Aerospace employment down, Tucson on path to bankruptcy

tucson-downtownIn the May 2014, Tucson Association of Realtors (TAR) published their Tucson MSA Jobs Scorecard. There were few surprises for business owners, who have grown increasingly concerned about the business unfriendly reputation Tucson has earned over the years.

To read the TAR Scorecard click here.

What was surprising to some was the revelation that in the month of April “the region continued to shed jobs in aerospace manufacturing (-100); construction (-100); Trade/Transportation/Utilities (- 300); and Professional & Business Services (-300), according to the TAR report, based on statistics by the U.S. Department of Labor.

While Pima County makes a practice of suing Raytheon, one of the largest aerospace employers in the area, Huntsville, Alabama keeps the red carpet rolled out for new hires and Tucson transfers.

“At month-end, there were 24,700 unemployed people looking for work,” states the TAR report.

The Scorecard findings for April:

● 200 jobs lost despite a 1.1% drop in unemployment

● Jobs were not created; the change was due mainly to 5,500 workers who dropped out of the labor force.

● Month-over-month however, Government added 100 jobs.

Tucson MSA Unemployment Rate on April 2014 was 5.5%, while a year ago it was it was 6.6%.
Prior month

“The Tucson MSA expanded last year, although at a disappointing pace. Job growth was 0.7%; down from 1.5% in 2012 and well below the state (2.1%) and national (1.7%) rates,” reads the report.

There was some good news; the “Federal fiscal drag is expected to dissipate this year, with no repeat of the payroll tax increase, the sequester cuts, or the Federal government shutdown. That opens the door to faster growth in Tucson, particularly as the housing recovery gains additional momentum.”

Tucson’s bond rating did not drop as many expected this month, however the Fitch bond rating agency listed the outlook as “negative.” The agency cited the persistent “structural budgetary imbalance,” which is due to “increasing outlays for employee benefits and a recent drop in economically sensitive revenues…. Preliminary fiscal 2014 operating results are positive, but are boosted by one-time measures.”

Because the City leaders have been unable to make tough choices the City is expected to go bankrupt according financial observers.

Tucson City Councilman, Steve Kozachik, in his May 21, 2014 newsletter wrote, “For 5 consecutive fiscal years since I’ve been on the council we have not put together a budget that a business or homeowner could live with. We take on more debt, use our reserves, fail to add revenues when we have the chance, and reduce our contingency.”

Kozachik says that the failure to act will reduce costs will lead to laid off workers, which means fewer services for the public.

“We are taking on $13M in debt to pay for the streetcar. The debt service is coming out of the General Fund. Some of that debt could be absorbed if we had rolled back some of the pay increases, raised bus fares incrementally, or adjusted bus routes as was proposed in our Comprehensive Operational Analysis of the bus system,” writes Kozachik, “We punted on all of those options.”

Kozachik concludes, “That’s a broad brush description of what will likely be adopted at the end of June. If it isn’t changed in some significant ways, they’ll have to find their 4 votes from among 6 people. I won’t be voting in favor of continuing down the same path as we have been on since I was first elected.”

It is that refusal by the majority on the City Council that could lead to bankruptcy. The City of Tucson is expected to go bankrupt if City leaders don’t begin to make tough choices immediately.

Those choices will get tougher, if at the end of 2015, funding for the A-10 is cut. Davis Monthan is home to the A-10 and according to documents obtained from the Air Force sources; there will not be sufficient missions to support keeping the base open.

Yet, Kozachik, who recognizes that the City is in trouble, and has come out in support of the A-10, says that he will only support certain missions at Davis Monthan. Those missions he favors are not planned for in the Air Force’s long term blue print.

Kozachik writes, “A group has formed whose expressed interest is in the long term preservation of DMAFB – and more broadly, all Southern Arizona military installations. The group is called Mission Strong, and I fully support their goal.”

Mission Strong members include International Association of Machinists, Metropolitan Pima Alliance, Southern Arizona Business Coalition, Southern Arizona Home Builders Association, Tucson Electric Power, Tucson Hispanic Chamber of Commerce, and the Tucson Association of Realtors.

According to Kozachik the City of Tucson has also signed onto the Mission Strong platform. “As I understand it, it was by virtue of our Resolution in support of DM that our name was added. As a general point of agreement in supporting DM, I’m fine with that.”

However Kozachik states, “When we voted our Resolution in support of DM I made the statement that my vote was in support of all current missions, and that I’d expect the base to engage with the community as new missions were being discussed. I’m certain that there are military missions that are not conducive to being located at a base that is already suffering from residential encroachment. For that reason, I’ll have to separate myself from that blanket statement of support for “any future missions” and reiterate my hope that the community and its unique characteristics are considered when the DOD is moving mission assignments around.”

To be sure the Air Force will consider Tucson’s now most famous characteristic; a business unfriendly community run by handfuls of small neighborhood associations that operate solely in the best interest of their little patches of soil.

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