Cleveland City Council seeks to discuss disputed liquor tax revenues

Cleveland City Council seeks to discuss disputed liquor tax revenues

January 28th, 2014 by Paul Leach in Local Regional News

Richard Banks

Photo by Paul Leach/Times Free Press.

Bradley County Schools Director Johnny McDaniel

Photo by Paul Leach/Times Free Press.

CLEVELAND, Tenn. - The Cleveland City Council would like to discuss the Bradley County School Board's request for $720,000 in previously collected liquor tax revenues if the county school system will provide good reasons.

According to a recent County Technical Assistance Service study performed on behalf of Bradley County and the county school system, $720,000 is the amount that Cleveland should have distributed to Bradley County Schools over the last 30 years.

On Monday, the Cleveland City Council voted to invite Bradley County School Director Johnny McDaniel, the Bradley County Board of Education and any of their advisers to meet with them during their 1 p.m. work session on Feb. 10.

"I suggest the last thing we need to do is get into litigation with the county," said Cleveland City Councilman Richard Banks. "We'll run up attorney's fees and throw rocks at each other and in the end, the taxpayers foot [the bill for] it."

Before the proposed meeting, city leaders said they wanted to review the legal basis for the county school system's pursuit of liquor tax revenues that have been previously distributed by Cleveland.

In December, the Bradley County Board of Education requested a meeting with the Cleveland City Council regarding the disputed funds.

"What we are doing here today is to establish our position that we believe, according to the law, the schoolchildren of Bradley County are really due that money," said McDaniel, in a December meeting of the Bradley County Board of Education.

The issue is driven by interpretation of Tennessee Code Annotated §57­4­306, which governs the distribution of liquor tax collections.

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."

However, the code also differentiates between local municipalities that operate their own school systems ­ such as Cleveland ­ and those that do not, said Banks.

According the code, "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."

A number of municipalities and counties in Tennessee are working through issues regarding previously distributed liquor tax revenues, said Bradley County Attorney Crystal Freiberg in a recent Bradley County Commission meeting.

So far, there has not been a court case in the state regarding such disputes, but she expects one will happen eventually, said Freiberg.

Paul Leach is based in Cleveland. Contact him at