Tennessee Advisory Commission on Intergovernmental Relations (TACIR)
Lynnisse Roehrich-Patrick, Executive Director

Commission Meeting June 19-20

TACIR will be meeting in Nashville on June 19 and 20. The Commission will be discussing and making recommendations on many important issues, such as Tennessee’s growth policy act, land use, and fire service. Plans will be presented for handling legislation sent to the Commission for study, including a number of bills related to annexation. Video streaming will be available both days. Please visit our meeting page for the agenda, reports and other documents on these issues, and video links.

The Recession and Employment in the US and Tennessee: A Long Road Back to Normal?

The Great Recession, which began in December 2007, has been the worst general economic decline that most Americans have experienced. It began in the construction sector, spread to the financial sector, and eventually rippled throughout the economy, causing significant collateral damage in most other areas. Overall employment fell by 8.7 million nationally, and by 220,000 in Tennessee. Almost six years since the recession began, employment has not fully recovered. A few job sectors were insulated from the decline—primarily education and health services. Others, like state and local government sectors, were able to postpone some of the recession’s effects. Job growth during the recovery has varied by sector, as well as between Tennessee and the US and by region within Tennessee. Looking at data for the most recent 12 months, it’s apparent that the sector hit hardest by the recession—mining, logging, and construction—has been recovering, but not in three of the four big regions: Nashville, Knoxville, and Chattanooga. Memphis is the only one of the four with growth in that sector. The sector has also declined in Clarksville and Kingsport. A similar story emerges for the financial sector, which is not looking good in the Memphis, Nashville, Chattanooga, Kingsport-Bristol, and Johnson City areas.

Recent estimates by the University of Tennessee’s Center for Business and Economic Research show total employment in both the US and Tennessee regaining or exceeding their previous peaks by 2015. The expectation for recovery in some sectors in Tennessee, however, remains dismal. The retail trade, wholesale trade, financial activities, and information sectors are not expected to return to their peak employment levels until after 2022. Manufacturing may never return to its peak, which occurred in 1979 for the US and 1978 for Tennessee. (Full Report)

Tennessee Valley Authority’s Payments in Lieu of Taxes Annual Report to the Tennessee General Assembly

Managing within the $30 billion debt limit set for it by Congress in 1979 has led the Tennessee Valley Authority to adopt a number of innovative but, by its own account, costly financing techniques. Some of these techniques could affect payments in lieu of taxes to states in the region. Most TVA states, like Tennessee, use the funds as general revenue and share much of it with local governments. Tennessee is by far the single largest recipient of TVA’s payments in lieu of taxes, drawing more than 60% of the total since 2011, and distributes close to half of that money to cities and counties.

TVA’s new financing arrangements, in particular, sale-and-lease-back agreements, could change the amount of revenue available for state government to fund its own budget and to share with Tennessee’s cities and counties. This information comes to light in an annual report by the Tennessee Advisory Commission on Intergovernmental Relations. TACIR has been asked by the state legislature to monitor possible effects on TVA’s payments to the states.

The report also notes that TVA’s estimated payments in lieu of taxes for the region for federal fiscal year 2012-13 are expected to be around $537 million, $43 million less than the $579 million in actual payments for federal fiscal year 2011-12. This is only the second time since 2000 that a decrease from one year to the next has occurred. The projected decline comes as a result of the slowing economy, mild weather, and the potential loss of its largest customer, the US Enrichment Corporation, because of the impending closure of the Paducah Gaseous Diffusion Plant in Kentucky. The decline in estimated payments to Tennessee amounts to slightly more than $1 million in the distribution to county governments, $462 thousand to cities, and approximately $2.0 million to the state and its agencies. In most cases, the loss to counties and cities amounts to only a few thousand dollars. (Full Report)

Charting A Course to Tennessee’s Future

Charting a Course to Tennessee’s Future, a new staff report released by the Tennessee Advisory Commission on Intergovernmental Relations (TACIR), presents an overview of the Volunteer State’s strengths and challenges based on the experience and views of more than 40 Tennesseans representing state and local government, business, the not-for-profit sector, and academia. The report builds on the foundation laid by the Forum on Tennessee’s Future, a group of leaders convened by TACIR staff in 2008 to discuss our state’s greatest challenges. Like the members of the Forum, most of the people interviewed for this report believe Tennessee needs to improve its ability to prepare for the future. The challenges they identified are discussed in four broad categories: people, infrastructure, natural resources, and governance. The report encourages Tennessee leaders to draw on the expertise of various groups to develop a statewide vision and long-term goals in order to shape public policy around effective solutions and wise use of resources. (Full Report)

Eminent Domain in Tennessee

TACIR has released a Commission report on eminent domain legislation referred for study during the 107th General Assembly. The report makes several recommendations including that property owners should not have the power to force local governments into binding arbitration to resolve disputes over the price to be paid for condemned property, and that mediation should always be considered before arbitration. It also recommends removing language from the law that allows local governing bodies to delegate the authority to approve redevelopment plans to housing authorities, ensuring that such agencies could not approve the plans themselves and use them as a basis for condemnation without the oversight of the local governing body. The report notes that many stakeholders interviewed supported the idea of giving property owners a right of first refusal in all condemnation cases. It recommends adoption of the Tennessee Department of Transportation’s right of first refusal model, including limiting the right of first refusal to ten years from the date of condemnation, limiting it to the former property owner only, and setting the price based on appraisals of fair market value. The report also suggests that efforts should be made to better inform property owners about their eminent domain rights. (Full Report)

Tracking Tennessee's Economic Recovery

TACIR has partnered with the Middle Tennessee State University Business and Economic Research Center to provide an Internet site to track the state economy during the recovery from the recession that began in December 2007. The site will permit the reader to follow labor force status including employment and unemployment numbers; housing data including a housing price index and construction activity; and sales tax collections. These data are available for the state and for 10 Metropolitan Statistical Areas across the state. Presented graphically, the data may also be downloaded for use at the reader’s convenience. (More)