Quicker rebound seen for D.C. area

By V. Dion Haynes
Washington Post Staff Writer
Wednesday, November 11, 2009

An anticipated expansion of the Washington area economy -- to be spurred largely by a federal hiring spree and military base realignment -- should help local governments restore tax revenue to pre-recession levels quicker than other municipalities across the country, according to a new report Tuesday by the bond rating firm Moody's Investors Service.

"As long as we have the trend of increased federal spending, you should continue to see a pretty robust economy in the area," said Geordie Thompson, a senior analyst for Moody's in New York. The region has "weathered the recession well and will be in a good position to capitalize on the upturn." Tax "revenue will start to come back potentially in 2010 and in 2011," he said.

That does not mean the local economy is not suffering now. Despite cushioning from a stable federal government, municipalities throughout the Washington region are grappling with the same severe revenue losses -- in the tens of millions of dollars -- experienced elsewhere, resulting from declines in employment levels, consumer spending and property values. The District recently laid off 266 teachers and other school personnel, Prince George's County furloughed 5,900 workers for 10 days, and Fairfax County gutted an affordable-housing program.

Local government officials say the cutting will likely continue.

"It's going to be another tough year -- I doubt there's going to be a quick recovery," said Dave Robertson, executive director of the Metropolitan Washington Council of Governments.

"No one is predicting that next fiscal year everything will be back to normal," he added.

Unemployment in the Washington area reached 6.2 percent in September, the latest month for government statistics on metropolitan regions. That is far below the not-seasonally adjusted national average of 9.5 percent for that month.

The federal government over the next several years is expected to hire as many as 600,000 people, including up to 120,000 in the Washington area, according to a study by the nonprofit Partnership for Public Service. Many of the workers would be hired to replace people who are expected to retire, but others would fill new positions at agencies that plan to expand.

Michael Knapp, a member of the Montgomery County Council, said officials are in discussions with the Food and Drug Administration, the Nuclear Regulatory Commission and other federal agencies located in the jurisdiction about expansion plans. County officials are looking for "investment in research commercialization so technologies [introduced by federal agencies] can be brought out in the private sector to create jobs," Knapp said. "As you see increased federal investment, we'll be in a position to benefit from it."

Knapp said, however, that he doesn't expect to see a boost in tax receipts until 2013.

Corey A. Stewart, chairman of the Prince William Board of County Supervisors, agreed that the area will probably benefit from the federal government's ase realignment and closure effort. Under the plan, the federal government will close several bases and shift thousands of military personnel to other bases.

Quantico Marine Base in Prince William is expected to receive about 3,000 additional service personnel, and nearby Fort Belvoir in Fairfax County is expecting about 20,000 more. Stewart said he anticipates that the moves will draw thousands of additional jobs in defense contracting and retail.

"We've seen an influx of military families into the county," he said, adding that the demand for housing has helped spur sales and reduced the inventory of foreclosed properties. "We're starting now to see an uptick in defense contractors [looking for] office space."

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