CLEVELAND, Tenn. — Bradley County Schools has agreed to guarantee payment of $1.4 million of disputed sales tax revenue to Cleveland in an effort to end recent litigation between the city and county by the year's end.
On Wednesday, the Bradley County School Board voted 6-0 to accept a proposed 30-month payment plan option, which was recommended by the Bradley County Commission in a 13-0 vote on Monday.
The plan calls for payments -- which amount to nearly $50,000 each, according to Bradley County Schools Director Johnny McDaniel -- to start no later than July 15, at the beginning of the next fiscal year. The payment plan allows to the county school system to reduce the financial impact to about $500,000 per year.
"It's just tough to swallow half a million dollars a year -- that's the only issue there is," said board member Troy Weathers. "It was tough for the County Commission; it's tough for this board."
Although the payment plan received a unanimous vote, board member Nicholas Lillios suggested the possibility of making a lump payment, possibly through putting a number of capital maintenance projects on hold. Most board members disagreed.
"I think it would provide more flexibility to the board to have payments -- and the longer, the better," said McDaniel. "That way we have three budget years to include [the payment]."
The proposed payment plan is intended to resolve recent litigation between Cleveland and Bradley County regarding the allocation of sales tax revenues generated in the wake of sales tax increases initiated separately by the city and county in 2009. The legal struggle between the city and county questioned the application of their sale tax revenue-sharing agreements, which provide funding to their respective education systems. Those agreements are driven by city and county student attendance and whether sales tax revenue is generated within the city.
If Cleveland accepts the payment offer, the legal dispute may conclude by the end of the year, said James Logan, attorney for Bradley County.
How Bradley County Schools will fund the payment remains an open question, but education officials discussed a number of possible scenarios prior the vote.
"What it would mean is that there will not be money for a salary increase for the next two years, at least" said McDaniel. "And there would not be money for us to put into our capital maintenance projects."
McDaniel cited a number of projects currently under way in the school system that would be affected by lack of funding, such as roofing and air conditioning.
The ultimate objective, officials said, is to minimize the impact upon the classroom.