PUBLICATIONS & RESEARCH

Since the U.S. Department of Energy (DOE) first sited its facilities in Tennessee in the 1940s, its operations have made significant contributions to the state of Tennessee, its residents and local governments. The DOE’s on-going operating budget yields significant benefits to the state economy through the creation of jobs and income, increases in state output and expansions in state and local tax bases. Even though the DOE’s primary presence in the state is in Anderson and Roane Counties, locatedadjacent to the Knoxville Metropolitan Statistical Area, the economic benefits accrue statewide. The spillover of benefits into the rest of the state can be attributed to the ripple effect of initial economic benefits as well as the numerous programs offered by the DOE to companies located within the state. The Center for Business and Economic Research (CBER) at the University of Tennessee started conducting an in-depth analysis of the annual economic benefits for Tennessee attributable to the operations of the DOE in 1999. The current report represents the seventh analysis and presents the economic benefits of the DOE for Fiscal Year 2008. The remainder of the report consists of three sections. First, the next section provides a profile of the activities of the DOE. Second, Section III provides a detailed analysis of the economic benefits for Tennessee in terms of output, income, jobs and sales tax revenue arising from activities of the DOE and its major contractors. Finally, Section IV summarizes many highlights and accomplishments that were noteworthy during Fiscal Year 2008.

Many attribute falling labor force participation rates to the effects of the Great Recession. However, the analysis presented here suggests that the seeds of falling labor force participation rates were sown much further back in history. The malelabor force participation rate, in particular, has been in long-term decline, while the participation rate of women began to decline in the early 2000s. The Great Recession certainly aggravated these trends, but the recession was not the lone culprit.The labor force participation rate is likely to show some near-term improvement as tighter labor market conditions draw discouraged workers back into the job hunt. But at some point the long-term trends affecting participation rates will reassertthemselves. The preparation of this report was financed in part by the following agencies: the Tennessee Department of Finance and Administration, the Tennessee Department of Economic and Community Development, the Tennessee Department of Revenue, the Tennessee Department of Labor and Workforce Development, and the Appalachian Regional Commission.

In Tennessee, total tax collections grew by 4.6 percent during the third quarter of 2014. This was faster than both the southeast average of 3.2 percent and the national average of 4.4 percent. Among the 12 southeastern states, only South Carolina, Mississippi, Virginia, and Florida experienced faster revenue growth than Tennessee (see Figure 8). As of March 2015, Tennessee Department of Revenue tax collections have totaled $7,797.9 million for the fiscal year-to-date (August 2014 through March 2015), representing a $535.4 million or 7.4 percent increase over last fiscal year. The 7.4 percent expansion in tax revenues has largely been driven by sales tax revenues which are up $269.8 million or 5.7 percent, and franchise and excise tax revenues (corporate income taxes) which have grown by $232.8 million or 24.5 percent compared to last fiscal year-to-date.