Crossville Chronicle, Crossville, TN

January 9, 2014

Schools owed liquor $

By Heather Mullinix
Assistant editor

CROSSVILLE — The city of Crossville could owe the Cumberland County School System as much as $375,000 in shared liquor by the drink revenues stretching back to when the measure was approved in the city in 1994.

Cumberland County is one of numerous counties across the state that have not received the shared revenue.

Tennessee law requires half liquor by the drink tax revenue to be sent to the state's general fund for education purposes. The balance of the tax revenues are then sent to the locality where the taxes were collected where, according to state law, the revenues should be split between the county school system and the city, with 50 percent going to each entity. Cities that operate their own school system are not required to make any further disbursement.

In Crossville, liquor by the drink brings in about $65,000 a year in local revenue. The school system would get about half of that. But looking back to when the revenues first started being collected, it was a much lower number, about $6,000 a year.

City officials say that, usually, such revenue splits are completed by the Tennessee Department of Revenue, and they do not know why that was not the case in liquor by the drink taxes.

The department, in a statement on its website says, "The Department does not oversee the distribution of liquor by the drink taxes after it disburses the funds to local governments. The Department generally has no oversight responsibility with respect to local government finances. The Department believes it has appropriately distributed the liquor by the drink taxes as required by law."

About 140 Tennessee cities allow liquor by the drink, but it's not clear yet how many are affected by the issue. In some areas, the total owed reaches upwards of $1 million. In Sumner County, Hendersonville, Gallatin and Portland have calculated about $1.5 million owed to the school system from the municipalities.

Crossville officials and representatives of the school system are planning to meet soon to discuss how to resolve the problem. There has not been guidance from the state on how to settle the repayment.