Blount County Board of Education v. City of Maryville, 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 affirmed the Court of Appeals' decision affirming the trial court's grant of summary judgment against the county and in favor of the two defendant cities, holding that the LBD statute, Tenn. Code Ann. 57-4-306, did not require the Commissioner of the Tennessee Department of Revenue to pay half of the cities' LBD tax proceeds to the county.
The recipient cities distributed half of their tax proceeds to its own city school system and did not share the proceeds with the county. The counties sued the cities, arguing that section 57-4-306 required the cities to distribute the tax proceeds pro rata among all schools in the county based on average daily attendance. The trial court granted summary judgment for the cities. The trial court held that the statute required counties to distribute their LBD tax proceeds pro rata among all schools in the county, even though it did not require the same of cities. The court of appeals affirmed. The Supreme Court affirmed, holding holding that the distribution statute directed the cities to distribute the education portion of their LBD tax proceeds in support of their own municipal school systems.
Court Description:
Authoring Judge: Justice Holly Kirby
Trial Court Judge: Chancellor Telford G. Forgety, Jr.
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 against the county and in favor of the two defendant cities. The county also raised an alternative claim for reimbursement of past liquor-by-the-drink tax proceeds that it had received from private club sales and shared with the cities; the county argued that, if cities were not required to share their tax proceeds, then counties should not be required to do so. The trial court rejected this claim as well and held that the statute required counties to distribute their liquor-by-the-drink tax proceeds pro rata among all schools in the county, even though it did not require the same of cities. The Court of Appeals affirmed. Discerning no error, we affirm.
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