Economic Fallout: As the U.S. Nuclear Weapons Complex Continues to Shrink, Local Governments Are Feeling the Fiscal Squeeze

By Lowrie, Karen; Greenberg, Michael et al. | Forum for Applied Research and Public Policy, Summer 1999 | Go to article overview
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Economic Fallout: As the U.S. Nuclear Weapons Complex Continues to Shrink, Local Governments Are Feeling the Fiscal Squeeze


Lowrie, Karen, Greenberg, Michael, Frisch, Michael, Forum for Applied Research and Public Policy


The end of the Cold War has dramatically decreased the need for continued nuclear weapons production in the United States. The communities around the largest of the weapons production and research sites owned by the Department of Energy are now facing the socioeconomic impacts caused by downsizing, mission changes, and in some cases, eventual closure of the sites. The resultant job losses reduce local incomes, property values, retail sales, and housing demand and cause other economic stresses that damages the fiscal health of some of these communities.

DOE owns some 140 sites in 38 U.S. states and territories, encompassing 2.3 million acres and containing tens of thousands of buildings and structures. This weapons complex employs more than 100,000 workers in various activities, ranging from continuing research and production at some sites to cleanup of contaminated water, soil, and buildings at other sites. Nearly all of the major weapons facilities were built in the 1940s and 1950s in locations that were relatively remote and rural, for reasons of national security. During Cold War production, communities that were supported almost totally by the nuclear weapons industry developed near the entrances to these facilities.

When a large industrial facility lays off workers, local communities often suffer economic decline. (1) In general, the smaller the local community and the further removed the facility is from metropolitan areas, the larger are the anticipated effects. (2) Towns and counties near U.S. nuclear weapons production sites are like company towns in their heavy reliance on DOE jobs to maintain their economies.

These communities have additional problems to confront, however. In the past they were forced to react to decisions made in secret because of security considerations. (3) Moreover, because some of the communities are rural, they often lack the professional expertise and budgets required to provide services, impose controls, or interact fruitfully with a large federal bureaucracy. Closing a massive nuclear facility is also more expensive and takes more time than closing an ordinary private plant. Remedial actions will be required for several decades and prospects for private reuse are problematic at best. (4)

Weapons Site Regions

Recently, we looked at budget and employment issues facing local governments in the regions surrounding the seven largest DOE facilities: Savannah River Site in South Carolina, Hanford in Washington, Idaho National Environmental Engineering Laboratory, the Oak Ridge complex in Tennessee, Rocky Flats in Colorado, and Los Alamos and Sandia laboratories in New Mexico. (5)

Since the late 1980s, all of these sites, for the most part, have undergone a boom-and-bust cycle that included a build up to peak employment in the early 1990s followed by drastic reductions of employment starting in 1994. By 1996, workforce cutbacks ranged from 8.5 percent (Sandia) to 53 percent (Rocky Flats), representing tens of thousands of jobs. (See Table 1.)

Economic Effects

Major employers are important to local governments in a number of ways. For instance, they often contribute a large share of property taxes, thus reducing the residential property tax burden. Federally owned nuclear facilities, however, have never paid property taxes, although they do make modest payments to local governments in lieu of taxes. Their direct contributions to municipal revenues have therefore been minimal. Commercial nuclear power plants, on the other hand, have historically paid a huge proportion of local taxes. (6)

Local governments usually financed roads, sewers, schools and parks to support the nuclear facility's employees and their families through local tax revenues and the sale of bonds, creating a long-term financial obligation for the host community. (7) The regional infrastructure created as communities grew up around the nuclear facility is therefore too big to be supported solely by the rural region.

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