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Customers would foot bill for commissary budget cuts

Mar. 4, 2014 - 03:32PM   |  
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As expected, commissary customers would foot the bill for operating the stores, according to details of the 2015 defense budget proposal released Tuesday.

The three-year plan to shrink the annual commissary budget from $1.4 billion to $400 million would raise prices to cover the costs of operating stores, expand the variety of products sold and reduce transportation costs.

Raising prices would require a change in law, as would expanding the product assortment. The exchange services have traditionally opposed expanding the variety of items sold in commissaries — such as beer and wine — because it would cut into their business.

Defense officials will not direct any commissary to close, according to the proposal. “In the end, patron usage of the commissaries will determine the savings and their competitive advantage,” the budget proposal states.

With the increase in prices, shoppers “should continue to enjoy significant savings on grocery purchases (about 10 percent or more) compared to high-priced grocery stores and modest savings over discount chains,” according to budget documents.

That would shift the Defense Commissary Agency’s operations to a model similar to the way exchanges operate. Exchanges mark up prices to pay for operations and capital improvements. They also contribute part of their profits to morale, welfare and recreation programs.

DeCA says customers save about 30 percent on the average compared to those at major retail and discount grocers in the private sector, which means the new proposal would wipe out about two-thirds of those average savings.

In the first year of the plan, DeCA would see about a $251 million decrease in the amount of taxpayer dollars in its budget.

By fiscal 2017, the Defense Commissary Agency would receive about $400 million in annual taxpayer dollars to continue funding shipments to overseas commissaries, and to subsidize about 25 commissaries in remote and isolated areas in the U.S, according to the budget documents.

The budget details released Tuesday made no mention of raising the 5 percent surcharge that all customers pay at the cash register. That surcharge provides funding to renovate existing commissaries and build new ones.

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