. &#8220UCSB is right behind at 4 to 5 percent of the economy. UCSB has more >bodies,/ but quite a few of them are part-time employees, so the impact is not as great.C

Using the data

Just how all the data in the 27-page report might be used depends on who is using it, Hamilton said.

But by showing Vandenberg/s economic output, high-tech support industries could be induced to locate in the surrounding area to take advantage of the base/s needs.

Other industries also could be lured to cash in on the indirect and induced economic activity.

&#8220People in the North County are very interested in this,C Hamilton said.

&#8220What they could do 7 and I don/t know if anyone will 7 but they could write up an economic development proposal or put together a PowerPoint presentation on it.

&#8220Of course, they would glitz it up 7 add pictures of rocket launches and such 7 and use that to draw industry to the area,C he said.

Richardson said his group wanted the data for a number of reasons, including to make the area more military-friendly and to drum up support for the base.

&#8220We were concerned the leadership from the county level to the city levels didn/t fully appreciate the impact Vandenberg had on the economy of the North County,C he said.

At the time, the Base Realignment and Closure Commission was looking at closing bases and moving various operations to other sites, and Richardson said his group wanted to support relocating those missions to Vandenberg 7 and still does.

&#8220What we think the subsequent use (of the study) ought to be is for people here to understand the value of Vandenberg here 7 and it is major 7 and not only support the base but try and advocate for other activities, whether government or otherwise, to come to Vandenberg,C Richardson said.

&#8220When you/ve got 100,000 acres of land … there/s a lot of area to move activities and missions into at Vandenberg without any problem,C he said.

Impacts of VAFB lower on San Luis Obispo County

The impact of Vandenberg Air Force Base on San Luis Obispo County/s economy is less than it is on Santa Barbara County, mostly because SLO County is farther from the base.

Still, the base had an estimated direct impact of ,4.9 million on SLO County 7 mostly the South County 7 in 2004, according to the UCSB Economic Forecast Project study.

The total direct, indirect and induced activity was pegged at ,8.1 million using a multiplier effect of 1.65 7 every dollar directly attributable to the base generates another 65 cents of economic output in indirect and induced activity in SLO County.

In 2004, an estimated 45 San Luis Obispo County jobs were directly attributed to Vandenberg. Using a multiplier of 1.73, a total of 78 positions were generated by direct, indirect and induced activity.

Direct labor income was about ,1.3 million, for a total labor income of ,2.4 million. Of that, 82 percent was paid to workers and 18 percent went to business proprietors.

Using a 1.91 multiplier, that meant for every dollar paid in labor as a result of the base, another 91 cents of income accrued to San Luis Obispo County workers and proprietors.

Vandenberg also generated a total of ,930,000 in taxes associated with San Luis Obispo activity. Of that amount, approximately 59 percent went into state and local government coffers.

77 Mike Hodgson

Mike Hodgson can be reached at 739-2221 or mhodgson@lompocrecord.com

July 15, 2007