CLEVELAND, Tenn. — Bradley County commissioners will support the county school system as it pursues a reported $800,000 in collected but not disbursed liquor tax revenues.
Of that amount, Cleveland owes $720,000 and Bradley County owes $80,000, according to a recent analysis done by the County Technical Assistance Service for Bradley County and the county school system.
The CTAS analysis also found that Bradley County owes $39,000 to Cleveland City Schools.
In a recent meeting, commissioners voted 14-0 to "waive any conflict or potential conflict of interest" that may exist between the county and the county school system. However, the county retained the right to vote whether to pursue litigation if it should be named in a lawsuit.
Considering that the Bradley County school system stands to be "the primary recipient" of the money, it might be expected to legally pursue the revenues if a settlement cannot be reached, said James Logan, attorney for Bradley County.
"It is my hope and desire, and I believe it is entirely possible, that the Bradley County school board will elect to proceed if it can't be resolved," Logan said. "I see no reason it cannot be resolved under the existing circumstances."
The failure to properly distribute funds resulting from the collection of consumption of alcohol on premises taxes to local school systems dates back to 1981. Those revenues began to increase dramatically after 2002, when Cleveland passed a referendum to publicly sell liquor by the drink, according to the study. Before that, only private clubs could sell liquor by the drink.
Whether a settlement can be reached or litigation will be required comes down to how Cleveland's legal counsel handles the matter, Logan said. Various local governments are treating the situation differently, he said.
Cleveland has not failed to properly distribute liquor tax revenues, City Manager Janice Casteel said in a phone interview Tuesday, citing discussions with high-ranking state revenue officials.
"We made every effort to share proceeds correctly when the referendum passed," said Casteel. "To the best of our knowledge we distributed those funds correctly and appropriately."
State law governs the distribution of liquor tax collections.
The Bradley County Board of Education will meet today to discuss the matter.
Paul Leach is based in Cleveland. Contact him at firstname.lastname@example.org.