Attorney general sides with county

Attorney general sides with county

March 2nd, 2011 by Kelli Gauthier and Dan Whisenhunt in News

Despite a legal opinion saying Hamilton County commissioners can keep about $6 million in tax money slated for schools, members of the local school board still hope to change their minds.

Document: PILOT funds

"It certainly takes away any legal standing. It takes any question out of it," said school board member Chip Baker. Still, he said he hopes school board members and commissioners can reach agreement on how to handle the money.

"I'd expect the commission and the school board to work together to achieve a common vision," he said.

State Attorney General Bob Cooper said money from payment-in-lieu-of-taxes agreements - dollars collected by the county on behalf of the schools - doesn't have to go straight to the school district.

In his opinion issued Monday, Cooper said, "The disputed PILOT funds are not required to be paid directly to the Hamilton County School Board when they are received and may be retained by the Hamilton County Commission."

State Rep. JoAnne Favors, D-Chattanooga and a former Hamilton County commissioner, had asked Cooper if the commission could legally withhold the money from the Hamilton County Board of Education.

Commission members said the ruling validates what they've been saying all along about their plan to earmark the money generated for school construction.

"It shows that what we're doing is legal," said Commissioner Joe Graham who initially proposed the idea. "As long as what we're doing is legal, then we've got a good discussion ahead of us."

County commissioners and school board members have argued in recent months over who has control of the estimated $6 million generated from the PILOT agreements.

Such agreements have been given made with businesses such as Volkswagen and Amazon to lure them to the area. Under the agreements, businesses don't have to pay full property taxes for a certain number of years, but they must pay the share of property tax that is slated for schools.

School officials say they were counting on the PILOT money for general operating expenses, while the commission would like to see the money used for new school construction.

"As much as I'd like to use that $6 million for new facilities, which, of course, we desperately need, there's nothing more important than continuing the operation of the schools we've got now," Baker said. "There's no question that's the higher priority."

After a Valentine's Day meeting between the two groups, another meeting has not yet been scheduled.

School board Finance Committee Chairwoman Linda Mosley said she was told to work one-on-one with Commission Chairman Larry Henry rather than have a second joint meeting. She said the attorney general's opinion left her "shocked and disappointed."

"We'll probably have to discuss it Thursday [at a previously scheduled Finance Committee meeting]," Mosley said. "I really don't know. I'm at a loss for words."

Henry said he thought the county's position was correct all along.

"Of course, the attorney general's opinion is the attorney general's opinion," he said. "It hasn't been tried in court. I think we're legally correct in what we're doing."

Henry said he hopes the discussion going forward will be "positive."

County Trustee Bill Hullander also submitted a request for an attorney general's opinion through state Rep. Gerald McCormick, R-Chattanooga. Hullander said he thought that, since his question was so similar to Rep. Favors', the attorney general answered only one.

Officials with the attorney general's office said they could not comment on discussions they'd had with their clients because it would violate attorney-client privilege.