Federal Budget Would Send Millions To The Region

The $1.1 trillion spending bill making its way through Congress this week would give Hampton Roads’ military-dependent economy some stability in 2014 by keeping intact funding for ship construction and overhaul projects that employ tens of thousands in the region.

The legislation approved by the House on Wednesday and expected to face a Senate vote by Friday also would give service members a 1 percent pay raise and eliminate the need for unpaid furloughs by civilian federal workers.

It includes more than $100 million for military construction projects in the region.

It also would block the Navy’s plans to retire early nine ships, including three homeported in Southeast Virginia.

The legislation, based on the budget deal negotiated in December, would reduce the pain from automatic defense cuts, known as sequestration. It would partly set aside across-the-board cuts, which are especially damaging to shipbuilding and vessel-repair projects, in favor of more targeted reductions.

“This is a giant step forward…. This gives predictability,” U.S. Sen. Mark Warner said Wednesday. He noted that, a year ago, the ship-repair industry was facing the prospect of canceled Navy contracts and layoffs because of sequestration and the inability of Congress to pass a spending plan covering more than a few months at a time.

U.S. Rep. Randy Forbes, a leader of the House Armed Services Committee, said the bill isn’t perfect but “does much to support our men and women in uniform and helps to reverse the hemorrhaging to our military’s readiness.”

He and the rest of the region’s House members voted for the bill.

Among those working in the civilian ship-repair and construction industry, the mood is markedly more upbeat today than it was a year ago, said Bill Crow, president of the Virginia Ship Repair Association.

The industry employs more than 40,000 in the region.

Knowing that funding would be set until the federal fiscal year ends on Sept. 30 would give industries “stability and the ability to plan for those repairs – all the way from our major ship-repair companies down to contractors, subcontractors and suppliers,” Crow said.

The budget bill would maintain funding for aircraft carrier construction and overhaul projects at Newport News Shipbuilding, the nation’s sole producer of nuclear-powered carriers.

The shipyard, which employs more than 23,000, also would benefit from continued funding for two Virginia-class submarines and a provision to allocate another $900 million this year toward completion of a third sub within the next five years. The subs are a joint project with General Dynamics Electric Boat in Groton, Conn.

Five military installations in Hampton Roads would see $113 million in shore construction projects. Among them: training barracks at Fort Eustis; renovation of Navy SEAL facilities at Joint Expeditionary Base Little Creek; and pier upgrades at Norfolk Naval Station in preparation for the carrier Gerald R. Ford, now under construction in Newport News.

The Hampton Roads projects would account for about a third of the $356 million in military-related construction budgeted for Virginia. The largest allocation – $87 million – would be for a new 253,000-square-foot office building in the Richmond area for the Defense Logistics Agency.

According to the Defense Department’s budget request, the new building is needed because the agency’s staff “currently occupies a mix of temporary mobile trailers and existing administrative and storage facilities of which most are more than 50 years old.”

The spending bill also would block the Navy’s plans to retire the cruiser Anzio, based at Norfolk Naval Station, and the dock landing ships Whidbey Island and Tortuga, based at Little Creek.

Rather than decommissioning those vessels and six other cruisers, Congress wants to spend $2.25 billion over 10 years to “man, operate, sustain, upgrade and modernize” the nine ships.

While the spending plan allocates a 1 percent raise for service members, it would take a bite out of pensions for most working-age veterans, with two new exceptions.

A budget plan approved by Congress in December would cut 1 percent of the annual cost-of-living adjustment added to the pensions of military retirees younger than 62.

The COLA increase would be restarted when a veteran turned 62.

However, the spending bill approved by the House on Wednesday would reinstate the cost-of-living increase for disabled veterans and families of service members killed in action.

Several members of Congress, including Hampton Roads’ delegation, have said they want to reinstate the COLA for all veterans. The reductions, set to begin in December 2015, would save the government an estimated $6 billion over a decade.

Warner said the spending bill this week and a budget plan approved by Congress in December are good news, but he warned that more automatic budget cuts loom unless legislators find an alternative.

Sequestration, which began in 2013, involves making $1 trillion in spending cuts – half in defense and half in domestic programs – over 10 years to trim deficit spending.

The budget plan passed last month significantly reduced this year’s cuts and will offset half the projected cuts for 2015, but it offered no solution for subsequent years.

This year “will be great,” Warner said. “’15 will be good…. ’16 and beyond is a question mark.”