Cleveland Mayor Tom Rowland said before the vote, “Although I have not heard from every member of the Council on how they feel about the appeal, I would highly recommend we put this lawsuit to rest and the Council unanimously agree not to enter into an appeal in this lawsuit.”
The resolution written by At-Large Councilman Richard Banks stated in part that the appeals court issued a ruling that settled all issues relating to the sales tax dispute between the two local governments. He said continuing working together on joint projects now and in the future is in the best interests of city and county residents.
Rowland said the Council met with attorney Douglas Johnston Jr., Barrett Johnston L.L.C., of Nashville, between the work session and the regular voting session to get his interpretation of the “recent lawsuit we defended against Bradley County. We won part of the lawsuit we were sued on and we are grateful for that.”
Bradley County commissioners voted Nov. 5 not to appeal the decision handed down Oct. 30 by the Tennessee Court of Appeals, Eastern District in Knoxville.
The panel of three appellate court judges heard oral arguments on Aug. 3, after the city appealed a chancery court ruling that left intact the 1967 agreement between the two local governments.
Johnston asked the appeals court justices to rule on three questions:
n Did the city and county amend the 1967 contract to extend its sales tax distribution formula to the 1982 local option sales tax increase? If not, the proceeds of the 1982 sales tax increase should be divided pursuant to Tennessee Code rather than the formula per the 1967 contract.
n Is the 1967 contract void, voidable or terminable with reasonable notice as a perpetual contract?
n Is the city entitled to all proceeds of the 2009 tax increase collected within the city limits through June 30, 2010?
The appellate court upheld Bryant’s decision on the first two questions, but agreed with the city on the third.
This latest dispute over sales tax distribution began at a joint city and county work session Oct. 21, 2008, during which there was 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.
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 in 1967, 1972, and a failed referendum in 1980, which was presented again to voters and approved in 1982.
Cleveland 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.
The issue ended up in court when the county asked Bryant for clarification on how the 2009 sales tax should be distributed.
The appeals court allowed the city to withdraw a fourth question concerning the constitutionality of the county only referendum.