Cleveland-Bradley County Schools liquor tax revenue dispute continues

Cleveland-Bradley County Schools liquor tax revenue dispute continues

February 11th, 2014 by Paul Leach in Local Regional News

Richard Banks

Photo by Paul Leach/Times Free Press.

CLEVELAND, Tenn. - The Cleveland City Council wants more time before discussing further the Bradley County Schools' pursuit of $720,000 in disputed liquor tax revenues with the city.

That amount is what the city owes the county school system, according to a County Technical Assistance Service review of Cleveland's liquor tax revenue distributions over a 30­year period.

After speaking with Bradley County education officials on Monday, the City Council voted 7­-0 to table the matter for 120 days.

This course of action will allow Cleveland and Bradley County Schools to follow the results of any possible litigation between county school systems and associated municipalities that are addressing similar disputes, said Councilman Richard Banks, who made the recommendation.

"Why do we have to rush in?" asked Banks. "Why do we have to be the test case?"

Interpretations of Tennessee Code Annotated §57­4­306, which governs the distribution of liquor tax collections, is the underlying factor in similar disputes across the state, said CTAS consultant Gary Hayes previously.

The code states that 50 percent of the liquor tax 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."

Banks has repeatedly challenged the code's application to Cleveland because it operates its own school system.

He cited text from the code which states that "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."

"Please quit suing the city," said Councilman George Poe, citing litigation between Cleveland and Bradley County that ended a year ago that involved the distribution of sales tax revenues resulting from increases made in 2009 by both city and county.

Ultimately, the city was awarded a $1.4 million settlement in that dispute, which Bradley County Schools is paying off in $50,000 monthly installments.

Both the Bradley County Commission and the Bradley County Board of Education have expressed a desire not to sue the city, said James Logan, attorney for the school system.

However, the Bradley County school board believes the disputed money rightfully belongs to the county school system, he said.

Logan said it was a matter of whether county leaders should simply say they don't want the revenues in which they are entitled to according to the statute.

The Bradley County Board of Education has put forth its intention to seek a reduction in the number of payments owed in the sale tax settlement instead of asking for an out-­of­-pocket settlement from Cleveland.

Such a measure would still mean 15 more months of payments to the city, leaving its contribution to Cleveland revenue streams untouched over the next fiscal year.

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