By Associated Press - Friday, March 21, 2014

CHATTANOOGA, Tenn. (AP) - The Hamilton County Board of Education has voted to sue the City of Chattanooga over $11 million in unpaid liquor taxes.

The Chattanooga Times Free Press ( reports school board attorney Scott Bennett said after the 8-1 vote on Thursday evening that he would file the suit in coming days in Chancery Court.

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 has been 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, but an attorney general’s opinion issued last month said the law requires cities to pay any unremitted liquor taxes to school districts.

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.

School board members said talks with the city were at a stalemate.

“I vote yes and I say it’s a shame it’s come to this,” said school board member David Testerman.

School board member Rhonda Thurman said filing lawsuit seemed to be the only option left.

“I don’t know what else you do,” she said. “It’s not like they have a choice whether or not to pay it.”

School board member Joe Galloway said he’s hopeful an out-of-court agreement can still be reached.

“I hate that we even had to file it,” he said. “Folks that work in the same town need to be able to work together.”


Information from: Chattanooga Times Free Press,

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