- Associated Press - Friday, February 28, 2014

CHATTANOOGA, Tenn. (AP) - A legal opinion released by Tennessee Attorney General Robert Cooper says the law requires cities across the state to pay any unremitted liquor taxes to school districts.

The Chattanooga Times Free Press (http://bit.ly/1fwbvsO) reports that the opinion says municipalities can’t negotiate a lesser payment or offset costs with land or local-option sales tax revenue. However, it says cities don’t have to pay all at once- they can set up a payment plan.

Hamilton County school officials said they are happy with the opinion.

“It’s wonderful news. It’s the best news since Santa Claus,” said school board member David Testerman. “Our school system is in desperate need of funds.”

Lacie Stone, who is Chattanooga Mayor Andy Berke’s spokeswoman, said Thursday officials were still reviewing the opinion to see what it meant for the city. The attorney general’s legal opinions don’t carry the force of law, but indicate what position the state’s top legal official would take if a lawsuit were filed.

The newspaper reports the city owes more than $11 million to the school district after not paying it a portion of the liquor tax for nearly a decade.

Chattanooga officials started paying the tax last year, but there was some disagreement on how to take care of the past due amount. The city had offered to donate land to the school system and give it $500,000 to start an early childhood education center.

The liquor tax has created confusion across the state. At least 15 other cities also owe money to school districts from unpaid liquor taxes over the years. The taxes are collected by the state, but shared with cities - and cities are supposed to split them with school systems.

Gary Hayes, government consultant with the University of Tennessee’s County Technical Assistance Service, said officials found out last year that the payments had been overlooked.

After discovering the issue, officials with Hamilton County Schools asked Republican state Rep. Gerald McCormick to request the attorney general’s opinion.

Hamilton County School Board Chairman Mike Evatt said the opinion is “cut and dried.”

“The city needs to pay up,” he said.


Information from: Chattanooga Times Free Press, http://www.timesfreepress.com



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