City of Chattanooga officials have admitted that the city owes half of liquor tax income to the county schools, but says it has remitted to the schools much more than is owed.
The County Schools sued the city in Chancery Court, saying it is owed over $11 million dating back to 1998.
Attorneys for the city said the city received approximately $22 million from the liquor tax between 1998 and 2012 and that half of that was due to the county schools.
The legal response says, "Indeed, the city contributed at least $58 million to the county for school purposes and covered numerous other costs of the county's school system as well."
City officials said the first time they were notified of the liquor tax issue was when they were contacted by Christie Jordan, county school finance director, in January 2013.
The city said it began making the monthly payments, but held out the amount it says it is owed by the county schools for stormwater fees.
The city is represented by Assistant City Attorney Phil Noblett and the Nashville firm of Frost Brown Todd LLC.