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BOE joins liquor tax funding battle


Staff Writer

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The Washington County Board of Education will be joining two other county systems in Tennessee who have opted for an application for permission to appeal to the supreme court.

The school board voted unanimously at the Thursday, Feb. 8 meeting in hopes of receiving what Cleveland, Tennessee attorney Jim Logan referred to as their “fair share” when it comes to the state’s consumption on the premises tax.

“Counties are no longer receiving the kind of revenue they did in years gone by,” Logan said at the meeting. “The places of sale have changed … Counties do not receive the percentage of sales taxes because we’ve got the mega stores. Most of the restaurants which serve alcohol are located within the cities.

“The time has come for counties to be active in the legislature.”

According to Tennessee Code Annotated 57-4-306, half of the liquor-by-the-drink tax revenue goes to the state’s general fund for education. The other half is to be split between the unincorporated areas (the county) while the other goes to the city or town in which the tax is collected. The method to determine the dollar amount is based on average daily attendance.

Back in 2015, Sullivan County Chancellor E.G. Moody ruled in favor of the Washington County School System in a lawsuit against Johnson City for $3.4 million in liquor-by-the-drink tax revenue. But Logan also mentioned at the BOE meeting that since that ruling, the state’s Court of Appeals at Knoxville ruled in favor of a city entity in a similar situation.

Logan also told the board that because Tennessee’s Courts of Appeals at Nashville ruled in favor of the Coffee County School System in a similar litigation against Tullahoma, the odds may be in Washington County’s favor in the liquor-by-the-drink tax matter.

“We can’t have a different set of laws governing the middle section of our state and those governing the eastern section of our state,” Logan said. “Supreme court has to act favorably to the application for permission to appeal.”

Back in the Washington County School System court ruling in 2015, Washington County joined in the case. However, Logan said that the Washington County Commission wouldn’t need to be involved in the decision.

“You (the school board) are the real party in interest because you are the agency and political agency which is entitled to the monies,” Logan said. “I do not think the county commission has to act as we thought as they might.”

Logan said initially, his fee for his work in case was going to be $250 per hour. But now 50 percent of the bill will be split between Washington County and Bradley County who also voted for an application of permission to appeal.

This isn’t the first time education funding between the county and city systems were considered in Washington County; In 2017, Washington County Mayor Dan Eldridge also expressed his concern for the amount of funds the county school system receives. The county mayor, along with Washington County Director of Schools Kimber Halliburton, met with Tennessee Education Commissioner Candice McQueen in August of 2017 to discuss the disparity between the county and city schools. Eldridge cited these sort of taxes as a leading cause in the school funding gap.

“The issue is that every dollar in revenue that the county puts into education, the county matches to the city,” Eldridge said at a 2017 county commission meeting. “But the city has all these resources of revenue available and they’re not required to share any of those, regardless of who’s paying those taxes.”

“At the end of the day, we’ve got to acknowledge that treating half the kids in this county as second class citizens isn’t right.”

After the school board opted for an application for permission to appeal, Logan, like Eldridge, mentioned equal opportunity as a main factor in the counties’ mission for equal funding.

“Most of the counties educate most of the students across our state,” Logan said after the school board opted for the application for appeal. “Counties provide the education services required by our constitution across our state. Now it’s time for our legislator to make it clear as a bell.

“We want to make sure that every student is provided equal funding for their education to be administered by the school boards across the state, irrespective of where they live when it’s a state tax.”