Bill designed to bring resolution to cities' failure to share liquor taxes headed to Haslam's desk

Todd Gardenhire

NASHVILLE - A bill designed to bring peaceful resolution to Tennessee cities' years-long failure to share liquor taxes with local school systems is headed to Gov. Bill Haslam's desk.

But the bill excludes both Hamilton and Bradley counties where school systems have already filed suits against local governments over back tax issue.

Senators this afternoon took final action on the bill, passing it on a 28-0 vote. Earlier today, the House voted 84-5 for the bill after adding an amendment excluding Bradley County. Hamilton County was excluded in a previous amendment.

Sen. Todd Gardenhire, R-Chattanooga, this morning explained excluding Hamilton County from the bill, saying, "we think it's better instead of the Legislature defining the winners and losers to let the court decide the winners and losers."

County school officials and Chattanooga Mayor Andy Berke have been going back and forth for months over how to resolve the city's estimated $11.7 million in unpaid mixed drink taxes going back years.

Many cities are in the same spot. The bill was brought by Tennessee Comptroller Justin Wilson. It is intended to provide frameworks both for addressing the unpaid tax issue statewide and to ensure the situation doesn't reoccur.

City and schools officials had been in the midst of a 30-day working period over the back taxes.

But Hamilton County school officials and several Hamilton County state senators and representatives became concerned over a provision in the bill. It encourages cities and schools to settle disputes without litigation. Moreover, the bill requires finalized agreements be submitted to state officials by Aug. 31.

If no such agreement is reached by Aug. 31, then cities' back taxes would be restricted to a 15-year period beginning July 1, 1999. Cities will have ten years to repay the money owed with no interest paid.

Rep. Mike Carter, R-Ooltewah, discussed with Comptroller Wilson an amendment that would have protected the county's ability to sue so long as the suit was filed by June 1.

That was added but last Friday, spurred by the pending bill in the Legilature and talks with the city that school officials contended were going nowhere, school officials filed suit.

Meanwhile, Bradley County schools on Monday filed suit against the city of Cleveland over the issue.