James Logan Jr., an attorney who works with the county, addressed the Bradley County Commission on Monday regarding the issue.
State law dictates that taxes collected from liquor being sold by the drink at places like bars has to be distributed a certain way. Of that revenue, 50 percent has to be used for educational purposes, and the remaining 50 percent has to be put into general funds and distributed the same way local property taxes must be.
A recent report issued by the County Technical Advisory Service had showed that the city of Cleveland still owed “substantial funds” to the Bradley County School System and, to a lesser degree, the city’s school system, despite the requirement.
Logan said the Bradley County Schools system was owed an estimated $30,000 in previously collected tax revenues.
He said the Cleveland City Council must decide what action it is going to take to distribute the tax funds. He asked the Commission to consider a resolution that would waive any conflict of interest from him representing both the county and the county school system if a lawsuit were to occur.
While the county government could pursue the matter on its own, Logan said he wanted to be sure that the Commission was in favor of him representing the school system as well.
“Obviously, the Bradley County Schools system has significant input into that decision because they are the primary recipient of the taxes that have been collected and will be collected in the future,” Logan said. “It’s entirely possible that the Bradley County school board can elect to proceed if this cannot be resolved.”
However, he added he believed the matter could likely be resolved without litigation, but it would be a good idea to allow everything to be in place in the event a lawsuit does occur.
Commissioner Ed Elkins said he believed the governing body should support the school system in whatever it wants to do in order to recover the funds which should have gone to them.
“I think that should be their prerogative,” Elkins said. “It’s not any income to the county general fund or anything.”
The Commission voted to approve a resolution that would waive the conflict of interest and require that any lawsuit on this matter involving the Commission be presented to its members for their approval before it proceeds.
Logan said the city had not addressed the issue yet to his knowledge.
“The City Council will have to make a decision as to whether or not the city of Cleveland would receive the funds and then distribute them, and would pay those back to the Bradley County schools.”
This issue has been a point of discussion elsewhere, as cities across the state have begun to re-evaluate their tax revenue distributions in similar ways. A recent study by the Tennessee Municipal League revealed many cities were having to address the same issue to comply with state law requirements. Each city seems to be handling the matter in a different way, Logan said.
Cleveland City Manager Janice Casteel this morning told the Cleveland Daily Banner the city of Cleveland had distributed taxes from liquor sold by the drink, in accordance with state law. Casteel said she researched the issue with state officials to ensure the city had acted in compliance. This was done after attending a Tennessee Municipal League conference in which the issue was discussed.
A TML list of cities that still need to work through liquor tax distribution issues revealed Cleveland is not one of them.
Additional information from Casteel’s assessment will be published in a later edition of the Banner.
The Bradley County Board of Education plans to hold a special called meeting to address the issue at 5:30 today in the Bradley County Schools Central Office.