New DoD Plan Would Force Major Commissary Cuts

The Defense Department plans to ask Congress for so little money for commissary operations over the next three years that keeping all stores open would become nearly impossible.

The plan, which I learned about from DoD sources yesterday, would force the commissary to either downsize or make major changes to how it operates -- or possibly both -- by slowing reducing the amount of money it has to run.

Right now the commissary needs $1.4 billion in tax payer money every year to stay open. If this plan rolls forward by 2017 DoD would only be giving it $400 million -- an almost 70 percent cut to its current funding. Can the Defense Commissary Agency operate all of its current stores on 30 percent of it's current budget?

You can read all the details of this plan in my story over on Military.com.

Let's be very clear first and foremost -- this plan does not mean commissaries are closing tomorrow, or perhaps even at all. For this to become law the White House must first agree to send it to Congress,  and then Congress must approve it.

If it makes it to Congress lawmakers would either have to give it the OK or increase the operating budget by taking money from some other request to pay for it. In this budget climate that seems, frankly, unlikely.

Just like in November when we first reported that this is happening, any downsizing would probably look to exclude overseas and rural stores.

However, again, it's difficult to see how even those locations would go completely untouched. As commissary advocates like Tom Gordy, president of the Armed Forces Marketing Council which represents brokers who do business with military stores, have pointed out, the existence of the overseas and rural stores are dependent on the other, non-rural stateside stores.

Here's just two examples of how:

-- The low food prices the commissary is able to negotiate with food sellers (think Proctor-Gamble or Unilever) is based on volume. Fewer shoppers = higher prices at the remaining stores.

-- That five percentage surcharge you see on your receipt pays for commissary maintenance and construction. As you might guess, most of that money is generated at the busy stores stateside and shared system wide. The stores overseas and in rural areas don't generate enough surcharge income to keep up themselves.

A measly $400 million may be able to keep those stores in vital locations open -- but they will not be like the commissary we know today.

There are ideas for raising more money or cutting costs that have been considered by DeCA. They could add beer and wine to their shelves -- but critics don't like that one because it creates competition with the Exchange system and increases the availability of alcohol on base. They could ask Congress to double the surcharge or raise prices -- but that would send shoppers to other civilian stores and create the same problems for the OCONUS and rural locations. They could eliminate funding for shipping food overseas by military transport -- but that could result in OCONUS bound groceries getting caught up in customs (which they currently skip) at foreign ports or being subject to excise taxes (from which they are currently exempt).As this story develops we'll keep you updated.

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