CLEVELAND, Tenn. - The sales tax revenue dispute between the city of Cleveland and Bradley County is going to court this morning.
On Wednesday, the City Council deadlocked with a 3-3 vote on a compromise offered by Councilman Richard Banks.
Banks proposed that both sides inform Chancellor Jerri Bryant that they wish to delay the hearing - called a "continuance" in legal terms - for 90 days. Meanwhile, Banks said, the city and county can continue to negotiate on a formula for sharing the disputed sales tax revenue, including future jointly funded capital projects.
"We have the utmost respect for Chancellor Bryant and her decision, but we need to resolve our differences and look to the future," Banks said.
Council members George Poe and Charlie McKenzie voted with Banks.
Douglas Johnston, the city's attorney for this case, advised the council that talks can continue even as the case goes through the courts. He said the chancellor could issue a decision today but may not.
"There is nothing to keep you from continuing to negotiate and to work on joint projects, as you have been doing," City Manager Janice Casteel told the council.
"So we still have some grace period to come up with a solution," Councilman David May said.
Councilman Bill Estes asked Johnston if the Chancery Court case could reopen sales tax sharing agreements dating back to 1967. Johnston said it could.
May observed the dispute has been going on since 2009 when, in separate referendums, city and county voters approved a half cent local sales tax increase. Some of that money, $720,000, is being held by the county trustee until a decision is made on how to spend it.
The county filed a lawsuit against the city over the money and future sharing of the money generated by that extra half cent. The city filed a counter suit against the county, raising questions about the prior sharing formula.
"We can't agree on why we are in court," May said. "We've had all this time and have come up with no agreement. I think we need a third party to decide."
That third party would be the court.
Most county commissioners and four council members spent two and a half hours Tuesday night discussing the issue and trying to find common ground.
Councilman Johnson said then he could not in good faith accept anything except what the city promised its voters in 2009, that the extra tax revenue would be spent on city capital projects, mainly schools and roads.
Commissioners Jeff Morelock and Terry Caywood watched Wednesday's city proceedings.
"The county doesn't have much choice now," Caywood said.
"We can always come back and talk some more," Morelock said.
He said Tuesday's informal talks were productive.
"No matter which side of the fence you are on, it's always good to see things from the other perspective, too," Morelock said.