published Wednesday, November 14th, 2012

Cleveland, Tenn., accepts sales tax ruling

  • photo
    Mayor Tom Rowland stands in front of the shops of downtown Cleveland, Tenn.
    Photo by Jenna Walker /Chattanooga Times Free Press.

CLEVELAND, Tenn. -- The Cleveland City Council voted unanimously Tuesday to abide by a recent Appeals Court ruling on long-standing sales tax revenue agreements between the city and Bradley County.

Council members voted 7-0 to abide by the Oct. 30 Tennessee Court of Appeals ruling and not apply for a rehearing, following a similar action by the Bradley County Commission last week.

"It seems to me like we haven't heard from every member of the council on how they feel on the appeal, but I would highly recommend that we set this lawsuit to rest," Cleveland Mayor Tom Rowland said before the council's decision.

The ruling upheld a previous Chancery Court ruling on the legitimacy of the agreements between the city and county, dating back to 1967. Those agreements allocate sales tax dollars based on county and city student populations and whether the revenue was generated within the city.

Several Bradley County leaders have expressed satisfaction with that facet of the litigation.

The other portion of the Appeals Court decision was on the allocation of sales tax revenues after the city and county separately passed sales tax increases in 2009.

"[Cleveland] shall be entitled to receive the proceeds of the 2009 tax increase on sales within the city limits from July 1, 2009, and through June 30, 2010," according to court documents. This expanded the previous Chancery Court ruling that limited the proceeds to the 2009 fiscal year.

The next move for the city and county will be to enter into settlement negotiations on sales tax revenues that have been held in escrow pending litigation, James Logan, attorney for Bradley County, has said.

"I'm very happy with the City Council's decision," said Bradley County Commissioner Adam Lowe, who attended the city meeting and shook every councilman's hand afterward. "Let's move on to bigger and better things."

The litigation has divided county and city leaders since the City Council voted 4-3 to appeal the Chancery Court ruling earlier this year. Councilmen Richard Banks, George Poe and Dale Hughes opposed further litigation, but were defeated by Vice Mayor Avery Johnson and Councilmen Bill Estes, David May and Charlie McKenzie.

When the appeal began, the County Commission voted 13-3 that the county might have to withdraw from joint funding ventures with Cleveland "due to a possible loss in sales tax revenues."

"We have to move forward together," said Estes, who said he was pleased with the decision.

Paul Leach is based in Cleveland. Contact him at paul.leach.press@gmail.com.

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