NASHVILLE – If the federal government falls off the “fiscal cliff” as a result of mandatory spending cuts, Tennessee and a lot of people in the Volunteer State may fall right along with it, according to a study released today.
The nonpartisan Pew Center on the States says the series of federal tax increases and spending cuts set to occur in January, absent an agreement between President Barack Obama and Republican members of Congress, will have “consequences” for states, including Tennessee.
According to Pew, the amount of federal grants in Tennessee subject to “sequester,” or mandatory cuts as a percentage of state revenue, is 7.7 percent based on 2010 figures. That’s the fifth highest among all 50 states and above the 6.6 percent national average.
Meanwhile, federal spending on procurement, salaries and wages as a percentage of Tennessee gross domestic product in 2010 is 4.9 percent. That’s below the national average, mainly due to the fact that Tennessee isn’t as high as many states when it comes to defense spending.
But when it comes to cuts in non-defense spending on procurement, salaries and wages, the Volunteer State’s 3.1 percent is well above the 1.8 percent national average. Tennessee is home to Oak Ridge National Laboratory, which is a huge federal presence in the state.