published Tuesday, June 5th, 2012

Sales tax dispute mars Cleveland partnership

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CLEVELAND, Tenn. — Bradley County is prepared to step back from jointly funding capital projects with Cleveland in light of the city’s ongoing litigation regarding the division of sales tax revenues between the two.

On Monday evening, county commissioners voted 13-3 to approve a measure stating the county’s intent to withdraw from major funding partnerships with the city “due to a potential loss of sales tax revenues.”

“This is a meaningless resolution,” said Commissioner Jeff Morelock.

Morelock was joined in opposing the measure by Vice Chairman Mark Hall and Commissioner Bill Winters.

Hall characterized the measure as “a symbolic gesture” and said he was willing to believe that city leaders thought they were doing the right thing. Hall called for joint meetings with the Cleveland City Council to settle the matter without further escalation.

While the County Commission has not specifically named any projects that will lose county funding, city and county officials have cited a few programs that could potentially suffer, including planned improvements to exit 20 on Interstate 75 and a new industrial park which would be located nearby.

Other jointly funded initiatives may be at risk as well. Commissioners Jeff Yarber and Adam Lowe have requested the county review all its funding partnerships with the city and determine which ones the county is not contractually obligate to support.

The current dispute over the allocation of sales tax dollars between the county and city has its most recent roots in the wake of a conflict which arose over sales tax initiatives passed separately by Bradley County and Cleveland in 2009.

However, the litigation actually questions a sales tax revenue-sharing agreement between the county and city that goes back to 1967, as well as amendments made to it in 1972 and 1982. The agreement calls for the division of sales tax revenues based on formulas driven by city and county student populations and whether the revenue was generated inside or outside of city limits.

Earlier this year, a Chancery Court ruling upheld the 1967 agreement, but the Cleveland City Council voted 4-3 to bring the case before the Tennessee Court of Appeals and possibly, the Tennessee Supreme Court.

If the city succeeds in overturning the 45-year-old agreement, it could mean an annual loss of $2 million in county revenue, according to prior statements made by Bradley County Commission Chairman Louie Alford.

County commissioners have repeatedly said the county budget cannot absorb that kind of loss and still be able to fund growth projects with the city.

Paul Leach is based in Cleveland. Email him at paul.leach.press@gmail.com.

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