How Is Tennessee's Share Distributed?

Tennessee distributes its share of TVA’s PILOT among local governments and the state according to a formula set in state law.  The share distributed through the formula excludes TVA’s direct payments to counties.  If TVA were to operate power property in Tennessee owned by another entity, the share distributed through the formula would also be reduced to the extent that TVA reimburses the property’s owner for any taxes it pays; however, there are currently no such properties in Tennessee.

Under the state’s formula, base payments, which don’t change from year to year, are made to local governments.  The state also retains a base amount, which similarly does not change.

For any remaining amount, the formula sets aside 48.5% for local governments with an equal percentage retained by the state.  The final 3% is set aside for communities in areas affected by TVA construction as well as for the Commission, the University of Tennessee’s County Technical Assistance Service, and the Tennessee Central Economic Authority to assist these agencies in their work supporting local governments.  The amount remaining after base payments are made varies from year to year with annual changes in TVA’s PILOT distribution to Tennessee.

Tennessee’s distribution formula is outlined in Tennessee Code Annotated, Section 67-9-101 et seq.  An overview of the formulas used by other states can be found at the Association of Tennessee Valley Governments' website.

To see what your local government receives, see appendixes C, D, E, and F from our annual report on TVA's payments in lieu of taxes.