source GAIA package: Sx_MilitaryTimes_M6200710703210316_5675.zip Origin key: Sx_MilitaryTimes_M6200710703210316 imported at Fri Jan 8 18:18:01 2016
A commissary construction cash crunch is looming, which could strain stores at bases with burgeoning populations brought on by base realignments and closures and repositioning of U.S. forces overseas.
BRAC actions will close six installations with commissaries, while overseas rebasing will affect 28 other commissaries in various ways.
Of more concern, commissary officials said, are the 16 installations expected to gain a significant number of people as a result of the moves — 10 in the U.S., including China Lake Naval Air Weapons Station, Calif., and Naval Station Norfolk, Va., and six overseas — that will require increased near-term store construction and expansion.
To deal with that, defense officials have two choices, each problematic in its own way: Increase the 5 percent surcharge patrons pay on all commissary items — the traditional funding pipeline for store construction and renovation — or supplement the surcharge by pumping in taxpayer dollars.
Which way to go?
"I'm not sure," Michael Dominguez, principal deputy undersecretary of defense for personnel and readiness, told lawmakers at a March 13 hearing.
Officials would have to first consult the Commissary Operating Board, a group of senior service and defense officials, and then staff the board's recommendation through the Defense Department, he said.
He did say, however, that he is "not an enthusiast for increasing the surcharge, simply because that has been so much a part of our understanding of the commissary benefit for so long."
Rep. John McHugh, R-N.Y., said he was glad to hear that.
"For the record, I'm a damn opponent of raising it from 5 percent," said McHugh, senior Republican on the House Armed Services military personnel subcommittee.
Still, McHugh said, "I want to underscore the fact that this is a retail challenge."
The commissaries must remain competitive with private-sector stores that are continually rebuilt, renovated and refurbished, McHugh said.
Strain on the surcharge account represents the commissary system's biggest challenge, said Patrick Nixon, director of the Defense Commissary Agency.
At the 16 locations that will see significant personnel increases in the next few years, "our existing facilities will not be able to accommodate the increased patron demand," he said.
The requirements to build new stores or renovate existing ones at these locations not only further strain the surcharge account, but also force the commissary agency to defer projects in other locations that were next in line under the planned construction program, Nixon said.
On top of that, construction costs worldwide have been on the upswing. Because of the limited funds available, it appears the only solution is to focus on repair and renovation of existing stores in the future, rather than building new ones, Nixon said.
In the meantime, commissary officials are trying to reduce or contain other costs, and have requested an operating budget of $1.25 billion for fiscal 2008.
One smaller measure that could make some difference in the cash crunch would be to let commissaries sell beer and wine at exchange prices, possibly as tobacco is sold now, which would pump some more money into the commissary surcharge fund as well as into exchange profits. Part of the exchange profits are returned to the services for morale, welfare and recreation programs.
Exchange officials have opposed allowing commissaries to sell beer and wine out of concern about the potential effect on their profits.
