Arizona Slips Out of Top 10 in Pentagon Spending, But Defense Economy Still Strong – Cronkite News | Bot To News

A ground crew checks an F-35 at Luke Air Force Base in this 2018 file photo, when total Defense Department spending in the country was $15.2 billion, the 10th highest in the nation. Pentagon spending in Arizona fell to $14.6 billion in fiscal year 2021, dropping the state out of the top 10, but economists and business officials say the long-term picture remains strong. (Photo by Nicole Neri/Cronkite News)

WASHINGTON — Pentagon spending in Arizona fell sharply in fiscal year 2021, part of an overall reduction in spending nationally that dropped the state from seventh place among nations to 13th, according to Defense Department data released this fall.

The nation’s total military spending fell from $20.2 billion in fiscal year 2020 to $14.6 billion in fiscal year 2021. That was a bigger drop than the 5.6 percent reduction in spending nationwide over the same period. total spending on contracts and military personnel fell from $593.9 billion to $559 billion.

But analysts say that while Arizona may have lost its standing among the states, the decline is nothing to worry about. The defense industry remains a pillar of the national economy. they said, and it will probably be the case in the near future.

“Given the good environment and the welcoming environment, Arizona is in a very good position to continue this growth in this industry,” said Todd Sanders, president and CEO of the Greater Phoenix Area Chamber of Commerce.

The Pentagon spent $398.7 billion nationally on contracts in fiscal year 2021 — down from $439.4 billion a year earlier — but that was partially offset by an increase in spending on Defense Department personnel, which increased from $154.6 billion to $160.3 billion in the same year. period.

In Pima County, home to Davis-Monthan Air Force Base near Tucson, spending on military pay and benefits increased from $746 million in fiscal year 2020 to $764.6 million a year later. Michael Guymon, president and CEO of the Tucson Chamber of Commerce, said the personnel spending “demonstrates that the Department of Defense remains very committed to Davis-Montana and the missions that flow out of Davis-Montana.”

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Guymon also praised the “great talent” coming out of the University of Arizona’s engineering department, which he said contributes to Tucson’s robust defense economy.

Military contracts have long been a staple of Arizona’s economy, which includes multinational defense manufacturers such as Boeing, Raytheon and Northrop Grumman, among others. But contract spending took a hit both nationally and in Arizona in fiscal year 2021, with the state’s contracts falling from $15.7 billion to $12.3 billion, according to the Pentagon’s 2021 report.

Boeing saw its contracts in Arizona drop from $2.2 billion to $1.2 billion over the year. But Kathleen Jolivette, vice president of Boeing Mesa’s attack helicopter program, said in a prepared statement that she was looking forward to the future, noting “solid and stable defense demand” in the United States.

Jolivette said Boeing in Arizona was focused on ensuring a steady supply of Apache helicopters, striving to provide “the best performance of today’s military aviator while innovating for the future.” Despite the military cutting orders for Apache helicopters from 49 in fiscal 2021 to 30 in fiscal 2022, Jolivette said “strong international sales are making up for the gaps.”

“Our portfolio is well positioned and our future franchise programs have a long way to go,” said Jolivette.

Budget numbers for 2021 across the country do not reflect the billions spent this year on military aid to Ukraine at war with Russia. The federal ranking was also skewed by “major contracts with Pfizer, Inc. and Regeneron Pharmaceuticals, Inc. in New York” and “Moderna, Inc. in Massachusetts” to purchase COVID-19 vaccines, the Pentagon report said.

“The contracts in New York and Massachusetts were related to the procurement of the COVID-19 vaccine and treatment by the Department of Defense in cooperation with the US Department of Health and Human Services,” the report said.

The Pentagon also said that eight of the 10 companies on its top 10 list were already there, with Pfizer and Moderna “both new to the list and representing an anomaly for traditional defense spending.”

Over the past decade, Arizona has ranked as low as 13th among the states in defense spending — in fiscal years 2016, 2017 and now 2021 — and even ranked seventh in fiscal 2020.

“Clearly, this spending is important to Arizona,” Sanders said. “We looked at the statistics for 2021 and when you look at the rest of the economy, you saw a similar drop in revenue or spending as the rest of the economy as a result of COVID.”

Sanders said the slowdown in defense spending was “a delayed effect of the economic slowdown due to COVID.”

But he expects the slowdown to be only temporary and reiterated the importance of defense to Arizona, where the Arizona Commerce Authority says 56,500 workers are employed in aerospace or defense jobs.

Similarly, Guymon said the defense industry in Tucson is a good bet. And, he said, it’s not just heavy hitters like “Raytheon and Davis-Monthan.”

“So are more than 200 other aerospace and defense companies here in southern Arizona,” Guymon said. “From a purely economic development perspective, Tucson and Southern Arizona have the fifth largest concentration of aerospace and defense employees in the nation.”

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