WASHINGTON - Nine cities and their surrounding counties are most likely to have their credit ratings downgraded as a result of the current round of military base closings and downsizings, according to Standard & Poor's Corp.
"Base closings and downsizing could have a material impact on the local economies of the base sites and eventually could alter outstanding bond ratings," says an article that is to appear in today's edition of Credit Week Municipal.
The article, "Base Closings: The Master List," features approximately 100 communities rated by Standard & Poor's that face some sort of base reorganization in the next few years. The list contains only bases that will either gain or lose more than 1,000 jobs.
The nine cities and counties, which the article says face "significant" negative effects from a base closing or downsizing, are: Seaside and Monterey County, Calif.; Vallejo Ranchero and Solano County, Calif.; Marquette and Marquette County, Mich.; Oscoda and Iosco County, Mich.; Plattsburgh and Clinton County, N.Y.; Charleston and Charleston County, S.C.; Myrtle Beach and Horry County. S.C.; Beeville and Bee County, Tex.; and Warrenton and Fauquier County, Va.
"Those base closings are significant enough that we will keep close track of these municipalities," said Carlos Lopez, an associate credit analyst at Standard & Poor's. Those communities are all areas where current ratings would be jeopardized by a planned base closing or downsizing, said Lopez.
Local officials' plans to soften the blow of base closings will play a major role in whether the areas are downgraded, Lopez said. But he noted that good planning alone may not stop a downgrade.
The list includes all municipalities and counties affected by approved base closings in 1988 and 1991, as well as those recently approved by President Clinton and waiting for Congressional approval. Lopez expects Congress to give the final nod to the current 30 base closings sometime in September.
Standard & Poor's quantified the anticipated economic impact to each area by calculating "impact ratios." These ratios are calculated by adding up the net military and civilian jobs lost or gained and dividing that by the total employment of the area, Lopez said.
The article says, "While the ratio reflects only the direct effects of a base closing or downsizing - not the indirect loss of jobs or multiplier effects - S&P considers impact ratios greater than 3% significant."
Nine areas earned ratios below negative-3% and seven earned ratios above positive-3%, the benchmarks on either end of the spectrum, the article says. This also implies that the top seven communities could see their credit ratings improved by jobs being added to nearby bases.
