County Schools Sue City Over Liquor Tax Money; Berke Makes Offer That Includes Schools Paying Stormwater Fees

Friday, April 11, 2014

The Hamilton County Schools filed suit Friday in Chancery Court seeking $11.7 million the district says it is owed in liquor tax funds.

Click here to read the lawsuit.

Mayor Andy Berke quickly responded with an offer to settle the suit that involves the county schools making stormwater payments to the city. School officials said recently they were not previously charged the fee and they believe other governments are not asked to pay.

The County School Board had authorized the suit several weeks ago, but there were some talks between the city and the schools.

City officials said, "Mayor Andy Berke and Supt. Rick Smith met on March 28 and agreed to convene a working group for 30 days to try to come up with a resolution that is responsible to taxpayers. That working group met twice and was making progress. They were scheduled to meet the upcoming two weeks, prior to the filing of this lawsuit."

The schools maintain that the city should have been giving the schools a share of the liquor tax funds over a long number of years.

Mayor Berke sent this letter today to Supt. Smith:

April 11, 2014

Mr. Rick Smith

Superintendent's Office

Hamilton County Schools

3074 Hickory Valley Road

Chattanooga, TN 37421

Dear Rick:

Two weeks ago, you and I had a productive one-on-one discussion about the issues related to $11.7 million in liquor taxes HCDE seeks from the City and the $1.7 million in storm water fees HCDE owes the City. I left the meeting believing that we both wanted to find a resolution that:

· Establishes an amount of liquor tax and a payment schedule that are responsible to Chattanooga taxpayers;

· Results in new, additional dollars from HCDE’s funding sources and is not merely offset by reductions in support from those sources;

· Benefits the schools the City’s children attend;

· Resolves HCDE’s delinquent storm water fee payments to the City; and

· Ensures that due amounts are paid going forward.

With these principles in mind, at that meeting, you and I agreed to select members of our staffs to work together as a group for 30 days in order resolve these issues. The group has met twice, once as recently as Tuesday, and was making progress by all accounts. Nevertheless, it is my understanding that HCDE has refused to cooperate in scheduling the next working group meeting and, instead, filed suit today while Wade Hinton was attempting to arrange our next meeting. This decision is very disappointing, especially after your withdrawal in November from the agreement to resolve all these issues we announced in August.

Based on our experience in the working group, we have decided to simply make the following proposal, with the hope that we can resolve this issue despite HCDE’s decision not to participate as agreed:

· The City will:

o make an initial liquor tax payment to HCDE of $3.33 million;

o make annual payments of approximately $1.67 million to HCDE for five years; and

o make current payments going forward.

· HCDE will:

o make an initial storm water payment to the City of approximately $1.7 million; and

o make current payments going forward.

· The City, HCDE, and any other necessary party will take steps required to ensure that the principles we discussed on March 28 (and listed above) are fulfilled.

I hope you and members of the School Board will accept this offer so the City and HCDE can move on from this topic and begin to focus on how we can partner together on issues such as digital inclusion, literacy, and other issues affecting our City’s children. Otherwise, we are merely going to spend a significant amount of time at taxpayer expense to resolve this issue.

As always, thank you for your commitment to service. I look forward to hearing from you.


Mayor Andy Berke

City of Chattanooga

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