Lost Millions In Liquor Sales Tax For County Schools Was Discovered By Happenstance

Wednesday, September 11, 2013

The fact that the county schools had for years been missing out on over $1 million in annual revenue was discovered by happenstance, County Schools Finance Director Christie Jordan said Wednesday.

She said the schools are still owed $7.2 million by the city of Chattanooga for unpaid liquor sales taxes dating to 2005.

The city recently began making monthly payments, which is expected to bring in $1.1 million a year to the school system.

Ms. Jordan said in recent years only two municipalities had been giving the county schools the required share, though all of the municipalities were supposed to.

She said the loss was discovered when one of the two municipalities stopped paying and the other asked if it could quit. She said she started looking into the issue closer with the state revenue department. She found that under state law municipalities that do not have a school system must turn over half a percent of the tax to the county schools.

The city of Chattanooga did not have to do so as long as it had its own school system. However, it went out of the school business in 1998. Chattanooga began remitting the required tax share at that time, but, for some reason, the payments stopped in 2005.

The Hamilton County government has been paying its required share all along, Ms. Jordan said.

She said when she confirmed that the city should have been paying down through the years she advised a city financial official, "Hey, it looks like you owe us some money."

Supt. Rick Smith said county school officials are in talks with city officials on repayment of the $7.2 million.

He said, "We're in no big hurry," and said the county schools want to keep cordial relations with the city.

One possible topic in the talks, he said, is the large amount of stormwater runoff fees the county schools have to pay to the city.    

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