Under a decision by Tennessee’s Court of Appeals at Knoxville, Johnson City will not have to share years of liquor sales tax revenue with the county. Attorney Jim Logan, who presented at the meeting, told board members he needed their OK to include Washington County in the permission to appeal, adding that they had a small window of time to make a decision — 60 days from the ruling.
“If we do not appeal, and if the Supreme Court decides that the school boards are entitled to the money, there’s another law that applies which says the final judgment is binding between the respective parties,” Logan said. “So you folks could find the other counties receiving the money while you don’t if you do not make the application for appeal.”
Washington County filed a lawsuit in 2014 against Johnson City for $3.4 million in retroactive sales tax revenues. In 2016, Sullivan County Chancellor E.G. Moody made a monumental decision when he sided with Washington County on the matter, calling the state laws "ambiguous" on the matter. Then the Court of Appeals reversed that decision in December.
Four other counties were affected by similar rulings, but the Washington County and Johnson City case was the only ruling that was reversed by the decision as the rulings for Sullivan County and Bristol, Blount County and Maryville, and Bradley County and Cleveland were upheld.
Logan, who is also working with Bradley County on the case, told board members if they did not act now, they would be left out of the ruling if the suit ends in the county's favor, so board members passed a unanimous vote to sign off on the appeal, which will go to the state Supreme Court.
Under state law, half of liquor-by-the-drink revenue is kept for education. Johnson City collects between $500,000 to $600,000 per year in that revenue.
“Most of the counties educate most of the students across our state,” Logan said. “It is without question that the counties provide the educational services required in our Constitution across the state. It’s time for the legislature 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 they school board across the state irrespective of where they live when it’s a state tax.”
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