The 2014 suit is one of four statewide in which an appellate court ruled against counties seeking millions of dollars, and the Sullivan County Commission last month voted not to seek permission to appeal its suit seeking $2 million.
However, both the school board and commission are plaintiffs in the lawsuit. After a non-voting work session briefing from County Attorney Dan Street on the suit, which seeks a share of back taxes on more than 30 years of liquor-by-the-drink tax collections in Kingpsort and Bristol, Tenn., board members indicated they likely would vote to do whatever the County Commission does. Street said it is possible but not likely the commission at its Feb. 20 meeting could reverse its Jan. 16 vote not to seek an appeal that went 21-0, with one abstaining and three absent.
Street has until Feb. 26, 60 days from a Dec. 27 appeals court ruling against plaintiffs Sullivan County, Washington County, Blount County and Bradley County. Initial lower court rulings went against all except Washington County, but the appeals court ruled against the counties in all four cases. So far, Street said only Blount County officials plan an appeal. The suits got started after Hamilton County officials figured out that Chattanooga, which has no school system, had been collected the tax but not turning any of it over to the county schools.
Under the law, the money is supposed to go to education, although Street said it has never been clear if that means city-only liquor-by-the-drink taxes must be shared with a county school system. Street said Kingpsort and Bristol countered successfully in court that the county illegally had not been sharing liquor-by-the-drink revenues from the Tri-Cities Airport and private clubs in the county but outside the cities. That ruling cost the county more than $180,000.
“If Sullivan County got out of this lawsuit, we could not get back in,” Street told school board members of getting retroactive payments from the cities. However, Street said that going forward the county would share in liquor-by-the-drink taxes however the courts rule and/or the General Assembly decides.
Asked by member Mark Ireson the down side of trying to appeal, Street said there wasn’t one other than the work he and his office would have to do to prepare the request, although school board member and attorney Matthew Spivey said that if the appeal permission were granted and then the county lost, it could be saddled with the cities’ costs to defend the appeal.
Both Spivey and Street, however, said such appeals are rarely granted. Street, asked what would happen if one governing body approved moving forward and the other did not, it would cause “a lot of heartache” for him. He said some attorneys believe the school boards have standing to sue, although he said he believes only the commission does, but he said both were brought in as plaintiffs as a fail safe since the courts could rule either way or both on which is the proper plaintiff.