Direct investment by the federal agencies such as the Departments of Defense, Homeland Security, Veterans Affairs, and Energy in support of national security is a key economic driver in the state. The salaries paid to active duty, reserve, and civilian DoD employees, as well as the many contracts executed with companies in the state, provide a direct and tangible means of economic growth in California’s communities. A number of entities have attempted to quantify this impact, and these efforts are referenced below.
Statewide National Security Economic Impact Study
The Governor’s Military Council, in conjunction with the Governor’s Office of Planning and Research, released the updated California Statewide National Security Economic Impacts study in December 2021. The study, conducted by the California State Library’s California Research Bureau and funded by the Department of Defense Office of Local Defense Community Cooperation (OLDCC), details the economic and employment impacts of direct spending and employment in the state by the federal Department of Defense, the Department of Homeland Security, and the Department of Veterans Affairs in FY2020. It expands on previous study of impacts from spending by the Department of Energy in the state. The report provides valuable comparisons with other states to provide context for how California performs in the national security framework. It includes supplements, which estimate the distribution of economic impacts among California’s counties and congressional districts, as well.
*Interactive data tool is available here: Tableau Economic Impacts Interactive Report Tool
Studies from Past Years
DoD Office of Local Defense Community Cooperation (OLDCC) Annual Report on State by State Defense Spending
Office of Local Defense Community Cooperation updated their state-by-state analysis of spending by the U.S. Department of Defense (DoD) for Fiscal Year (FY) 2020 in the 50 states and the District of Columbia. The report may be used as a source of information and statistics on links between defense spending and a state’s economy, particularly in relation to defense-related employment and industry, as well as how defense spending received by a state compares with other states. California again ranks first in total defense spending by the DoD.
This report, and those from FY 2013 – 2019 can be found on the new site here.
San Diego Military Economic Impact Study
The San Diego Military Advisory Council (SDMAC) has recently published its 13th Military Economic Impact Study, a report detailing the economic footprint of the military in the greater San Diego region in 2020. This study, provides a detailed look at the many direct economic benefits the Department of Defense provides the San Diego community, where it generates over 349,000 jobs and an estimated $55.2 billion in Gross Regional Product. This study was the second conducted by UC San Diego’s Rady School of Management. Both Rady School reports, and previous studies conducted by a team from the Fermanian Business and Economic Institute at Point Loma Nazarene University, can be obtained here.
Military Retiree Pay Study
In 2018, San Diego Military Advisory Council, in partnership with the Governor’s Military Council, released its report on “Ending Taxation of Military Retiree Pay in California,” finding that the elimination of state tax on military retiree pay in 2016 would have led to an increase in state and local revenue of $18.4 million. The study for the report, which was conducted by the Fermanian Business & Economic Institute, also identified that California is one of only nine states, including Georgia, Montana, New Mexico, North Dakota, Oregon, Rhode Island, Vermont, and Virginia, to fully tax military retirement pay, making it one that misses out on additional economic benefits beyond state and local government revenue growth to include additional tax on post military retirement careers, gross state product, and total business sales. View the full report on the SDMAC website here