The city instead made a counteroffer to the county with a deadline of Aug. 2. At that time, counsel for the city is authorized to take any and all actions necessary, which includes filing post-trial motions, and seeking appellate review of the Chancery Court’s order.
County commissioners asked the city to accept $850,000. However, that amount is $1.424 million less than city officials say they are entitled to according to the July 5 decision handed down by Chancellor Jerri Bryant.
At-Large Councilman Richard Banks said it is important to resolve the issue without further dividing the two local governments.
“But it is important to note that Bradley County filed the lawsuit and the city was forced to defend itself. Now that the chancellor has ruled, I think it’s important for both bodies to respect her ruling,” Banks said. “Based upon our conference with our attorney, we have to decline the offer because it is inconsistent with the way our attorney has interpreted her order.”
Banks said declining the offer should not be an indication the city is unwilling to work with the county on joint projects.
“It’s not about being disagreeable. It’s about trying to move on and honor the court’s decision,” Banks said.
Cleveland Mayor Tom Rowland said if the city accepted the county’s offer, the Council would have given up its rights to the additional funds and the city’s right to claim that the distribution of the 1982 local option sales tax increase of .75 percent should be distributed according to the state’s situs-based formula and not the 1967 sales tax agreement. The city would also relinquish the right to seek further judicial review of its right to terminate the existing sales tax agreement in its entirety.
“We in no way intend to destroy the county’s budget forecast and we are willing to wait until the property tax from Wacker Polysilicon North America comes in,” he said.
Rowland said the county will collect an estimated $4 million in property taxes from Wacker beginning in fiscal year 2014. The city is willing to wait so the county can avoid being forced into raising property taxes.
“That’s about as fair of a thing as the Council could do,” the mayor said. “We don’t want the county to raise property taxes because we have to pay them as well.”
The most recent dispute over sales tax distribution began at a joint city and county work session Oct. 21, 2008, in which discussion concerning the need to fund capital projects and the possibility of a referendum allowing the voters to decide to raise the sales tax by .5 percent was discussed.
The City Council approved an ordinance for a referendum on Nov. 24, 2008. County commissioners voted not to participate in a countywide referendum as they had on three previous occasions.
Cleveland city voters approved increasing the city sales tax rate by .5 percent. The March 10, 2009, ballot referenced the ordinance, which limited the funds for capital needs of the city and Cleveland City Schools.
Bradley County commissioners changed their position and voted 9-5 to approve a referendum for voters residing outside the city of Cleveland on May 14, 2009. The referendum passed by county voters did not restrict the use of funds solely for capital needs.
In the lawsuit filed by Bradley County against the city, Bryant ruled the city was allowed to collect its own sales tax through June 30, 2010, and is therefore due $1.424 million that was distributed to Bradley County Schools.
According to the state’s situs-based distribution formula, the city’s General Fund is also due — in addition to the $1.424 million — the funds accumulated by the Bradley County Trustee’s Office while the lawsuit was pending. That amount is $845,384 for sales tax collections received through June 30, 2011.
In addition to the amounts set forth in the two preceding paragraphs, the city is also due any accumulated interest and any additional funds deposited into the Trustee’s Office account after June 30, 201l, and until such time as the office begins to use the state’s situs-based distribution formula.
Bryant’s order provides that after June 30, 2010, the state’s situs-based distribution formula, not the 1967 sales tax agreement between the city and the county, provides the basis for which the 2009 sales tax is to be divided in the future.
In exchange for the county’s agreement to begin distributing all of the 1982 sales tax money according to the state’s situs-based formula beginning July 1, 2013 — since there was no contract amendment signed by the city and county in 1982 — the city will not proceed with seeking appellate review of the Chancery Court’s order.
Also, any future sales tax revenue from the 2009 sales tax referendum or any future referendum will be distributed pursuant to the state’s situs-based distribution formula. This also hinges on the county agreeing not to file any post-trial motions with the Court or an appeal to the Court of Appeals.
