- Associated Press - Tuesday, April 15, 2014

CHATTANOOGA, Tenn. (AP) - The Hamilton County Board of Education has filed suit against the City of Chattanooga over more than $11 million in unpaid liquor taxes.

The Chattanooga Times Free Press (https://bit.ly/1gZaLaK) reports the lawsuit on Friday spurred an offer from the city and a counterproposal on Monday from the school district, both of which were rejected.

The newspaper reports the city owes the money 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 has been disagreement on how to take care of the past due amount.

The liquor tax has created confusion across the state. At least 15 other cities also owe money to school districts.

The city had proposed paying back the amount over a 5-year period, but attached strings including that the school district would begin paying its stormwater fees and that new revenue would be used to improve city schools.

The district’s counter-offer suggests that the city owes at least an additional $3.5 million on top of the $11.7 million and asks for two pieces of property to be transferred.

“My proposal would do more than merely clear the City’s debt, which I presume to be your intention,” Superintendent Rick Smith wrote to Berke on Monday. “By transferring the properties in question, neither of which is of use to the City, the City would be enabling the Board to better the communities in which they are located.”

The city rejected it in a matter of hours.

“We are now hearing a new, increased amount - almost one-third higher than the $11.7 million stated repeatedly over the last twelve months,” said Mayor Andy Berke’s Chief of Staff Travis McDonough. “When HCDE decides to increase the amount owed by nearly 30 percent, file a lawsuit, and state that the City is not operating in good faith, it’s time to let the lawyers handle it.”


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

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