Bradley County School System v. City of Cleveland, Tennessee
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In this case regarding the proper distribution of liquor-by-the-drink (LBD) tax proceeds between a county and a municipality within the county, the Supreme Court affirming the decision of the court of appeals affirming the judgment of the trial court granting summary judgment against the county on its claim that the LBD tax distribution statute, Tenn. Code Ann. 57-4-306, required cities to distribute the tax proceeds as the counties distribute the county property tax schools, holding that that the city was not required to share those proceeds with the county or the county schools.
The county in this case had not approved the LBD sales, but the city had. The Commissioner of the Tennessee Department of Revenue distributed tax proceeds to the city in accordance with section 57-4-306. The city distributed half its tax proceeds to its own city school system and did not share the proceeds with the county. The trial court granted summary judgment in favor of the city. The court of appeals affirmed. The Supreme Court affirmed, holding that the statute directed the city to distribute the education portion of its LBD tax proceeds in support of its own municipal school system and did not require the city to share the proceeds with the county or its schools.
Court Description:
Authoring Judge: Justice Holly Kirby
Trial Court Judge: Chancellor Jerri S. Bryant
This is one of five cases on appeal to this Court regarding the proper distribution of liquor-by-the-drink tax proceeds between a county and a municipality within the county. In each case, the county had not approved the liquor-by-the-drink sales, but the city had approved such sales. The Commissioner of the Tennessee Department of Revenue, who collects taxes on all liquor-by-the-drink sales, distributed tax proceeds to the defendant cities in accordance with the liquor-by-the-drink tax distribution statute, Tennessee Code Annotated section 57-4-306. The statute required the recipient cities to then distribute half of their proceeds in the same manner as the county property tax for schools is expended and distributed. Tenn. Code. Ann. 57-4-306(a)(2)(A) (2013). In each case, the recipient city distributed half of its tax proceeds to its own city school system and did not share the proceeds with the county. The counties sued the cities, claiming that the statute required the cities to distribute the tax proceeds as the counties distribute the county property tax for schools, which is pro rata among all schools in the county based on average daily attendance. In the instant case, the trial court granted summary judgment in favor of the city. The Court of Appeals affirmed, concluding that the distribution statute was ambiguous and that the statutory framework, legislative history, and other sources supported the trial court s interpretation of the statute. We affirm.
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