published Thursday, November 1st, 2012

Cleveland-Bradley County Tax ruling draws cautious response

CLEVELAND, Tenn. — Officials on Wednesday reacted cautiously to a court ruling in a dispute between Cleveland and Bradley County over how to divide sales tax revenues.

On Tuesday, the Tennessee Court of Appeals in Knoxville sided with Cleveland, ruling that the county owes the city more sales tax revenues from 2010.

Cleveland Mayor Tom Rowland said he could not comment on the matter until it was finalized, citing the possibility that either the county or the city could appeal the ruling.

County officials have estimated the ruling likely will result in a payout of $1.5 million to the city.

The dispute started in the wake of separate sales tax increases implemented independently by the city and county in 2009 and originally covered only revenues from that year. Bradley County Mayor D. Gary Davis said he was "disappointed" that the appeals court added tax revenues from 2010 to the mix.

"This money, which was used to educate our students in Bradley County Schools, must be returned to the city," he said in a news release.

The litigation also questioned the legitimacy of tax revenue-sharing agreements between the city and county dating to 1967.

On that question, the Court of Appeals partially overturned a prior Chancery Court ruling limiting the funds to 2009, but the court also ruled that all past sales tax revenue-sharing agreements were valid.

"I am encouraged that the appeals court has once again upheld our position that the division of sales tax revenue as outlined in the 1967 agreement with the City of Cleveland is correct," Davis said in the release. "This is the second time the court has ruled on this question."

The issue likely will be finalized in 60 days, Bradley County Attorney Jimmy Logan said.

Several county and city officials have said they want the litigation ended and relations improved between the two bodies.

"We are one community," Rowland said.

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