TVA payments fall to states, localities

TVA payments fall to states, localities

November 21st, 2013 by Dave Flessner in Business Around the Region

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TVA payments in fiscal 2013

• Tennessee $337.7 million

• Alabama - $110.9 million

• Kentucky - $47 million

• Mississippi - $38.7 million

• Georgia - $8.4 million

• North Carolina - $3 million

• Illinois $492,366

Source: Tennessee Valley Authority

Falling fuel prices may be benefit ting consumers with cheaper electric bills, but the decline in power sales is projected to cost state and local governments in the Tennessee Valley another $25 million this year from one of its biggest taxpayers.

TVA projects it will pay state and local governments in its 7-state region $522 million in the current fiscal year, down 4.6 percent from the $547 million paid in fiscal 2013 and nearly 10 percent below the $579 million TVA paid out in fiscal 2012.

Governments in Tennessee, where TVA has nearly 63 percent its sales and assets, will be paid $328 million this year, or $9 million less than last year and $26 million less than two years ago.

Dr. Reuben Kyle, retired economics professor at Middle Tennessee State University who works as a research consultant for the Tennessee Advisory Commission on Intergovernmental Relations, said the drop in TVA payments will pinch some governments.

"It's definitely a concern for local governments that rely upon this money for schools and other government operations," Kyle said. "It's certainly not chicken feed."

Last year, Hamilton County received more than $3.4 million and the city of Chattanooga received nearly $2 million from TVA.

As a federally owned corporation, TVA is technically exempt from property, franchise and excise and other state and local taxes. But the TVA act provides that 5 percent of TVA's revenues will be paid to governments where TVA sells power or has operations.

TVA lost its biggest industrial customer -- U.S. Enrichment Corp. in Kentucky in May -- and other sales to direct-served industries fell another 2.2 percent last year as factories cut production in the Valley or revamped operations to save power. In fiscal 2013 TVA sold $10.96 billion of electricity, or $280 million less than the previous year.

TVA splits its annual tax-equivalent payments to states based equally upon its sales in those states and its assets in each area. As home of TVA's Sequoyah Nuclear Power Plant, the Power Services Center and the Chattanooga Office Complex, Hamilton County ranks No. 4 among Tennessee counties in its share of TVA payments.

In Tennessee, Kyle said 48.5 percent of the TVA money goes to state government, 48.5 percent goes to local government and the other 3 percent goes to statewide organizations such as TACIR and the Tennessee County Services Association.

"These funds provided by TVA play a significant role in supporting economic development, public services and quality of life for communities across the TVA region," TVA President Bill Johnson said in a statement announcing the in-lieu-of-tax payments. "The payments are an important part of TVA's mission to serve the 9 million residents of the Tennessee Valley."

Since 1941, TVA has made $10.9 billion in tax equivalent payments to state and local entities, with payments in the past 10 years totaling $4.6 billion.