Trim military commissaries? Them's fightin' words -
Published Sunday, December 15, 2013 at 12:01 am / Updated at 4:31 pm
Trim military commissaries? Them's fightin' words

No matter where in the world the Air Force took them, Kim Livingston and her daughter, Shannon, always knew they could count on one familiar thing: a modern commissary well stocked with low-cost American groceries.

“I'm a military brat. I've always shopped at the commissary,” Shannon Livingston, 32, of Bellevue said during a recent trip to the store at Offutt Air Force Base. “It makes it easier for the military (families) that you're not paying an extraordinary amount of money.”

Now, though, cash-strapped Pentagon leaders are looking to squeeze the $1.4 billion subsidy given to the Defense Commissary Agency, which runs 178 commissaries in the United States and 70 more overseas.

Tom Gordy, president of the Armed Forces Marketing Council, told a congressional subcommittee last month that the Joint Chiefs of Staff had asked the agency to prepare plans to reduce its budget by as much as 66 percent.

Currently, commissaries net almost $6 billion in sales in addition to the taxpayer subsidy, agency Director Joseph Jeu testified at the same hearing. Ninety percent of active-duty service members reported shopping at one last year.

One much-discussed option would include shutting down the Offutt commissary and most others in the continental United States.

The commissary agency referred all questions to Defense Secretary Chuck Hagel's office, which declined to answer questions but has released a brief statement in response to the reports.

“No commissaries have closed. No commissaries are about to close,” Col. Steve Warren, Hagel's chief spokesman, said in the statement. “As with every other program that's out there, we're taking a look at how we can save money. We're just taking a look. No one's decided to do anything.”

That may not be enough to reassure the millions of service members, retirees and their families who shop at the commissaries. Groups representing military families have mobilized to defend a benefit they have come to cherish over nearly 200 years.

“It's a terrible mistake,” said retired Lt. Gen. Leo Smith of Omaha, who was once the budget director for the entire Air Force. “It sends the wrong messages to a lot of folks.”

Smith is concerned that the Pentagon is targeting benefits that are popular with military spouses.

“If there's anything that's very important to spouses, it's the commissary benefit,” Smith said. “Spouses have a lot to do with retention.”

The commissary privilege remains close to the heart of Kim Livingston, 56, who is married to an Air Force retiree.

“They better not take away our commissary benefit,” she said.

The Coalition to Save Our Military Shopping Benefits was created in 2011 because of congressional talk of changing the commissary system.

“Military families are very concerned,” said Candace Wheeler, a military wife and a coalition spokeswoman. “Many of them are feeling that this is a broken promise.”

As of Friday, more than 9,600 people had signed a petition on the website protesting the potential closing of stateside commissaries.

Commissaries are part of the fabric of the lives of almost everyone who serves in the military, and they have been for a long time. As far back as 1825, officers were allowed to buy grocery supplies through their military units at cost, said Nancy O'Nell, a spokeswoman for the commissary agency.

Starting in 1841, the privilege was extended to their immediate family members. And in 1867, enlisted troops gained the right.

Until the early 1990s, each service ran its own commissary system. A blue-ribbon panel recommended merging them into what became the Defense Commissary Agency — a move that the agency says saved $500 million a year.

Commissaries are off-limits to almost everyone who isn't a service member, family member, or retiree. In all commissaries, shoppers must present a proper military ID to buy goods. In many, an ID is required even to enter. Civilian military workers at bases in the U.S. may not shop at commissaries.

They look like the best supermarkets in the civilian world: neatly stacked shelves, well-stocked aisles, cashiers, baggers and a service desk.

“I really like it. It's on base, it's handy,” said 2nd Lt. Calvin Fishburn, 22, an officer at Offutt. “The tax-free benefit is nice.”

There's some debate whether commissary prices are cheaper than other stores.

Commissary prices are set by law at cost plus a 5 percent surcharge to cover store construction and maintenance. And they don't charge sales tax.

Commissary officials say patrons save 30 percent over civilian supermarkets — $1,500 a year for a single service member and $4,500 for a family of four, Jeu said.

“The commissary not only enhances the quality of life for military families,” Jeu testified, “but also provides an excellent return of two dollars in patron savings for every taxpayer dollar invested.”

Those who shop there offer a somewhat more nuanced view of the savings. If you live in one of the 45 U.S. states and territories with no sales tax or reduced tax on food — including Nebraska — the savings are less. And the baggers at commissaries work only for tips, so the few dollars that patrons tip them cut into the savings.

Commissary shoppers also note that the military stores don't offer lower-priced store-brand items or weekly specials, as do most off-base grocery stores. Warehouse stores that sell in bulk also may offer lower prices. And the cost may balance out further for shoppers who must drive a long distance to shop.

Still, retirees such as former Air Force master sergeant John Reed of Bellevue say the savings are real.

“It's 20 to 40 percent cheaper here — it depends on what you're buying,” he said during a shopping visit to the Offutt commissary last month. “I do almost all my shopping here.”

Not all commissaries are created equal. Stores in Japan, Guam or Italy are more expensive to stock and run than stores in San Diego, San Antonio or Washington D.C., and they are less profitable.

Because the money-losing overseas stores also are the least likely to be closed, Gordy said, closing the more profitable domestic commissaries would cost the agency some volume discounts — driving up prices at the remaining stores.

“The loss of these savings would be akin to a pay cut and would undermine financial and personal readiness of military personnel,” Gordy said in his congressional testimony.

The commissary agency is looking at other options to cut costs without closing stores. They include:

» Increasing prices 2 to 3 percent on all products worldwide to pay the costs of shipping to overseas commissaries.

» Allowing commissaries to sell products such as beer, wine and health and beauty items at a profit. That, however, would undercut sales of those items at military exchanges — on-base stores similar to Walmart or Target — which currently operate without tax subsidies but whose profits currently support military quality-of-life programs.

» Boosting the commissary surcharge from 5 to 10 percent.

Gordy said each of these options would shift about $450 million in costs from taxpayers to military families.

Advocates for service members and veterans say they will continue to fight any changes to what they say is one of the military's most cherished benefits.

“We're prepared to galvanize our members,” said Karen Golden, deputy director of military family issues for the Military Officers Association of America. “Military families are watching this very, very closely.”

Contact the writer: Steve Liewer    |   402-444-1186

Steve is the military affairs reporter for The World-Herald.

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