Source: Knoxville News Sentinel | Jim Gaines , USA Today Network | May 11, 2017
The U.S. military’s economic impact on the Knoxville area was $1.8 billion in 2016, an 85 percent increase in just three years, according to a report released Thursday morning.
The report is a joint effort of the East Tennessee Military Affairs Council and the Knoxville Chamber. The biggest reason for the dramatic increase is a flood of military contracts, since that spending is no longer under the federal budget sequestration, which was in effect in 2013, said retired U.S. Air Force Col. Joe Sutter, past president of ETMAC.
But there has also been a big increase in veterans’ benefits, and the number of military retirees in the area has grown by about 1,000 to more than 9,600, he said.
The average annual pay for the Knoxville area is almost $46,000, and that too helped pump up the numbers, which include not only active-duty and reserve military pay but also the indirect impact of local jobs created due to spending by military personnel, Sutter said.
Following the regular monthly ETMAC meeting – delayed a week to coincide with the report – officials presented the 2017 Military Economic Impact Report at the Knoxville Chamber office on Market Square. ETMAC, founded in 1990, works with the Knoxville Chamber to assemble the report every three or four years. It was first done in 2000, and is based on data from the previous fiscal year.
This analysis, the fifth, updates one from 2014, said Doug Lawyer, chamber vice president of economic development. The 2014 report found a total impact of $943.3 million; that was up $80 million from 2011, partially due to including GI Bill, high school ROTC and Civil Air Patrol spending for the first time.
Unlike some areas with major military installations, the Knoxville area is host to many small units, particularly National Guard and Reserve, Lawyer said. The cumulative impact of those is not always well understood, he said.
“We’re here to change that in a big way today,” Lawyer said.
The four major categories of military economic impact are veterans’ benefits, sitting now at $655 million. That’s up from $224 million in the previous report.
Next is Department of Defense contracts, now at nearly $468 million, an increase of $366 million from last time.
Third is pay and job creation stemming from military retirees in the area, at $436.5 million. That’s up from $375 million.
Active-duty personnel, National Guard and Reserve spending comes in fourth at $299 million, up $59 million from the 2014 report.
The Air Force and Army were nearly equal contributors to that fourth category, at $140.7 milion and $139.3 million respectively.
In calculating impact, ETMAC used standard Department of Defense methodology, Sutter said: a radius of 50 miles from Knoxville, not including defense-related Department of Energy activities at Oak Ridge.
Even disregarding veterans’ benefits, the military’s economic impact ranks sixth in the area, behind the Department of Energy at Oak Ridge, Denso Manufacturing, Covenant Health, Wal-Mart and University Health Systems, according to the report.