The Wilson County School Board has rejected an offer from the City of Mt. Juliet to settle a lawsuit brought about five years ago when the school district sued the city for back proceeds in connection to a state-mandated liquor-by-the-drink tax.
The total amount due is now approximately $450,000, plus interest, according to Wilson County Attorney Mike Jennings.
“WCS rejected (the offer) due to the resolution not paying the money that was collected by Mt. Juliet and not paid to the board. (The resolution) included no money at all to the board,” Jennings said.
The resolution from Mt. Juliet’s leaders allowed for WCS to “receive credits up to but not exceeding $385,000, (with) credits to be in the form of any fees of any fees incurred (by WCS) and payable to the City of Mt. Juliet.”
The city is allowed to waive fees because it is a governmental agency, the July 22 resolution said.
A hearing in Wilson County Chancery Court is set for Nov. 14 to determine the amount owed to WCS by Mt. Juliet.
According to the state liquor by the drink law, the liquor-by-the-drink tax rate is “15% of the gross sales price of all alcoholic beverages and wine sold for consumption on the premises.”
The law continues, stating that the Department of Revenue keeps half the total amount and returns the other half to the city which initially collected the funds. Municipalities then keep 50 percent of that money and give 50 percent to the county school system.
The county school system is then required to give a special school district, such as LSSD, 17.01 percent of the funds received by the district, according to Jennings.
The Mt. Juliet resolution also stated that, if the settlement was accepted, the district would not be required to pay any monies to the Lebanon Special School District
“We are bound by law (to pay LSSD),” Jennings said. “The Lebanon Special School District joined in as a plaintiff. Mt. Juliet has no authority to waive that law.”
In 2013, the school board discovered the lack of payment, according to court filings with the Wilson County Chancery Clerk’s office. Mt. Juliet paid part of what it owed ($30,917.10) but still owed the Board of Education fund $449,280.50, it said
The paperwork requested that Mt. Juliet pay the amount, from the inception of the liquor by the drink tax, until June 30, 2013.
In a 2014 filing, the Mt. Juliet leaders stated that because the liquor-by-the-drink had not been passed in the unincorporated county areas, the school district was not entitled to a portion of the tax revenue.
Mt. Juliet then filed a motion to dismiss in 2015, but the motion was denied by the judge presiding over the case. A 2018 judgement by Wilson County Chancellor Judge C.K. Smith, denied Mt. Juliet’s Motion for Summary Judgement, stating that Wilson County Schools was eligible to receive the funds.
The Mt. Juliet Board of Commissioners voted in October 2018 to offer a settlement of $325,000 to be given to the schools. The school board denied this offer at its November 2018 meeting.
Earlier this year, a Tennessee Supreme Court ruling stated that that local entities had to share a portion of the liquor tax with their respective counties, unless the local entity had its own school system, according to Jennings.
“It doesn’t affect our case,” Jennings said. “It doesn’t affect the City of Lebanon because they (do not have) a city-operated school system. They are a special school district.”
As a special school district, Lebanon Special School District, although within city limits, is not governed by the City of Lebanon and maintains its own taxing ability.
Mt. Juliet does not have its own school system in the city and all schools in Mt. Juliet are a part of Wilson County Schools.