By Angie Mayes
Special to Mt. Juliet News
Wilson County Schools attorney Mike Jennings told the school board last Monday night he filed a motion to set a hearing regarding the liquor tax money the city of Mt. Juliet owes the school system.
The school board and a court ruling say Mt. Juliet has to pay a portion of the back-tax revenue to Wilson County Schools.
According to court filings from 2014, Wilson County Schools said it should receive the back funds and would then pay a portion of that money to Lebanon Special School District. The amount paid to both school systems is based on the daily average attendance, as recognized by the Tennessee Board of Education, according to court records.
When the school board sued Mt. Juliet in 2014 for the back taxes, Mt. Juliet cited state court rulings that went back to 1883 that said cities didn’t have to pay the taxes to county schools. Mt. Juliet attorneys argued the school board had no authority to sue the city, but the Wilson County Commission, which is the governing body in the county, could sue for the funds.
The filing paperwork said the city is required by state law to collect 15 percent of all liquor-by-the-drink revenues. The money is supposed to be divided by 50 percent, according to suit paperwork. Fifty percent goes to the city and the other half goes to the schools.
Lebanon also didn’t pay its fair share to Wilson County Schools but eventually agreed to pay the back taxes during a 10-year period, according to court records.
The school board discovered the lack of payments in 2013, court records said. Mt. Juliet paid part of what it owed, nearly $31,000, but still owed Wilson County Schools nearly $450,000, court records said.
The payment amount was determined by the daily average attendance percentage of tax revenue collected, and the court said Mt. Juliet should pay the amount, from the inception of the liquor-by-the-drink tax until June 30, 2013.
In a filing from 2014, Mt. Juliet attorneys said the county was not eligible to collect a portion of the tax revenues because liquor-by-the-drink statutes were not passed in the county, but rather only in the cities. They said the liquor-by-the-drink were not passed in the unincorporated county areas, therefore the school board was not entitled to a portion of the tax revenue.
Mt. Juliet filed a motion to dismiss in 2015, but it was denied. In the motion, the city offered other lawsuits in the state it considered precedent that found in defendants’ favor.
A 2018 judgment by Chancellor C.K. Smith denied Mt. Juliet’s motion for summary judgment, and Wilson County Schools was eligible to receive the money.
The amount of unremitted revenue was to be determined in a future evidentiary hearing, the order said.
In October, the Mt. Juliet City Commission voted to offer a $325,000 settlement to the school board. The school board denied the offer at its November meeting.
Mt. Juliet City Manager Kenny Martin said the city is currently paying the necessary liquor-by-the-drink tax revenue to the school systems.
Unless a date is named or an agreement reached before the hearing, the issue will be discussed March 27 at 9 a.m. in Wilson County chancery court.