published Saturday, March 15th, 2014

Bradley County Board of Education seeking ruling on liquor tax revenues

Richard Banks
Richard Banks
Photo by Paul Leach /Chattanooga Times Free Press.
Liquor Tax Resolution 2
Liquor Tax Resolution 2

CLEVELAND, Tenn. — The Bradley County Board of Education has authorized its legal counsel to take action over more than $720,000 in previously distributed liquor tax revenues that the body says Cleveland owes the county school system.

On Thursday, the board voted 6-0 to ask law firm Logan-Thompson, P.C., "to take such steps as are necessary to request a judicial ruling as to the meaning and enforceability" of state law that pertains to the distribution of liquor-tax revenues to school systems.

In addition to the previously allocated $720,000, a ruling in Bradley County Schools' favor would equate to about $80,000 in annual distributions from the city going forward, board member Chris Turner said.

"I regret that Bradley County Schools has decided to rush into this course of action," Cleveland City Councilman Richard Banks said Friday. "I don't think it's a wise use of taxpayer money, since this is a common issue facing cities and school boards across the state."

It was the City Council's hope that some other municipality and school board would be the test case on the division of proceeds from liquor-tax revenues, Banks said. The council voted in February to wait 120 days before considering the matter, allowing time to review litigation that might occur elsewhere in the state.

Turner said the decision to seek a judicial ruling was not made lightly.

The school board had made multiple attempts since December to address the matter with city officials, he said.

Underlying the dispute are differing interpretations of a state law governing the distribution of liquor-tax collections, according to Gary Hayes, a consultant with the University of Tennessee's County Technical Assistance Service.

Fifty percent of liquor proceeds allotted to the local government body should be "expended and distributed in the same manner as the county property tax for schools is expended and distributed," according to the code.

Banks has challenged the code's application to Cleveland because the city operates its own school system. He cites a portion of the law that states "any proceeds expended and distributed to municipalities which do not operate their own school systems separate from the county are required to remit one half of their proceeds of the gross receipts liquor-by-the-drink tax to the county school fund."

Turner said the intention of the code is not to be selective or to segregate school system funding. The code adheres to Tennessee's practices for funding public education, he said.

"It provides a clear road map," Turner said.

Paul Leach is based in Cleveland. Contact him at paulrleach3@gmail.com.

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