Although federal government defense spending grew significantly from 2000 to 2010, spending by the Department of Defense (DoD) has been on the decline ever since. The recent cut in defense spending can be attributed to the troop drawdown in Iraq and Afghanistan, as well as the Budget Control Act of 2011. With defense spending expected to decline by 28% between 2011 and 2019, the potential effects will differ across states and counties. The Defense Spending by State Fiscal Year 2014 Report examines defense spending in 2014 at the state and local levels for all 50 states. The report breaks down the $418 billion spent on payroll and contracts in the United States, which was equivalent to approximately 2.4% of U.S. GDP, or $1,312 per U.S. resident, and offers a glimpse into where and in what type of work DoD is spending its resources.
In Tennessee, the DoD report indicates that Tennessee received $2.4 billion in 2014, accounting for 0.8% of the state’s GDP, and $361 per person. The total amount puts Tennessee 36 out of 50 states, and less 1% of total U.S. defense spending. In addition, it represents the fifth consecutive year of a decrease in DoD contract spending in Tennessee. Top contractors in Tennessee for 2014 included Aerospace Testing Alliance, BAE Systems, and UT-Battelle, with contract spending focused on services (37%), supplies (29%), R&D (21%) and construction (14%). In addition, almost 40% of DoD spending on contracts and payroll is focused in three counties: Shelby County (Memphis) with $452.2 million, Coffee County (Tullahoma) with $321.4 million and Sullivan County (Kingsport) with $211.1 million. Thus, although Tennessee did not receive significant defense spending, certain counties seem to reap most of the benefits and are holding on to their share of the overall spending. Furthermore, it is important to note that the report only pertains to DoD spending and does not take into account Department of Energy spending that also benefits certain parts of Tennessee.