Commission OKs schools liquor tax funds pursuit
by CHRISTY ARMSTRONG  Banner Staff Writer
Feb 04, 2014 | 758 views | 0 0 comments | 12 12 recommendations | email to a friend | print

The Bradley County Board of Education has been given the go-ahead to pursue any litigation related to the ongoing debate over how previously collected liquor taxes should have been distributed.

During its Monday night meeting, the Bradley County Commission passed a resolution “to approve school board action” on the matter that pits the county school board against the city of Cleveland.

James Logan Jr., the attorney the school board has hired to help address this matter, has said the city owes more than $700,000 in back tax revenues to the county school system.

Monday night, he asked the Commission “to defer to the Bradley County school board to determine when and if litigation will be necessary.” 

The Commission had already passed a resolution that had cleared any conflict of interest for the school board to hire an attorney who had worked with the county government on other matters.

On Monday Logan said “the real party in interest” was “the entity that represents the Bradley County school system,” the school board.

While he said the school board hoped to settle the matter outside of court, the board was choosing to address the issue.

State law dictates a 15 percent tax be charged on liquor sold by the drink on the premises of places like restaurants. Tennessee Code Annotated 57-4-306, which concerns the “consumption of alcoholic beverages on premises,” dictates that “one half of the proceeds shall be expended and distributed in the same manner as the county property tax for schools is expended and distributed.”

However, regarding counties with populations between 27,900 and 27,920, “according to the 1980 federal census or any subsequent federal census, any proceeds expended and distributed to municipalities which do not operate their own school systems separate from the county are required to remit one half of their proceeds of the gross receipts liquor-by-the-drink tax to the county school fund.” 

The law also reads the “collections of gross receipts collected in unincorporated areas” are to be given “to the county general fund,” and 50 percent of gross receipt taxes are to be given “to local political subdivisions by subdivision.”

The Bradley County school board passed a resolution Dec. 18 stating it “does hereby respectfully request the city of Cleveland to pay over unto the Bradley County School System all funds received by the city of Cleveland and which have not been distributed to the Bradley County School System as provided in [Tennessee Code Annotated] 57-4-306.” 

However, Cleveland has maintained it does not owe those funds because of the phrase in the law that specifies “municipalities which do not operate their own school systems” and the fact it does operate a school system separate from the county’s.

Logan said the school board is hoping to meet with city officials to discuss the matter as it had not been able to yet.

At the school board’s Jan. 25 meeting, Bradley County Schools Director Johnny McDaniel said the board’s Dec. 18 request to meet with city officials to discuss the matter had not received a response.

The Cleveland City Council voted Dec. 23 to send a response to the school board saying it believed the city had done nothing wrong.

He said the city has since agreed to meet with the school board, and a meeting had been scheduled for Feb. 10. However, Logan added he had recently gotten word the city wanted to postpone the meeting until Feb. 24. He said he was unsure when the two entities would actually meet.

While some commissioners expressed concerns that passing the resolution would limit the county’s ability to pursue its own litigation if the school board chose not to pursue any legal action, the Commission passed the resolution with votes from all 11 of the commissioners present.

It was agreed the school board would be the “party in interest,” and Commissioner Bill Winters said it was “appropriate” for the county school board to move forward with it.

While the Commission will be looking at what the school board will do, commissioners said the county did have a stake in the argument because of how much the county would or wouldn’t have to allocate to the county school system in the future.

“That’s $700,000 less that we would have to come up with,” Elkins said.

Also at the meeting, Commissioner Charlotte Peak-Jones said McDaniel had taken action on a matter which had been discussed in a previous work session.

A man who lived next to Michigan Avenue Elementary School had complained about the lights and noise resulting from the lack of a buffer zone being in place. She said the problem was in the process of being remedied.

The Commission also voted to allow a retiring K9 police officer to take ownership of the dog he has been handling on the job.

Two requests for rezoning were also approved. A property at 162 Helton Road was rezoned from Forestry/Agricultural/ Resid-ential District to Highway Commercial District. Property at 2628 Dalton Pike was rezoned from General Commercial District to Highway Commercial District.