Tennessee § 57-4-306 - Distribution of collections.

§ 57-4-306. Distribution of collections.

All gross receipt taxes collected under § 57-4-301(c) shall be distributed by the commissioner of revenue as follows: Fifty percent (50%) to the general fund to be earmarked for education purposes; and The other fifty percent (50%) to be distributed to local political subdivisions as follows: Collections for privileges exercised in an incorporated municipality shall be distributed by the commissioner to the city recorder; and Collections for privileges exercised in an unincorporated area of the county shall be distributed by the commissioner to the county trustee. The proceeds received by a local political subdivision pursuant to subdivision (a)(2) must be distributed by the local political subdivision in the following manner: One-half (½) of the proceeds must be distributed as follows: If the county school system is the only LEA in the county, then to the county trustee for the county school system from the collection of taxes in the county or any city exercising the privilege authorized under § 57-4-301(c); If a city exercises the privilege authorized under § 57-4-301(c) and operates a kindergarten through grade twelve (K-12) school system, then to the city recorder, who shall retain the collections for the city school system; If a city exercises the privilege authorized under § 57-4-301(c) and operates a city school system that is not a kindergarten through grade twelve (K-12) school system, then to the city recorder: In the amount the percentage that the prior year's average daily attendance (ADA) of the students in the city school system is to the prior year's ADA of public school students residing in the city who attend either the city school system or the county school system with the remaining amount distributed to the county trustee for the county school system, if the city lies entirely in a single county; or In the amount the percentage that the prior year's ADA of the students in the city school system is to the prior year's ADA of public school students residing in the city who attend either the city school system or a county school system with the remaining amount divided between the counties based on where the tax was collected and distributed to the county trustees for the county school systems, if the city lies within two (2) or more counties; Notwithstanding § 49-3-315, if a city exercises the privilege authorized under § 57-4-301(c), but does not operate a city school system, then to the county trustee for the county school system; If a special school district lies, in whole or in part, within a city that exercises the privilege authorized under § 57-4-301(c), then to the appropriate official acting for the special school district in the amount the percentage the ADA of public school students residing in the city and attending the special school district is to the total ADA of city public school students who attend either the special school district or the county school system with any remaining amount distributed to the county trustee for the county school system; Notwithstanding § 49-3-315, if a county exercises the privilege authorized under § 57-4-301(c) and one (1) or more city school systems operate within the county, then to the county trustee for the county school system any tax revenues collected outside the boundaries of cities exercising the privilege authorized under § 57-4-301(c) that have city school systems; or If a city that lies in two (2) or more counties exercises the privilege authorized under § 57-4-301(c) but does not operate a city school system, then tax revenues collected in the city must be divided between the counties based on where the tax was collected and distributed to the county trustees for the county school systems; The other one-half (½) of the proceeds must be distributed as follows: Collections of gross receipts collected in unincorporated areas, to the county general fund; and Collections of gross receipts in incorporated cities and towns, to the city or town wherein such tax is collected; and As used in subdivision (b)(1), “average daily attendance” or “ADA” means: If the school system was in operation during the prior school year, the aggregate days' attendance of the school system during the prior school year divided by the number of days school was in session during the prior school year; or If the school system was not in operation during the prior school year, then the estimated expected attendance of the school system for the current school year as reported to the department of education. [Deleted by 2020 amendment.] Notwithstanding subdivision (a)(2), the fifty percent (50%) of the gross receipt taxes allocated to local political subdivisions by subdivision (a)(2) and collected in a municipality which is a premier tourist resort shall be distributed to and expended by such municipality for schools in such municipality. By August 1, 2014, every city or county that exercises the privilege authorized under § 57-4-301(c) shall provide written notice to each school system operating within its jurisdiction. This notice shall contain a statement that the local political subdivision exercises the privilege authorized under § 57-4-301(c), a statement that students within the jurisdiction attend a school or schools operated by the school system, a statement that the school system is authorized to receive a portion of the revenues collected, and a reference to this part. A city or county that, subsequent to July 1, 2014, elects to exercise the privilege authorized under § 57-4-301(c), shall comply with the notice provisions of this subsection (e) within thirty (30) days of the effective date of the referendum. If the local political subdivision fails to remit the proceeds to the appropriate school fund, system, or systems as required under subsection (b) within sixty (60) days of receipt from the commissioner, then the aggrieved local school board shall notify the comptroller of the treasury who shall deliver by certified mail a written notice of such failure to the local political subdivision within five (5) business days of notice of the failure. In the event the local political subdivision fails to remit the proceeds within thirty (30) days of the receipt of such notice, the comptroller of the treasury shall direct the commissioner to withhold future distributions of proceeds to the local political subdivision authorized under subsection (b) until a final determination is made pursuant to subsection (h). Upon the commissioner withholding distributions of proceeds as authorized under subsection (g), an aggrieved local school board shall have the authority to pursue equitable relief against the local political subdivision in the chancery court; provided, however, that in the event that the state is a party or becomes a party to the suit, then such suit shall be filed or transferred to the chancery court of Davidson County. Upon receipt of a copy of the final judgment of the court, the commissioner shall distribute all withheld proceeds to the local political subdivision, which shall remit such proceeds to the aggrieved party pursuant to the judgment. If the amount of the judgment is not satisfied by the withheld proceeds, then the local political subdivision shall be solely responsible for remitting future proceeds to the aggrieved party pursuant to the judgment. Subsections (a)-(h) shall not apply in counties having a population, according to the 2010 federal census or any subsequent federal census of: not less than nor more than 336,400 336,500 98,900 99,000 In such counties, all gross receipt taxes collected under § 57-4-301(c) shall be distributed by the commissioner of revenue as follows: Fifty percent (50%) to the general fund to be earmarked for education purposes; and The other fifty percent (50%) to be distributed to local political subdivisions as follows: Collections for privileges exercised in an incorporated municipality shall be distributed by the commissioner to the city recorder; and Collections for privileges exercised in an unincorporated area of the county shall be distributed by the commissioner to the county trustee. The proceeds received in each local political subdivision pursuant to subdivision (i)(1)(B) shall be distributed by the local political subdivision in the following manner: One-half (½) of the proceeds shall be expended and distributed in the same manner as the county property tax for schools is expended and distributed; any proceeds expended and distributed to municipalities which do not operate their own school systems separate from the county are required to remit one-half (½) of their proceeds of the gross receipts liquor-by-the-drink tax to the county school fund; and The other one-half (½) of the proceeds shall be distributed as follows: Collections of gross receipts collected in unincorporated areas, to the county general fund; and Collections of gross receipts in incorporated cities and towns, to the city or town wherein such tax is collected. [Effective until July 1, 2023.] Notwithstanding this section to the contrary, fifty percent (50%) of the event revenue from gross receipt taxes collected under § 57-4-301(c) for privileges exercised in an event venue during an event period that would not otherwise be earmarked for educational purposes shall be deposited in the event tourism fund. One and one hundred twenty-five thousandths percent (1.125%) of funds deposited in the event tourism fund shall be retained by the department of finance and administration to be used for costs associated with administering the fund and this section. The department of finance and administration shall cause to be paid to the department of revenue an amount to offset the department's costs in administering this section. As used in this subsection (j): “Event period” has the same meaning as defined in § 67-6-105; “Event revenue” has the same meaning as defined in § 67-6-105; and “Event venue” has the same meaning as defined in § 67-6-105. Acts 1967, ch. 211, § 3; T.C.A., § 57-162; Acts 1982, ch. 942, §§ 1, 2; 1983, ch. 356, § 1; 2003, ch. 355, § 19; 2005, ch. 500, § 2; 2006, ch. 989, § 7; 2014, ch. 901, § 1; 2015, ch. 220, §§ 1, 2; 2016, ch. 885, §§ 1, 2; 2017, ch. 346, §§ 1, 2; 2018, ch. 687, §§ 1, 2; 2018, ch. 959, § 2; 2019, ch. 194, §§ 1, 2; 2020, ch. 696, §§ 1-4. Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement. Acts 2003, ch. 355, § 66 provided that no expenditure of public funds pursuant to the act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000 d. Acts 2006, ch. 989, § 17 provided that the act, which deleted former subdivisions (4) and (5), shall apply to funds remitted to the department of revenue on or after August 1, 2006. For the Preamble to the act concerning a mechanism by which a sponsoring county or municipality and event venue may receive reimbursement for certain event-related expenses out of the sales tax revenues generated in connection with a qualified event, please refer to Acts 2018, ch. 959. Acts 2018, ch. 959, § 4 provided that the provisions contained in the act, which added subsection (j), shall terminate on July 1, 2023. Amendments. The 2018 amendment by ch. 687 in (b), substituted “2016-2017” for “2015-2016” throughout (b)(1), substituted “From July 1, 2017, until June 30, 2018,” for “From July 1, 2016, until June 30, 2017,” at the beginning of (b)(1), substituted “2017-2018” for “2016-2017 throughout (b)(2), substituted “From July 1, 2018, until June 30, 2019,” for “From July 1, 2017, until June 30, 2018,” at the beginning of (b)(2); and substituted “After July 1, 2019” for “After July 1, 2018” at the beginning of the introductory language of (c). The 2018 amendment by ch. 959, effective on January 1, 2019 and effective until July 1, 2023, added (j). See the Compiler's Notes. The 2019 amendment, substituted “2017-2018” for “2016-2017”, “2018-2019” for “2017-2018” and “2019-2020” for “2018-2019” throughout subsection (b); in (b)(1), substituted “July 1, 2018 until June 30, 2019” for “July 1, 2017 until June 30, 2018” and substituted “must” for “shall” in (b)(1), (b)(1)(A)(vii), (b)(1)(B), (b)(1)(B)(ii), and (b)(2)(A)(vii); in (b)(1)(A)(ii) substituted “then to the city recorder, who shall retain” for “then the city recorder shall retain”; in (b)(2)(A)(vi), inserted “Notwithstanding § 49-3-315 , if a county exercises the privilege authorized under § 57-4-301(c) ” at the beginning; substituted “After July 1, 2020” for “After July 1, 2019” at the beginning of (c). The 2020 amendment rewrote (b), which read; “(b) From July 1, 2018, until June 30, 2019, the proceeds received by a local political subdivision pursuant to subdivision (a)(2) must be distributed by the local political subdivision in the following manner:“(A) One-half (½) of the proceeds must be distributed as follows:“(i) If the county school system is the only LEA in the county, then to the county trustee for the county school system from the collection of taxes in the county or any city exercising the privilege authorized under § 57-4-301(c) ;“(ii) If a city exercises the privilege authorized under § 57-4-301(c) and operates a kindergarten through grade twelve (K-12) school system, then to the city recorder, who shall retain the collections for the city school system;“(iii) If a city exercises the privilege authorized under § 57-4-301(c) and operates a city school system that is not a kindergarten through grade twelve (K-12) school system, then to the city recorder:“(a ) In the amount the percentage that the 2017-2018 average daily attendance (ADA) of the students in the city school system is to the 2017-2018 ADA of public school students residing in the city who attend either the city school system or the county school system with the remaining amount distributed to the county trustee for the county school system, if the city lies entirely in a single county; or“(b ) In the amount the percentage that the 2017-2018 ADA of the students in the city school system is to the 2017-2018 ADA of public-school students residing in the city who attend either the city school system or a county school system with the remaining amount divided between the counties based on where the tax was collected and distributed to the county trustees for the county school systems, if the city lies within two (2) or more counties;“(iv) Notwithstanding § 49-3-315 , if a city exercises the privilege authorized under § 57-4-301(c), but does not operate a city school system, then to the county trustee for the county school system;“(v) If a special school district lies, in whole or in part, within a city that exercises the privilege authorized under § 57-4-301(c), then to the appropriate official acting for the special school district in the amount the percentage the ADA of public-school students residing in the city and attending the special school district is to the total ADA of city public-school students who attend either the special school district or the county school system with any remaining amount distributed to the county trustee for the county school system;“(vi) Notwithstanding § 49-3-315 , if a county exercises the privilege authorized under § 57-4-301(c) and one (1) or more city school systems operate within the county, then to the county trustee for the county school system any tax revenues collected outside the boundaries of cities exercising the privilege authorized under § 57-4-301(c) that have city school systems; or“(vii) If a city that lies in two (2) or more counties exercises the privilege authorized under § 57-4-301(c) but does not operate a city school system, then tax revenues collected in the city must be divided between the counties based on where the tax was collected and distributed to the county trustees for the county school systems; and“(B) The other one-half (½) of the proceeds must be distributed as follows:“(i) Collections of gross receipts collected in unincorporated areas, to the county general fund; and“(ii) Collections of gross receipts in incorporated cities and towns, to the city or town wherein such tax is collected.“(2) From July 1, 2019, until June 30, 2020, the proceeds received by a local political subdivision pursuant to subdivision (a)(2) must be distributed by the local political subdivision in the following manner:“(A) One-half (½) of the proceeds must be distributed as follows:“(i) If the county school system is the only LEA in the county, then to the county trustee for the county school system from the collection of taxes in the county or any city exercising the privilege authorized under § 57-4-301(c);“(ii) If a city exercises the privilege authorized under § 57-4-301(c) and operates a kindergarten through grade twelve (K-12) school system, then the city recorder shall retain the collections for the city school system;“(iii) If a city exercises the privilege authorized under § 57-4-301(c) and operates a city school system that is not a kindergarten through grade twelve (K-12) school system, then to the city recorder:“(a ) In the amount the percentage that the 2018-2019 average daily attendance (ADA) of the students in the city school system is to the 2018-2019 ADA of public school students residing in the city who attend either the city school system or the county school system with the remaining amount distributed to the county trustee for the county school system, if the city lies entirely in a single county; or“(b ) In the amount the percentage that the 2018-2019 ADA of the students in the city school system is to the 2018-2019 ADA of public school students residing in the city who attend either the city school system or a county school system with the remaining amount divided between the counties based on where the tax was collected and distributed to the county trustees for the county school systems, if the city lies within two (2) or more counties;“(iv) Notwithstanding § 49-3-315, if a city exercises the privilege authorized under § 57-4-301(c), but does not operate a city school system, then to the county trustee for the county school system;“(v) If a special school district lies, in whole or in part, within a city that exercises the privilege authorized under § 57-4-301(c), then to the appropriate official acting for the special school district in the amount the percentage the ADA of public school students residing in the city and attending the special school district is to the total ADA of city public school students who attend either the special school district or the county school system with any remaining amount distributed to the county trustee for the county school system;“(vi) Notwithstanding § 49-3-315, if a county exercises the privilege authorized under § 57-4-301(c) and one (1) or more city school systems operate within the county, then to the county trustee for the county school system any tax revenues collected outside the boundaries of cities exercising the privilege authorized under § 57-4-301(c) that have city school systems; or“(vii) If a city that lies in two (2) or more counties exercises the privilege authorized under § 57-4-301(c) but does not operate a city school system, then tax revenues collected in the city must be divided between the counties based on where the tax was collected and distributed to the county trustees for the county school systems; and“(B) The other one-half (½) of the proceeds shall be distributed as follows:“(i) Collections of gross receipts collected in unincorporated areas, to the county general fund; and“(ii) Collections of gross receipts in incorporated cities and towns, to the city or town wherein such tax is collected.“(3)(A) As used in subdivision (b)(1), “average daily attendance” or “ADA” means:“(i) If the school system was in operation during the 2017-2018 school year, the aggregate days' attendance of the school system during the 2017-2018 school year divided by the number of days school was in session during the 2017-2018 school year; or“(ii) If the school system was not in operation during the 2017-2018 school year, then the estimated expected attendance of the school system for the 2018-2019 school year as reported to the department of education.“(B) As used in subdivision (b)(2), “average daily attendance” or “ADA” means:“(i) If the school system was in operation during the 2018-2019 school year, the aggregate days' attendance of the school system during the 2018-2019 school year divided by the number of days school was in session during the 2018-2019 school year; or“(ii) If the school system was not in operation during the 2018-2019 school year, then the estimated expected attendance of the school system for the 2019-2020 school year as reported to the department of education.”; deleted (c), which read; “(c) After July 1, 2020, the proceeds received in each local political subdivision pursuant to subdivision (a)(2) shall be distributed by the local political subdivision in the following manner:“(1) One-half (½) of the proceeds shall be expended and distributed in the same manner as the county property tax for schools is expended and distributed; any proceeds expended and distributed to municipalities which do not operate their own school systems separate from the county are required to remit one-half (½) of their proceeds of the gross receipts liquor-by-the-drink tax to the county school fund; and“(2) The other one-half (½) of the proceeds shall be distributed as follows:“(A) Collections of gross receipts collected in unincorporated areas, to the county general fund; and“(B) Collections of gross receipts in incorporated cities and towns, to the city or town wherein such tax is collected.” and in (f) and (g) substituted “subsection (b)” for “subsections (b) or (c) as applicable”. Effective Dates. Acts 2018, ch. 687, § 3. July 1, 2018. Acts 2018, ch. 959, § 4. January 1, 2019. Acts 2019, ch. 194, § 3. July 1, 2019. Acts 2020, ch. 696, § 5, July 1, 2020. Cross-References. Changes in municipal boundaries, effect upon receipt and distribution of tax revenues, § 6-51-115 . Attorney General Opinions. Distribution of tax proceeds in City of Columbia, OAG 94-72 (6/2/94). Distribution of tax proceeds in Bedford County, OAG 97-143 (10/23/97). The state can probably continue to distribute state-shared taxes even if the General Assembly does not enact a general appropriations act, OAG 00-083 (5/4/00). Authority of county school board to compromise or forgive liquor-by-the-drink tax revenue. OAG 14-22, 2014 Tenn. AG LEXIS 23 (2/26/14). NOTES TO DECISIONS 1. Construction. 2. Allocation of Funds. 1. Construction. Trial court did not err in finding that former T.C.A. § 57-4-306(a)(2)(A) (amended 2014) did not require the cities to share one-half of their liquor-by-the-drink tax revenue with the county's school system where the statute was ambiguous, and based on the surrounding statutory scheme, legislative history, and other authorities, the General Assembly's intent was to require solely those cities that did not operate their own school systems to share the liquor-by-the-drink proceeds with the counties in which they were located. Blount Cty. Bd. of Educ. v. City of Maryville, — S.W.3d —, 2017 Tenn. App. LEXIS 831 (Tenn. Ct. App. Dec. 27, 2017). Trial court properly granted the cities summary judgment on the county's claim for reimbursement of the funds each city's respective school systems had received as a result of liquor-by-the-drink sales in unincorporated areas of the county given the proper interpretation of T.C.A. § 57-4-306(a)(2)(A) . Blount Cty. Bd. of Educ. v. City of Maryville, — S.W.3d —, 2017 Tenn. App. LEXIS 831 (Tenn. Ct. App. Dec. 27, 2017). Upon thorough review of the language of the statute in light of the statutory framework, legislative history, and attorney general's opinions referenced by the legislative history, the Court of Appeals of Tennessee, at Knoxville, holds that the General Assembly's intent in enacting the 1982 Amendment to T.C.A. § 57-4-306(a)(2)(A) was to require solely those municipalities that did not operate their own school systems to share liquor-by-the-drink tax proceeds with the counties in which they were located. Wash. Cty. Sch. Sys. v. City of Johnson City, — S.W.3d —, 2017 Tenn. App. LEXIS 832 (Tenn. Ct. App. Dec. 27, 2017). Court of Appeals of Tennessee, at Knoxville, concludes that because T.C.A. § 57-4-103(a)(1) set forth the effectiveness of the entire statutory chapter in which former T.C.A. § 57-4-306(a) (amended 2014), was located, § 57-4-103(a)(1) operated to classify a local political subdivision receiving liquor-by-the-drink taxes from the Commissioner of Revenue as one that had passed a liquor-by-the-drink referendum. The Court of Appeals further concludes, however, that this did not necessarily exempt a city from the general requirement of § 57-4-306(a)(2)(A) of distributing one-half of its liquor-by-the-drink revenue in the manner of county property tax distribution. Wash. Cty. Sch. Sys. v. City of Johnson City, — S.W.3d —, 2017 Tenn. App. LEXIS 832 (Tenn. Ct. App. Dec. 27, 2017). Under the plain language of former T.C.A. § 57-4-306(a)(2)(A) (amended 2014), a city was excluded from the proviso of remitting one-half of its proceeds into the county's school fund when the city operated its own school system. Wash. Cty. Sch. Sys. v. City of Johnson City, — S.W.3d —, 2017 Tenn. App. LEXIS 832 (Tenn. Ct. App. Dec. 27, 2017). Under former T.C.A. § 57-4-306(a)(2)(A) (amended 2014), one-half of the proceeds were to be expended and distributed in the same manner as the county property tax for schools on the condition or understanding that any proceeds expended and distributed to municipalities which did not operate their own school systems separate from the county were required to remit one half of their proceeds of the gross receipts liquor-by-the-drink tax to the county school fund. The clause “which did not operate their own school systems separate from the county” functioned as a restrictive relative clause, restricting the municipalities to which that proviso applied to those that did not operate their own school systems. Wash. Cty. Sch. Sys. v. City of Johnson City, — S.W.3d —, 2017 Tenn. App. LEXIS 832 (Tenn. Ct. App. Dec. 27, 2017). Under former T.C.A. § 57-4-306(a)(2)(A) (amended 2014), one-half of the proceeds were to be expended and distributed in the same manner as the county property tax for schools on the condition or understanding that any proceeds expended and distributed to municipalities which did not operate their own school systems separate from the county were required to remit one half of their proceeds of the gross receipts liquor-by-the-drink tax to the county school fund. The clause “which did not operate their own school systems separate from the county” functioned as a restrictive relative clause, restricting the municipalities to which this proviso applied to those that did not operate their own school systems. Bradley Cty. Sch. Sys. v. City of Cleveland, — S.W.3d —, 2017 Tenn. App. LEXIS 833 (Tenn. Ct. App. Dec. 27, 2017). Court of Appeals of Tennessee, at Knoxville, concludes that because T.C.A. § 57-4-103(a)(1) set forth the effectiveness of the entire statutory chapter in which former T.C.A. § 57-4-306(a) (amended 2014) was located, § 57-4-103(a)(1) operated to classify a local political subdivision receiving liquor-by-the-drink taxes from the Commissioner of Revenue as one that had passed a liquor-by-the-drink referendum. The Court of Appeals further concludes, however, that this did not necessarily exempt a city from the general requirement of § 57-4-306(a)(2)(A) of distributing one-half of its liquor-by-the-drink revenue in the manner of county property tax distribution. Bradley Cty. Sch. Sys. v. City of Cleveland, — S.W.3d —, 2017 Tenn. App. LEXIS 833 (Tenn. Ct. App. Dec. 27, 2017). Court of Appeals of Tennessee, at Knoxville, determines that as presented to and adopted in the Senate, the legislative intent of the 1982 Amendment to T.C.A. § 57-4306(a)(2)(A) was to correct a situation in which some municipalities that did not operate their own school systems were failing to distribute the statutorily required portion of liquor-by-the-drink gross receipt taxes to the counties whose school systems they utilized. As explained by the Senate sponsor, the intent was not to require municipalities that operated their own school systems to distribute liquor-by-the-drink revenue to the corresponding counties. Bradley Cty. Sch. Sys. v. City of Cleveland, — S.W.3d —, 2017 Tenn. App. LEXIS 833 (Tenn. Ct. App. Dec. 27, 2017). Upon thorough review of the language of the statute in light of the statutory framework, legislative history, and attorney general's opinions referenced by the legislative history, the Court of Appeals of Tennessee, at Knoxville, holds that the General Assembly's intent in enacting the 1982 Amendment to T.C.A. § 57-4-306(a)(2)(A) was to require solely those municipalities that did not operate their own school systems to share liquor-by-the-drink tax proceeds with the counties in which they were located. Bradley Cty. Sch. Sys. v. City of Cleveland, — S.W.3d —, 2017 Tenn. App. LEXIS 833 (Tenn. Ct. App. Dec. 27, 2017). Court of Appeals of Tennessee, at Knoxville, agrees that under the plain language of former T.C.A. § 57-4-306(a)(2)(A) (amended 2014), a city was excluded from the proviso of remitting one-half of its proceeds into a county's school fund when the city operated its own school system. Bradley Cty. Sch. Sys. v. City of Cleveland, — S.W.3d —, 2017 Tenn. App. LEXIS 833 (Tenn. Ct. App. Dec. 27, 2017). Under former T.C.A. § 57-4-306(a)(2)(A) (amended 2014), one-half of the proceeds were to be expended and distributed in the same manner as the county property tax for schools on the condition or understanding that any proceeds expended and distributed to municipalities which did not operate their own school systems separate from the county were required to remit one half of their proceeds of the gross receipts liquor-by-the-drink tax to the county school fund. The clause “which did not operate their own school systems separate from the county” functioned as a restrictive relative clause, restricting the municipalities to which this proviso applied to those that did not operate their own school systems. Sullivan Cty. v. City of Bristol, — S.W.3d —, 2017 Tenn. App. LEXIS 834 (Tenn. Ct. App. Dec. 27, 2017). Court of Appeals of Tennessee, at Knoxville, agrees that under the plain language of former T.C.A. § 57-4-306(a)(2)(A) (amended 2014), cities a excluded from the proviso of remitting one-half of their proceeds into a county's school fund when the cities operated their own school systems. Sullivan Cty. v. City of Bristol, — S.W.3d —, 2017 Tenn. App. LEXIS 834 (Tenn. Ct. App. Dec. 27, 2017). Court of Appeals of Tennessee, at Knoxville, concludes that because T.C.A. § 57-4-103(a)(1) set forth the effectiveness of the entire statutory chapter in which former T.C.A. § 57-4-306(a) (amended 2014) was located, § 57-4-103(a)(1) operated to classify a local political subdivision receiving liquor-by-the-drink taxes from the Commissioner of Revenue as one that had passed a liquor-by-the-drink referendum. The Court of Appeals further concludes, however, that this did not necessarily exempt the cities from the general requirement of former T.C.A. § 57-4-306(a)(2)(A) (amended 2014) of distributing one-half of their respective liquor-by-the-drink revenue in the manner of county property tax distribution. Sullivan Cty. v. City of Bristol, — S.W.3d —, 2017 Tenn. App. LEXIS 834 (Tenn. Ct. App. Dec. 27, 2017). Upon thorough review of the language of the statute in light of the statutory framework, legislative history, and attorney general's opinions referenced by the legislative history, the Court of Appeals of Tennessee, at Knoxville, holds that the General Assembly's intent in enacting the 1982 Amendment to T.C.A. § 57-4-306(a)(2)(A) was to require solely those municipalities that did not operate their own school systems to share liquor-by-the-drink tax proceeds with the counties in which they were located. Sullivan Cty. v. City of Bristol, — S.W.3d —, 2017 Tenn. App. LEXIS 834 (Tenn. Ct. App. Dec. 27, 2017). Court of Appeals of Tennessee, at Knoxville, determines that as presented to and adopted in the Senate, the legislative intent of the 1982 Amendment to T.C.A. § 57-4-306(a)(2)(A) was to correct a situation in which some municipalities that did not operate their own school systems were failing to distribute the statutorily required portion of liquor-by-the-drink gross receipt taxes to the counties whose school systems they utilized. As explained by the Senate sponsor, the intent was not to require municipalities that operated their own school systems to distribute liquor-by-the-drink revenue to the corresponding counties. Sullivan Cty. v. City of Bristol, — S.W.3d —, 2017 Tenn. App. LEXIS 834 (Tenn. Ct. App. Dec. 27, 2017). Pre-2014 local education provision required a municipality with its own school system to expend and distribute half of its liquor by the drink tax proceeds in the same manner that the county property tax for schools was expended and distributed within the municipality, which was for the benefit of the municipality's own school system. Coffee Cty. Bd. of Educ. v. City of Tullahoma, — S.W.3d —, 2019 Tenn. LEXIS 174 (Tenn. May 8, 2019). 2. Allocation of Funds. County board of education, which was located in a county in which the voters of the county had not authorized the sale of liquor by the drink within the county, was entitled to recover a share of liquor by the drink tax revenues from a city within the county in which the voters of the city had authorized the sale of liquor by the drink within the city. Specifically, the county was entitled to one-half of the 50 percent (25 percent) allocated by the Commissioner of Revenue for Tennessee to the city. Coffee Cty. Bd. of Educ. v. City of Tullahoma, — S.W.3d —, 2018 Tenn. App. LEXIS 29 (Tenn. Ct. App. Jan. 23, 2018). Because the city has its own school system, the court held that 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 or the county schools, and therefore the appellate court erred by reversing the trial court's grant of summary judgment for the city. Coffee Cty. Bd. of Educ. v. City of Tullahoma, — S.W.3d —, 2019 Tenn. LEXIS 174 (Tenn. May 8, 2019). In an action filed by a county against cities based on the cities' failure to share the proceeds of liquor by the drink (LBD) tax proceeds with the county, the court held that the liquor-by-the-drink tax distribution statute did not require the cities to share half of their LBD tax proceeds with the county and other school systems in the county pro rata, but rather, the local education provision directed the cities to expend and distribute the education portion of their LBD tax proceeds in support of their own municipal school systems. Sullivan Cty. v. City of Bristol, — S.W.3d —, 2019 Tenn. LEXIS 175 (Tenn. May 8, 2019). Liquor-by-the-drink tax distribution statute did not require the city to share half of its liquor by the drink (LBD) tax proceeds with the county and other school systems in the county pro rata, but rather, the local education provision directed the city to expend and distribute the education portion of its LBD tax proceeds in support of its own municipal school system, and therefore the appellate court properly reversed the trial court's entry of summary judgment in favor of the county. Wash. Cty. Sch. Sys. v. City of Johnson City, — S.W.3d —, 2019 Tenn. LEXIS 176 (Tenn. May 8, 2019). Liquor-by-the-drink tax distribution statute did not require the city to share half of its liquor by the drink (LBD) tax proceeds with the county and other school systems in the county pro rata, but rather, the local education provision directed the city to expend and distribute the education portion of its LBD tax proceeds in support of its own municipal school system. The court's conclusion applied to all LBD tax proceeds paid to the city, those generated from pre-2002 referendum LBD tax proceeds from private club sales as well as those generated post-referendum. Bradley Cty. Sch. Sys. v. City of Cleveland, — S.W.3d —, 2019 Tenn. LEXIS 177 (Tenn. May 8, 2019). Liquor-by-the-drink tax distribution statute did not require the Commissioner of the Tennessee Department of Revenue to pay half of the cities' liquor by the drink (LBD) tax proceeds directly to the county trustee and that the cities were not required to distribute half of their LBD tax proceeds pro rata among the county school system and the other school systems in the county, but rather, the local education provision directed the cities to expend and distribute the education portion of their LBD tax proceeds in support of their own municipal school systems. Blount Cty. Bd. of Educ. v. City of Maryville, — S.W.3d —, 2019 Tenn. LEXIS 178 (Tenn. May 8, 2019). County's argument that if the cities were not required to share their liquor by the drink (LBD) tax proceeds under this section then the county was not required to share its LBD tax proceeds from sales at private clubs with the cities was rejected because the disparity was understandable, because the citizens of the cities were necessarily also citizens of the county, but the citizens of the county that lived outside the cities were not citizens of the cities. Blount Cty. Bd. of Educ. v. City of Maryville, — S.W.3d —, 2019 Tenn. LEXIS 178 (Tenn. May 8, 2019).