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‘Liquor-by-the-drink’ tax dispute suit to be dismissed

A lawsuit filed in May 2014 by the Anderson County Board of Education against the cities of Clinton and Oak Ridge concerning liquor-by-the-drink tax revenue is expected to be dismissed, after the Tennessee Supreme Court ruled in a similar lawsuit against five other counties.

During its May meeting the Anderson County Board of Education said, following the ruling, the board would drop its suit.

Oak Ridge and the City of Clinton both passed liquor-by-the-drink laws. Anderson County has not.

The Tennessee Department of Revenue collects a 15-percent tax on alcoholic drinks sold at restaurants. According to the lawsuit filed by the Anderson County Board of Education, the department of revenue then distributes a portion of those taxes to the cities that authorized the drink sales.

Half of that is supposed to go to the local school fund.

The board of education claimed in their lawsuit that part of that should have gone to the county school system, not just the city school systems. The lawsuit states that Oak Ridge has received funds since 1975, and Clinton since 2003, and owes the school county school board’s education fund money. It alleges that Clinton owes the school fund $38,519.30, and Oak Ridge owes more than $800,000.

The Tennessee Supreme Court states in an opinion that “we agree with the city and hold that the distribution statute directed cities to expend and distribute half of their liquor-by-the-drink tax proceeds for the benefit of the city’s own school system, if any.

In this case, because the city has its own school system, it was permitted to use half of its liquor-by-the-drink tax proceeds for its own school system, and it was not required to share those proceeds with the county.”

During Clinton’s May city council meeting, City Manager Roger Houck said they had set aside a little more than $70,000 in case they were required to share the revenue with the county schools.