published Wednesday, July 16th, 2014

Schools, city need to finalize their liquor taxes dispute

If Chattanooga and Hamilton County Schools officials actually follow through this time with a tentative agreement for the city to pay delinquent liquor taxes, and if the school system actually forks over delinquent city sewer stormwater fees, then perhaps our children will benefit more than the lawyers.

That's actually a big "if," despite a story on Tuesday's front page that touted a tentative agreement for the city to pay more than $11 million and transfer some property to the schools. In the "tentative" agreement, the school system also is to pay the city $1.7 million in overdue sewer fees.

"Terms are still being finalized, and the deal has to be agreed on by both governing bodies before it's official," states Tuesday's story by Joy Lukachick.

The fact of the matter is this agreement has been on-and-off again several times since late August of 2013. There was even a story then -- almost a year ago -- about the settlement, which then called for the city to give the schools $1 million, plus pay $500,000 on an early childhood development initiative at Calvin Donaldson Elementary School, fund the county's e-books effort for four years, and donate the site of the former Poss Homes to support the county's plan to construct new athletic facilities for Howard School.

That deal also included the transfer of the North River YMCA pool, and forgave the county for past due stormwater fees (unpaid since 2009). The agreement stated the city would resume the liquor tax payments in October 2013. These were essentially the same terms Hamilton County School Superintendent Rick Smith had sought from the city in an email sent 25 days before. In that Aug. 5 missive, Smith wrote that the city owed $7.2 million dollars, accrued since 2005.

A quote in the then-settlement announcement from Smith states, "In the past, there have been some issues with how the funds were paid to the school system. I am excited that we have been able to work with Mayor Berke to reach a clear solution and we can move forward."

That's what Berke thought, too -- for awhile.

"Usually when you jointly announce with another organization a resolution of a topic, you think it's resolved," Berke said this April just after the schools sued the city. "We kept working on paperwork. There were exchanges of paperwork to memorialize that agreement. And then, it just stopped."

By November 2013, the agreement had dissolved into a series of city and county lawyer work sessions, and the school system was suddenly claiming the city owed more than $15 million going all the way back into the 1970s. Halfway through an agreed-on meetings process, the school officials balked again, and the Board of Education filed suit.

Smith said things fell apart when school board members reported a "rumor" that Berke was trying to get amendments through the Legislature to limit what the schools can collect in past-due liquor taxes. Berke and his administration denied that, and in fact the final legislation aimed at addressing dozens of similar problems all over the state did not and would not aid Chattanooga. The bill capped cities' payback time at 10 years. The city was already planning to pay the money in six years.

But the school system put the matter in court -- on the taxpayers' dollar. Since then, Hamilton County Chancellor Jeffrey Atherton has denied some city motions, and school officials have asked for a summary judgment of $15.2 million in unpaid taxes dating to 1980. Now there is talk again of an out-of-court settlement.

The city-collected liquor taxes were not paid to the school system since the merger of the city and county schools -- a period stretching across four mayoral administrations: Jon Kinsey, Bob Corker, Ron Littlefield and now Andy Berke.

It was an oversight not just in Chattanooga, but in many cities. That's why the Tennessee General Assembly was looking to cap repayments -- everywhere except in Chattanooga and Cleveland, where cases has just been turned over to the courts to decide.

Our students don't have enough computers in schools, and teachers have to buy supplies. But we can pay lawyers for a dispute that theoretically had been resolved months before -- complete with jubilant comments from our superintendent in a local news report.

Let's hope this tentative agreement actually gets inked and carried out this time.

Students -- not lawyers -- need to benefit.

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