IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

August 8, 2017 Session

WASHINGTON COUNTY SCHOOL SYSTEM BY AND THROUGH THE 

WASHINGTON COUNTY BOARD OF EDUCATION ET AL. v. THE CITY 

OF JOHNSON CITY, TENNESSEE

Interlocutory Appeal from the Chancery Court for Washington County

No. 42491 E. G. Moody, Chancellor

No. E2016-02583-COA-R9-CV

This is one of four separate actions currently before this Court with the common issue of 

whether the version of Tennessee Code Annotated § 57-4-306(a)(2)(A) in effect prior to 

the July 2014 amendment of that statute required a municipality governed by its own 

liquor-by-the-drink referendum and operating its own school system to share one-half of 

its liquor-by-the-drink tax revenue with the county in which the municipality was located 

when the county had not enacted a liquor-by-the-drink referendum. The county 

commenced the instant action by filing a complaint requesting declaratory judgment of its 

asserted right to a portion of liquor-by-the-drink tax revenue collected within the 

municipality. The city filed a motion to dismiss the complaint, or in the alternative, for 

summary judgment. Following a hearing, the trial court denied the municipality’s motion 

for summary judgment and granted declaratory judgment to the county, declaring that the 

municipality was required to share with the county its liquor-by-the-drink tax monies 

distributed to it by the Tennessee Commissioner of Revenue (“the Commissioner”) in the 

manner that county property tax was expended and distributed. The trial court reserved 

issues of prejudgment interest and the amount of unremitted tax revenue for an 

evidentiary hearing. The municipality subsequently filed an unopposed motion for 

interlocutory appeal, which was granted, respectively, by the trial court and this Court. 

Determining that the municipality was not required under the applicable version of the 

statute to share its liquor-by-the-drink tax revenue with the county, we reverse the trial 

court’s grant of declaratory judgment and grant summary judgment in favor of the 

municipality, dismissing the county’s complaint. 

Tenn. R. App. P. 9 Interlocutory Appeal; Judgment of the Chancery Court

Reversed; Case Remanded

THOMAS R. FRIERSON, II, J., delivered the opinion of the court, in which D. MICHAEL 

SWINEY, C.J., and RICHARD H. DINKINS, J., joined.

12/27/2017
2

K. Erickson Herrin, Johnson City, Tennessee, for the appellant, The City of Johnson City, 

Tennessee.

James F. Logan, Jr., Cleveland, Tennessee, for the appellees, Washington County School 

System, by and through the Washington County Board of Education, and Washington 

County, Tennessee.

OPINION

I. Factual and Procedural Background

The facts underlying this action are essentially undisputed. Tennessee Code 

Annotated § 57-4-301(c) (2013 & Supp. 2017) provides for a tax “to include each and 

every retail” of an alcoholic beverage sold for consumption on the premises by various 

establishments delineated in section -301, such as restaurants, hotels, sports facilities, and 

private clubs. This tax is commonly referred to as a “liquor-by-the-drink tax.” See Tenn. 

Code Ann. § 57-4-306 (2013 & Supp. 2017); Copper Cellar Corp. v. Jackson, 762 

S.W.2d 560, 562 (Tenn. 1988). Tennessee Code Annotated § 57-4-306, originally 

enacted in 1967, prescribes the manner in which proceeds from the liquor-by-the-drink 

tax are to be distributed, primarily in support of public education. At issue in this action 

is the version of section -306 in effect prior to the Tennessee General Assembly’s 2014 

amendment of that statutory section (“2014 Amendment”). See 2014 Tenn. Pub. Acts, 

Ch. 901 § 1 (H.B. 1403). Particularly at issue is statutory language added to subsection 

-306(a)(2)(A) through an amendment made by the General Assembly in 1982 (“1982 

Amendment”). See 1982 Tenn. Pub. Acts, Ch. 942, §§ 1-2 (S.B. 1817).

 

The City of Johnson City (“the City”) passed a liquor-by-the-drink referendum in 

1980. The citizens of Washington County (“the County”) had never had such a 

referendum put before them at the time this action was commenced. As the trial court 

noted, the City had continuously operated its own school system since at least the 1967 

enactment of the liquor-by-the-drink statutory scheme by the General Assembly. Since 

passage of the 1980 referendum, the City had received fifty percent of gross receipt taxes 

arising from sales of liquor by the drink. The City had not distributed any of its liquorby-the-drink revenue to the Washington County School System or to Washington County 

generally. Simultaneously, within the unincorporated areas of the County, private clubs 

had legally sold alcohol for consumption on the premises through the time this action was 

commenced. The Commissioner had distributed one-half of those funds to the County, 

which in turn distributed one-quarter (or one-half of the half it had received) among the 

school systems in the County, including the City’s school system. 
3

On May 2, 2014, the Washington County School System (“the County School 

System”), acting by and through the Washington County Board of Education (“the 

County Board”), filed a complaint in the Washington County Chancery Court (“trial 

court”), seeking declaratory judgment regarding the rights and responsibilities of the 

parties concerning the liquor-by-the-drink tax. The County Board requested, inter alia, 

an order directing the City to remit to the County Board the “full amount of unremitted 

tax revenues” plus prejudgment interest. 

On June 27, 2014, the City filed a motion to dismiss the complaint or, in the 

alternative, for summary judgment. The City asserted, as pertinent to this appeal, that (1) 

the County Board’s complaint failed to state a claim upon which relief could be granted 

pursuant to Tennessee Rule of Civil Procedure 12.02(6), (2) Tennessee Code Annotated §

57-4-306(a) (2013) did not operate to require the City to remit any part of its portion of 

liquor-by-the-drink tax proceeds received from the Commissioner to the County’s school 

system, and (3) Title 57, Chapter 4 of the Tennessee Code was not applicable to the 

County because the County had not authorized liquor-by-the-drink sales. In support of 

the latter argument, the City contended that because the County had not authorized 

liquor-by-the-drink sales, all of Title 57, Chapter 4, including section -306, did not apply 

to the County. See Tenn. Code Ann. § 57-4-103(a) (2013 & Supp. 2017) (“This chapter 

shall be effective in any jurisdiction which authorizes the sale of alcoholic beverages for 

consumption on the premises in a referendum . . . .”).

In its motion to dismiss, the City also asserted that the County Board lacked the 

capacity to commence and maintain this lawsuit against the City. The County Board 

filed a response on November 12, 2014, requesting denial of the City’s motion. The 

parties subsequently filed additional pleadings and exhibits concerning the City’s motion, 

including, as attached to a pleading filed by the City, a copy of the legislative history 

surrounding the 1982 Amendment. On April 28, 2015, the County filed a petition to 

intervene as a co-plaintiff, and the County Board filed a motion the following day,

seeking to amend the complaint to add the County as a co-plaintiff. The City filed 

responses objecting to the County’s intervention and the amendment of the complaint. 

Following a hearing, the trial court entered an order on June 1, 2015, granting the motion 

to intervene and the motion to amend the complaint, with the effect of joining the County 

with the County Board as joint plaintiffs. We will hereinafter refer to the plaintiffs 

collectively as “the County.” 

On June 15, 2015, the City filed a motion to alter or amend the judgment that 

allowed the County to intervene. On February 16, 2016, the City filed an answer to the 

County’s amended complaint and a renewed motion to dismiss or, in the alternative, for 

summary judgment. In its answer, the City also renewed its motion to alter or amend the 

judgment allowing the County’s intervention. Also on February 16, 2016, the parties 
4

filed an agreed notice of hearing for all pending motions. The County subsequently filed 

a response to the City’s motion for summary judgment, and the City filed a reply.

In the meantime, the General Assembly amended Tennessee Code Annotated § 

57-4-306(a)(2), effective July 1, 2014, setting forth, inter alia, a detailed process by 

which counties that were owed funds by municipalities under Tennessee Code Annotated 

§ 57-4-306 could seek those funds and negotiate settlements as applicable. See 2014 

Tenn. Pub. Acts, Ch. 901 § 1 (H.B. 1403). The 2014 Amendment included a distinction 

between the liquor-by-the-drink tax proceeds received by a local political subdivision in 

the time period spanning July 1, 2014, until June 30, 2015, and those proceeds received 

after July 1, 2015, when, according to the 2014 Amendment, the statute would revert 

back to its pre-amendment language. See Tenn. Code Ann. § 57-4-306(b)-(c) (Supp. 

2014); 2014 Tenn. Pub. Acts, Ch. 901 § 1 (H.B. 1403). However, the General Assembly 

has also amended Tennessee Code Annotated § 57-4-306 each year since the 2014 

Amendment, extending the amended language in subsequent years, one year at a time. 

See 2015 Tenn. Pub. Acts, Ch. 220 §§ 1, 2 (S.B. 990); 2016 Tenn. Pub. Acts, Ch. 885 §§

1, 2 (H.B. 1691); 2017 Tenn. Pub. Acts, Ch. 346 §§ 1, 2 (S.B. 1262). In this action, the 

City attached a copy of the legislative history surrounding the 2014 Amendment to its 

reply to the response filed by the County to the City’s motion for summary judgment.

Following a hearing conducted on March 8, 2016, the trial court entered an order 

on October 27, 2016, granting declaratory judgment in favor of the County, denying the 

City’s motion for summary judgment, and directing the City to pay the County 

unremitted liquor-by-the-drink tax revenue in the same manner as the county property tax 

was distributed. The court specifically found that the language of Tennessee Code 

Annotated § 57-4-306(a)(2)(A) (2013) and the meaning of “jurisdiction” as it was used in 

Tennessee Code Annotated § 57-4-103(a)(1) were ambiguous. The court then examined 

the legislative history of the 2014 Amendment but made no reference in its order to the 

legislative history underlying the 1982 Amendment that effected the governing version of 

subsection -306(a)(2)(A). Although the court found the legislative history surrounding 

the 2014 Amendment to be “ambiguous” in terms of determining the General Assembly’s 

intent, the court agreed “with the County’s argument that it would be counterintuitive for 

the legislature to codify a remedial measure allowing an ‘aggrieved’ county school board 

to recover Consumption Tax proceeds from a municipality operating its own school 

system if the legislature never intended such an outcome.” 

The trial court went on to find that because “there are ambiguities in both the 

statute and in the legislative history, the Court must consider public policy concerns.” 

The court concluded in pertinent part:
5

[P]ublic policy and the principles of equity and fairness demand that 

students across the State receive essentially the same education 

opportunities whether they attend City or County schools. Any other result 

would be inequitable, unjust and against a well settled public policy of 

equal education opportunities for all students in the State. 

The court also found that principles of equity favored the County’s argument because the 

County had consistently expended and distributed the liquor-by-the-drink sales taxes it 

received from the Commissioner for private club sales to all schools in the County in the 

manner that the county property tax for schools was expended and distributed. The court 

reserved issues regarding prejudgment interest and the amount of unremitted tax revenue 

for an evidentiary hearing.

During the March 2016 hearing, the City raised a constitutional argument, positing

that if the trial court were to adopt the County’s interpretation of Tennessee Code 

Annotated § 57-4-306(a) (2013) and hold that a privilege tax collected in the Cities

should have benefitted citizens of another jurisdiction, such a holding would render the 

statute in violation of Article II, Section 29 of the Tennessee Constitution.1 Maintaining 

that public education is a “State function,” the trial court found that “Article II, Section 

29 of the Tennessee Constitution does not apply.”

The City filed an unopposed motion for interlocutory appeal on December 2, 

2016, which was granted by the trial court in an order entered December 29, 2016. The 

trial court noted in its order that other cases with the same issue of statutory interpretation 

were scheduled for appeal before this Court. This Court subsequently granted permission 

for interlocutory appeal. Upon a motion to consolidate filed by the appellants in a 

separate action sharing the same overarching question of statutory interpretation, this 

Court entered an order on May 26, 2017, granting the motion “only to the extent that 

these cases shall be set for oral argument on the same docket and on the same day.”2

 

1 Article II, Section 29 provides in pertinent part: 

The General Assembly shall have power to authorize the several counties and 

incorporated towns in this state, to impose taxes for county and corporation purposes 

respectively, in such manner as shall be prescribed by law; and all property shall be taxed 

according to its value, upon the principles established in regard to state taxation.

2

The other three cases currently before this Court on the same overarching issue are Bradley Cty. Sch. 

Sys. by and through the Bradley Cty. Bd. of Educ. v. City of Cleveland, No. E2016-01030-COA-R3-CV; 

Sullivan Cty. v. City of Bristol, No. E2016-02109-COA-R3-CV; and Blount Cty. Bd. of Educ. v. City of 

Maryville, No. E2017-00047-COA-R3-CV.
6

II. Issues Presented

Pursuant to Tennessee Rule of Appellate Procedure 9, “we are limited on appeal to 

the questions certified by the trial court in its order granting permission to seek an 

interlocutory appeal and in this Court’s order granting the appeal.” In re 

Bridgestone/Firestone & Ford Motor Co. Litig., 286 S.W.3d 898, 902 (Tenn. Ct. App. 

2008). This Court directed in its order granting interlocutory appeal that the issues would 

be as certified by the trial court in its order granting interlocutory review. We note, 

however, that the trial court in its order did not expressly state the issues certified for 

review. The trial court did provide a detailed rationale for approving interlocutory 

review, referencing the other cases currently before this Court involving interpretation of 

the pre-2014 version of Tennessee Code Annotated § 57-4-306(a) and the need for 

appellate review of differing trial court decisions. We therefore summarize the issues 

before us as in the other three cases currently before this Court on the same overarching

question of statutory interpretation. As such, this Court has granted an interlocutory 

appeal in the instant action to address the following issues: 

1. Whether the trial court erred by finding that the version of Tennessee 

Code Annotated § 57-4-306(a)(2)(A) in effect prior to the 2014 

Amendment required the City, as a municipality governed by its own 

liquor-by-the-drink referendum and operating its own school system,

to share one-half of its liquor-by-the-drink tax revenue with the 

County when the County had not enacted a liquor-by-the-drink 

referendum.

2. Whether the trial court erred by finding that the pre-2014 version of 

Tennessee Code Annotated § 57-4-306(a)(2) required that one-half 

of all liquor-by-the-drink sales tax revenue received by the City must 

be distributed in support of education in the same manner as the 

County property tax is distributed.3

 

3 We note that in its motion for interlocutory appeal, Johnson City requested review of the issues 

addressed by the trial court in its October 2016 order, which included a section entitled “Summary of the 

Issues,” stating the following:

1. Is the statutory language in Tenn. Code Ann. § 57-4-306 ambiguous?

2. Does requiring Johnson City to disburse a portion of the proceeds from the 

Consumption Tax to the County violate Article II, Section 29 of the Tennessee 

Constitution?

3. Does Washington County’s lack of a referendum, authorizing liquor-by-the-drink 

sales, disqualify it from receiving its statutory share of the revenues generated by 

liquor-by-the-drink sales pursuant to Tenn. Code Ann. § 57-4-306?
7

III. Standard of Review

The issue raised in this interlocutory appeal is a question of law. We review 

questions of law, including those of statutory construction, de novo with no presumption 

of correctness. See Cunningham v. Williamson Cnty. Hosp. Dist., 405 S.W.3d 41, 43 

(Tenn.2013) (citing Mills v. Fulmarque, Inc., 360 S.W.3d 362, 366 (Tenn. 2012)). The 

trial court in this action granted declaratory judgment in favor of the County. 

Tennessee’s Uniform Declaratory Judgment Act provides, inter alia, that any person 

“whose rights, status, or other legal relations are affected by a statute . . . may have 

determined any question of construction or validity arising under the . . . statute . . . and 

obtain a declaration of rights, status or other legal relations thereunder.” Tenn. Code 

Ann. § 29-14-103 (2012). Although Tennessee Code Annotated § 29-14-108 (2012) 

provides for the determination of an issue of fact within an action for declaratory 

judgment, “ideally and ordinarily” such an action does not invoke disputed issues of fact. 

See Goodwin v. Metro. Bd. of Health, 656 S.W.2d 383, 387 (Tenn. Ct. App. 1983). To 

the extent that we may need to review the factual findings of the trial court, we presume 

those findings to be correct and will not overturn them unless the evidence preponderates 

against them. See Tenn. R. App. P. 13(d); Morrison v. Allen, 338 S.W.3d 417, 425-26 

(Tenn. 2011). 

The trial court also denied the City’s motion for summary judgment. The grant or 

denial of a motion for summary judgment is a matter of law; therefore, our standard of 

review is de novo with no presumption of correctness. See Rye v. Women’s Care Ctr. of 

Memphis, MPLLC, 477 S.W.3d 235, 250 (Tenn. 2015); Dick Broad. Co., Inc. of Tenn. v. 

Oak Ridge FM, Inc., 395 S.W.3d 653, 671 (Tenn. 2013) (citing Kinsler v. Berkline, LLC, 

320 S.W.3d 796, 799 (Tenn. 2010)). As such, this Court must “make a fresh 

determination of whether the requirements of Rule 56 of the Tennessee Rules of Civil 

Procedure have been satisfied.” Rye, 477 S.W.3d at 250. “Statutory construction is a 

question of law that is reviewable on a de novo basis without any presumption of 

correctness.” In re Estate of Tanner, 295 S.W.3d 610, 613 (Tenn. 2009).

As our Supreme Court has explained concerning the requirements for a movant to 

prevail on a motion for summary judgment pursuant to Tennessee Rule of Civil 

Procedure 56:

 

We reiterate that a moving party seeking summary judgment by attacking 

the nonmoving party’s evidence must do more than make a conclusory 

 

We determine that these issues are included in analysis of the overarching issues presented here, as are a

separate list of issues presented by the City in its principal brief on appeal.
8

assertion that summary judgment is appropriate on this basis. Rather, 

Tennessee Rule 56.03 requires the moving party to support its motion with 

“a separate concise statement of material facts as to which the moving party 

contends there is no genuine issue for trial.” Tenn. R. Civ. P. 56.03. “Each 

fact is to be set forth in a separate, numbered paragraph and supported by a 

specific citation to the record.” Id. When such a motion is made, any party 

opposing summary judgment must file a response to each fact set forth by 

the movant in the manner provided in Tennessee Rule 56.03. “[W]hen a 

motion for summary judgment is made [and] . . . supported as provided in 

[Tennessee Rule 56],” to survive summary judgment, the nonmoving party 

“may not rest upon the mere allegations or denials of [its] pleading,” but 

must respond, and by affidavits or one of the other means provided in 

Tennessee Rule 56, “set forth specific facts” at the summary judgment 

stage “showing that there is a genuine issue for trial.” Tenn. R. Civ. P. 

56.06. The nonmoving party “must do more than simply show that there is 

some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. 

Co., 475 U.S. [574,] 586, 106 S.Ct. 1348 [(1986)]. The nonmoving party 

must demonstrate the existence of specific facts in the record which could 

lead a rational trier of fact to find in favor of the nonmoving party. If a 

summary judgment motion is filed before adequate time for discovery has 

been provided, the nonmoving party may seek a continuance to engage in 

additional discovery as provided in Tennessee Rule 56.07. However, after 

adequate time for discovery has been provided, summary judgment should 

be granted if the nonmoving party’s evidence at the summary judgment 

stage is insufficient to establish the existence of a genuine issue of material 

fact for trial. Tenn. R. Civ. P. 56.04, 56.06. The focus is on the evidence 

the nonmoving party comes forward with at the summary judgment stage, 

not on hypothetical evidence that theoretically could be adduced, despite 

the passage of discovery deadlines, at a future trial.

Rye, 477 S.W.3d at 264-65 (emphasis in original). Pursuant to Tennessee Rule of Civil 

Procedure 56.04, the trial court must “state the legal grounds upon which the court denies 

or grants the motion” for summary judgment, and our Supreme Court has instructed that 

the trial court must state these grounds “before it invites or requests the prevailing party 

to draft a proposed order.” See Smith v. UHS of Lakeside, Inc., 439 S.W.3d 303, 316 

(Tenn. 2014).

IV. Distribution of Liquor-by-the-Drink Tax Revenue

The City contends that the trial court erred by finding that the version of 

Tennessee Code Annotated § 57-4-306(a)(2)(A) (2013) in effect prior to the 2014 
9

Amendment required the City to share one-half of its liquor-by-the-drink tax revenue 

with the County’s school system. The City asserts that the governing statute directed that 

because the City operated its own school system, the portion of its liquor-by-the-drink 

revenue not paid into the state’s general education fund was to be split between the City’s 

school system and the City itself. Upon careful review, we determine that the governing 

statute was ambiguous in that the distribution scheme for a city operating its own school 

system could be reasonably interpreted in more than one way. Having therefore analyzed 

the surrounding statutory scheme, the legislative history, and other applicable authorities, 

as well as the record in this action, we conclude that the trial court erred in determining 

that the City was required to share one-half of its liquor-by-the-drink tax revenue with the 

County’s school system.

In conducting this analysis, we adhere to the following longstanding principles of 

statutory interpretation:

When dealing with statutory interpretation, well-defined precepts apply. 

Our primary objective is to carry out legislative intent without broadening 

or restricting the statute beyond its intended scope. Houghton v. Aramark 

Educ. Res., Inc., 90 S.W.3d 676, 678 (Tenn. 2002). In construing 

legislative enactments, we presume that every word in a statute has 

meaning and purpose and should be given full effect if the obvious 

intention of the General Assembly is not violated by so doing. In re 

C.K.G., 173 S.W.3d 714, 722 (Tenn. 2005). When a statute is clear, we 

apply the plain meaning without complicating the task. Eastman Chem. 

Co. v. Johnson, 151 S.W.3d 503, 507 (Tenn. 2004). Our obligation is 

simply to enforce the written language. Abels ex rel. Hunt v. Genie Indus., 

Inc., 202 S.W.3d 99, 102 (Tenn. 2006). It is only when a statute is 

ambiguous that we may reference the broader statutory scheme, the history 

of the legislation, or other sources. Parks v. Tenn. Mun. League Risk 

Mgmt. Pool, 974 S.W.2d 677, 679 (Tenn. 1998). Further, the language of a 

statute cannot be considered in a vacuum, but “should be construed, if 

practicable, so that its component parts are consistent and reasonable.” 

Marsh v. Henderson, 221 Tenn. 42, 424 S.W.2d 193, 196 (1968). Any 

interpretation of the statute that “would render one section of the act 

repugnant to another” should be avoided. Tenn. Elec. Power Co. v. City of 

Chattanooga, 172 Tenn. 505, 114 S.W.2d 441, 444 (1937). We also must 

presume that the General Assembly was aware of any prior enactments at 

the time the legislation passed. Owens v. State, 908 S.W.2d 923, 926 

(Tenn. 1995).

In re Estate of Tanner, 295 S.W.3d at 613-14.
10

A. Ambiguity of Tennessee Code Annotated § 57-4-306(a)(2)(A) (2013)

The version of Tennessee Code Annotated § 57-4-306 in effect when this action 

was commenced provided in pertinent part:

(a) All gross receipt taxes collected under § 57-4-301(c) shall be 

distributed by the commissioner as follows:

(1) Fifty percent (50%) to the general fund to be earmarked for 

education purposes; and

(2) Fifty percent (50%) to the local political subdivision as 

follows:

(A) One half (1⁄2) of the proceeds shall be expended and 

distributed in the same manner as the county property 

tax for schools is expended and distributed; provided, 

however, that except in counties having a population 

of not less than twenty-seven thousand nine hundred 

(27,900) nor more than twenty-seven thousand nine 

hundred twenty (27,920), according to the 1980 federal 

census or any subsequent federal census, 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 (1⁄2) of their 

proceeds of the gross receipts liquor-by-the-drink tax 

to the county school fund; and

(B) The other one half (1⁄2) 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.

(b) Notwithstanding subdivision (a)(2), the fifty percent (50%) of the 

gross receipt taxes allocated to local political subdivisions by 
11

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.

Tenn. Code Ann. § 57-4-306 (2013).

The applicable version of Tennessee Code Annotated § 57-4-301(c) (2013), 

referenced in subsection -306(a), provided:

(c) In addition to the privilege taxes levied in subdivision (b)(1), there is 

further levied a tax equal to the rate of fifteen percent (15%) of the 

sales price of all alcoholic beverages sold for consumption on the 

premises, the tax to be computed on the gross sales of alcoholic 

beverages for consumption on the premises for the purpose of 

remitting the tax due the state, and to include each and every retail 

thereof.4

Subsection -301(b)(1) (2013 & Supp. 2017) sets forth privilege taxes to be paid to the 

alcoholic beverage commission by “[e]ach applicant for an on-premises consumption 

license” during the application process and on an ongoing basis as the privilege is 

exercised, according to such criteria as the type of seller, seating capacity, and percentage 

of gross sales. Subsection -301(c), in both its prior and current versions, thus adds to the 

privilege taxes levied in -301(b)(1) the fifteen-percent, liquor-by-the-drink tax applied to 

alcoholic beverages consumed on the premises. Pursuant to subsection -306(a)(1), which 

remains unchanged since the version governing here, all of the gross receipt liquor-bythe-drink taxes are to be distributed by the Commissioner, with fifty percent allocated to 

the state’s general fund, where they are earmarked for education purposes. Tenn. Code 

Ann. § 57-4-306(a)(1) (2013 & Supp. 2017). Up to this point, the clarity of section -306 

is not in dispute.

At issue in this action is the second fifty percent of the gross receipt taxes, which, 

under the governing version of the statute, were to be distributed to the “local political 

subdivision.” See Tenn. Code Ann. § 57-4-306(a)(2) (2013). Particularly at issue is the 

distribution of the twenty-five percent (half of the fifty percent returned to the local 

political subdivision by the Commissioner) as set forth in subsection -306(a)(2)(A). The 

phrase, “local political subdivision,” is not expressly defined in Title 57, Chapter 4. In 

general, a “political subdivision” may be defined as “[a] division of a state that exists 

primarily to discharge some function of local government.” BLACK’S LAW DICTIONARY

 

4

Effective May 9, 2017, the General Assembly amended Tennessee Code Annotated § 57-4-301(c) to 

designate the prior version of subsection -301(c) as -301(c)(1) and add a subsection -301(c)(2). See 2017 

Tenn. Pub. Acts, Ch. 338 § 4 (S.B. 798). 
12

1197 (8th ed. 2004). For example, within Tennessee’s Governmental Tort Liability Act, 

a “governmental entity” is defined in part as “any political subdivision of the state of 

Tennessee including, but not limited to, any municipality, metropolitan government, 

county, utility district, school district . . . .” Tenn. Code Ann. § 29-20-102(3)(A) (2012 & 

Supp. 2017) (emphasis added). Accordingly, both the City and the County are local 

political subdivisions of the state. However, whether the applicable version of Title 57, 

Chapter 4 applied to a local political subdivision that had not authorized liquor-by-thedrink sales is a separate question, which we will address in a subsequent portion of this 

analysis. 

We note that the plain language of Tennessee Code Annotated § 57-4-

306(a)(2)(B) (2013), which disposed of the final twenty-five percent of liquor-by-thedrink gross receipt taxes, is not in dispute. This subsection provided that twenty-five 

percent of gross receipt taxes (or fifty percent of the revenue returned to the local 

political subdivision by the Commissioner) would be distributed to a county’s general 

fund if the gross receipt taxes were collected in unincorporated areas of the county and to 

a city or town if the gross receipt taxes were collected in that city or town. Tenn. Code 

Ann. § 57-4-306(a)(2)(B) (2013). The applicable version of subsection -306(b), which 

provided for distribution of gross receipt taxes collected in a municipality that was a 

premier tourist resort, as that term was defined in Tennessee Code Annotated § 57-4-

102(26) (2013), is also not in dispute. The question of statutory interpretation at issue is 

thus narrowed to the distribution scheme set forth for twenty-five percent of the gross 

receipt taxes from liquor-by-the-drink revenue in subsection -306(a)(2)(A) (2013). 

In the applicable version, subsections -306(a)(2)(A) and -306(a)(2)(B) were joined 

by a semi-colon and the coordinating conjunction, “and.” Subsection -306(a)(2)(A), up 

to the conjunction joining it to -306(a)(2)(B), stated:

One half (1⁄2) of the proceeds shall be expended and distributed in the same 

manner as the county property tax for schools is expended and distributed; 

provided, however, that except in counties having a population of not less 

than twenty-seven thousand nine hundred (27,900) nor more than twentyseven thousand nine hundred twenty (27,920), according to the 1980 

federal census or any subsequent federal census, 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 (1⁄2) of their 

proceeds of the gross receipts liquor-by-the-drink tax to the county school 

fund; . . . .

The paragraph began with an independent clause, ending with the first semi-colon, which 

provided: “One half (1⁄2) of the proceeds shall be expended and distributed in the same 
13

manner as the county property tax for schools is expended and distributed; . . . .” This 

statement, which stood as its own sentence prior to the 1982 Amendment, was linked in 

the applicable version to an additional clause by the semi-colon, beginning with 

“provided, however that . . . .” 

The County posits, and the trial court agreed, that the semi-colon preceding 

“provided” indicates that the clause added by the 1982 Amendment was a clarification of 

the preceding sentence. We note that when the 1982 Amendment was approved by the 

General Assembly, “provided” began a new sentence and that the punctuation was 

subsequently changed to a semi-colon, apparently during codification of the 1982 

Amendment. However, we find this distinction immaterial to analysis of the statute. The 

meaning of “provided,” as it was utilized here as a conjunction, is “[o]n the condition or 

understanding (that).” See BLACK’S LAW DICTIONARY at 1261-62. Combined with 

“however,” “provided” functioned as a conjunctive adverbial phrase, with the standard 

function of “join[ing] two clauses and indicat[ing] the relationship between them.” See 

generally BRYAN A. GARNER, THE REDBOOK, A MANUAL ON LEGAL STYLE, 207 (3d ed.

2013). 

A semi-colon, when utilized in its non-listing function, separates two independent 

but related clauses and, as the County notes, “generally signals addition or contrast.” See 

CHERYL GLENN & LORETTA GRAY, HODGES’ HARBRACE HANDBOOK 63 (16th ed. 2007). 

Of course, a period also separates independent clauses, but one sentence does not follow 

another in a vacuum. In this instance, the amended language began with the conjunctive 

adverbial phrase, “provided, however,” which through its meaning connected the proviso 

to the clause preceding it, whether that connection was signaled by a semi-colon, as in the 

printed version of the amended statute, or simply through the neighboring proximity of 

two sentences and context of those sentences, as in the version of the 1982 Amendment 

passed by the legislature. The phrase, “provided, however,” was followed by the

nominalizer, “that,” signaling what was provided, which in this case was the entire clause 

up to the end of subsection -306(a)(2)(A). The use of “provided that” thus created a 

proviso, or “a provision that begins with the words provided that and supplies a 

condition, exception, or addition.” See BLACK’S LAW DICTIONARY at 1262 (emphasis in 

original).

Immediately following “provided, however that . . .” the General Assembly 

included an exception, narrowly drawn as applying “in counties having a population of 

not less than twenty-seven thousand nine hundred (27,900) nor more than twenty-seven 

thousand nine hundred twenty (27,920).” Tenn. Code Ann. § 57-4-306(a)(2)(A) (2013). 

As the legislative history of the 1982 Amendment indicates, the General Assembly 

designed the exception to the proviso to apply solely to Bedford County. Given that the 
14

above population parameters do not apply to Washington County, we can, for the purpose 

of our analysis, omit the exception, yielding the following:

One half (1⁄2) of the proceeds shall be expended and distributed in the same 

manner as the county property tax for schools is expended and distributed; 

provided, however, that . . . 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 (1⁄2) of their proceeds of the gross 

receipts liquor-by-the-drink tax to the county school fund; . . . .

See id.

In other words, 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 (1⁄2) 

of their proceeds of the gross receipts liquor-by-the-drink tax to the county school fund.” 

See id. (emphasis added). The underlined clause functioned as a restrictive relative 

clause, restricting the “municipalities” to which this proviso applied to those that did not 

operate their own school systems.5 

The City relies in part on this proviso as excluding it from remitting any part of its 

liquor-by-the-drink proceeds to the County’s school system, whether in the manner in 

which the county property tax for schools is distributed or into the County’s school fund, 

because the City has operated its own school system since at least the 1967 initial 

enactment of the liquor-by-the-drink tax. We agree that under the plain language of the 

applicable version of subsection -306(a)(2)(A), the City was excluded from the proviso of 

remitting one-half of its proceeds into the County’s school fund because the City 

operated its own school system. However, it is not clear from the structure and plain 

language of the first part of subsection -306(a)(2)(A) whether the City’s operation of its 

own school system excluded it from the general rule that “one-half of the proceeds [were 

to] be expended and distributed in the same manner as the county property tax for schools 

[was] expended and distributed[.]” See id. 

 

5 Although the relative pronoun, “which,” generally would be used to indicate a nonrestrictive relative 

clause while the relative pronoun, “that,” would be used to indicate a restrictive clause, interpreting 

“which” as nonrestrictive in this instance would be nonsensical because it would mean that no 

municipalities operated their own school systems. We note also that this “which” clause is not marked by 

paired commas as a nonrestrictive relative clause normally would be. The drafters appear simply to have 

made the very common grammatical error of using “which” rather than “that” as a restrictive relative 

pronoun. See generally GARNER, THE REDBOOK, A MANUAL ON LEGAL STYLE at 188-90.
15

The statute established this general rule and then set forth a condition or 

understanding that applied to municipalities not operating their own schools. This 

version of the statute did not clarify whether the opposite of the proviso was true, in other 

words, whether a municipality operating its own school system could disregard the 

general rule of distribution in the manner of county property tax and instead distribute 

one-half of its proceeds to its own school system. Although the placement of the 

conjunctive adverb, “however,” following “provided” in subsection -306(a)(2)(A) would 

typically indicate that the proviso is in some manner antithetical to the general rule of 

distribution in the manner of county property tax, it is not clear from the plain language 

of subsection -306(a)(2)(A) how it would be so.

To summarize, it is possible to reasonably interpret the proviso as simply 

operating to ensure that a municipality without its own school system would remit onehalf of its liquor-by-the-drink proceeds to the county within which it was located. It is 

also possible to reasonably interpret the proviso as operating to require solely those 

municipalities not operating their own school systems to remit proceeds to the counties in 

which they were located, effectively exempting those municipalities that operated their 

own school systems. The latter interpretation utilizes the longstanding maxim of 

statutory construction maintaining that “the expression of one thing implies the exclusion 

of all things not expressly mentioned.” See Limbaugh v. Coffee Med. Ctr., 59 S.W.3d 73, 

84 (Tenn. 2001) (citing City of Knoxville v. Brown, 260 S.W.2d 264, 268 (Tenn. 1953)). 

We do not find this maxim dispositive in this instance, however, because the statute is 

ambiguous regarding whether the general rule of distribution in the manner of the 

property tax for schools would still apply to municipalities to which the proviso does not 

apply. Because the requirement in Tennessee Code Annotated § 57-4-306(a)(2)(A) 

(2013) that municipalities without school systems must remit proceeds to counties can be 

reasonably interpreted in more than one way when municipalities that do operate their 

own school systems are at issue, we determine this requirement in the applicable version 

of the statute to be ambiguous. See Bryant v. HCA Health Servs. of N. Tenn., Inc., 15 

S.W.3d 804, 809 (Tenn. 2000) (“A statute is ambiguous if the statute is capable of 

conveying more than one meaning.”). 

B. Consideration of Statutory Framework, Legislative History, and Other Sources

Having determined that Tennessee Code Annotated § 57-4-306(a)(2)(A) (2013) 

was ambiguous with regard to whether municipalities with their own school systems were 

required to remit a portion of liquor-by-the-drink tax proceeds to the counties in which 

they were located, we now consider the statutory framework, legislative history, and 

other sources surrounding the version of the statute governing this action. See Arden v. 

Kozawa, 466 S.W.3d 758, 764 (Tenn. 2015) (“Where statutory language is ambiguous, 

we may decipher legislative intent in other ways, including consideration of the broader 
16

statutory scheme, legislative history, and other sources.”). We begin with the City’s 

assertion that the trial court erred by declining to find that Tennessee Code Annotated § 

57-4-103(a)(1) (2013) operated to render subsection -306 inapplicable to a county, such 

as Washington County, that had not passed a liquor-by-the-drink referendum. Upon 

careful review, we conclude that because subsection -103(a)(1) set forth the effectiveness 

of the entire statutory chapter in which the applicable version of subsection -306(a) was 

located, subsection -103(a)(1) operated to classify a “local political subdivision” 

receiving liquor-by-the-drink taxes from the Commissioner as one that had passed a 

liquor-by-the-drink referendum. We further conclude, however, that this did not 

necessarily exempt the City from the general requirement of subsection -306(a)(2)(A) of 

distributing one-half of its liquor-by-the-drink revenue in the manner of county property 

tax distribution.

Title 57 of the Tennessee Code is entitled, “Intoxicating Liquors.” Chapter 4 of 

Title 57 is entitled, “Consumption of Alcoholic Beverages on Premises,” and it consists 

of three parts: Part 1 – “General Provisions,”; Part 2 – “Administration, Enforcement, 

Prohibited Acts”; and Part 3 – “Taxes and Fees.” This overall structure has remained 

unchanged since the present action was commenced, as has the language of Tennessee 

Code Annotated § 57-4-103(a)(1), which provides within the general provisions of Title 

57:

This chapter shall be effective in any jurisdiction which authorizes the sale 

of alcoholic beverages for consumption on the premises in a referendum in 

the manner prescribed by § 57-3-106; provided, that, in addition to any 

other method authorized for holding an election pursuant to § 57-3-106, an 

election may be held for such sales upon adoption of a resolution by a twothirds (2

/3) vote of the legislative body of a county or municipality.

We determine this language regarding the effectiveness of Chapter 4 to be clear 

and unambiguous. Because Part 3 is within Chapter 4, Part 3 is effective in any 

jurisdiction that has authorized liquor-by-the-drink sales by referendum. See In re Estate 

of Tanner, 295 S.W.3d at 614 (“Any interpretation of the statute that ‘would render one 

section of the act repugnant to another’ should be avoided.”) (quoting Tenn. Elec. Power 

Co. v. City of Chattanooga, 114 S.W.2d 441, 444 (Tenn. 1937)). Although the statutory 

scheme regarding alcoholic beverages does not provide a definition of “jurisdiction” as it 

is used in subsection §-103(a)(1), we further determine that the generally accepted 

definition of jurisdiction as it applies to governmental authority is applicable within the 

context of a jurisdiction’s authorization of alcoholic beverage sales. Black’s Law 

Dictionary defines “jurisdiction” within this context of governmental authority as a 

“government’s general power to exercise authority over all persons and things within its 

territory,” “geographic area within which political . . . authority may be exercised,” or 
17

“political . . . subdivision within such an area.” BLACK’S LAW DICTIONARY at 867. 

Therefore, at the time this action was commenced, Part 3 of Chapter 4 was effective in 

the jurisdiction of the City, which had authorized liquor-by-the-drink sales, but was not 

effective in the jurisdiction of the County, which had not authorized such sales. 

The City argues that the ineffectiveness of Tennessee Code Annotated § 57-4-

306(a) (2013) in the jurisdiction of the County means that the City was not required to 

remit any portion of its liquor-by-the-drink proceeds distributed by the Commissioner to 

the County. However, we do not agree that this conclusion automatically follows from 

subsection -103(a)(1) because the City, as a jurisdiction having authorized the sale of 

alcoholic beverages for consumption on the premises, see Tenn. Code Ann. § 57-4-

103(a)(1), and thereby a local political subdivision receiving liquor-by-the-drink gross 

receipt taxes from the Commissioner, see Tenn. Code Ann. § 57-4-306(a)(2), was

required to follow the requirements of Chapter 4. This analysis leads us back to the 

ambiguity previously identified in subsection -306(a)(2)(A) but does not clarify it. It is 

still possible to reasonably interpret the proviso of subsection -306(a)(2)(A) as either 

simply ensuring that a municipality without its own school system would remit one-half 

of its liquor-by-the-drink proceeds to the county within which it was located or as 

actually exempting municipalities with their own school systems, such as the City of 

Johnson City, from the general requirement of distributing one-half of their liquor-by-thedrink revenue in the manner of county property tax distribution.

Inasmuch as Tennessee Code Annotated § 57-4-306(a)(2)(A) (2013) provided that 

“[o]ne half (1⁄2) of the proceeds shall be expended and distributed in the same manner as 

the county property tax for schools is expended and distributed,” it is important to 

consider the statutory scheme for expenditure and distribution of the county property tax 

for schools. Tennessee Code Annotated § 49-3-315(a) (2016) provides in pertinent part:

For each LEA [local education agency] there shall be levied for current 

operation and maintenance not more than one (1) school tax for all grades 

included in the LEA. Each LEA shall place in one (1) separate school fund 

all school revenues for current school operation purposes received from the 

state, county and other political subdivisions, if any. . . . All school funds 

for current operation and maintenance purposes collected by any county . . . 

shall be apportioned by the county trustee among the LEAs in the county 

on the basis of the WFTEADA [weighted full-time equivalent average daily 

attendance] maintained by each, during the current school year. For the 

purposes of making the apportionment of local school funds as set forth in 

this subsection (a), and in defining the WFTEADA for the current school 
18

year, the county director of schools and the county trustee shall be guided

by the following procedure: . . . .6

The above statute goes on to delineate the procedure by which the county director 

of schools shall certify to the county trustee the weighted full-time equivalent average 

daily attendance (“WFTEADA”) during the preceding school year and, in progressive 

fashion, estimate “the WFTEADA in the schools of the LEAs in the county” for 

successive quarters of the current and upcoming years. See Tenn. Code Ann. § 49-3-

315(a)(1)-(5). Although the statutory procedure for determining the WFTEADAs 

involves county officials, the City, as a local political subdivision receiving liquor-bythe-drink tax revenue, would be able to remit a portion of those gross receipt taxes 

received from the Commissioner to the County’s school fund, which arguably could then 

be distributed by the County according to the procedure delineated in the above statute. 

See Tenn. Code Ann. § 49-3-315(a) (“Each LEA shall place in one (1) separate school 

fund all school revenues for current school operation purposes received from the state, 

county and other political subdivisions . . . .”) (emphasis added). 

The question arises as to whether, if the County were successful in the present 

action, funds remitted by the City to the County’s school fund would in turn be partially 

apportioned to schools operated by the City as LEAs geographically existing within the 

County. This Court recently interpreted Tennessee Code Annotated § 49-3-315(a) in 

light of whether a county was required to apportion funds from its “educational capital 

projects fund” to the school boards of cities located within the county. See City of Athens 

Bd. of Educ. v. McMinn Cty., 467 S.W.3d 458, 459-60 (Tenn. Ct. App. 2014), perm. app. 

denied (Tenn. May 14, 2015). This Court noted that, with one exception for 

transportation levies not relevant here, “[a]ll school funds for current operation and 

maintenance purposes collected by any county . . . shall be apportioned by the county 

trustee among the LEAs,” including those LEAs operated by the cities located in the 

county. Id. at 460 (quoting Tenn. Code Ann. § 49-3-315(a)) (emphasis in City of Athens). 

Because the funds at issue in City of Athens had been collected by the county through 

levying “a special tax designated for a capital projects fund,” this Court held that the 

funds had not been collected “for current operation and maintenance purposes” and 

therefore did not fall under the purview of Tennessee Code Annotated § 49-3-315(a). 

City of Athens, 467 S.W.3d at 465-66 (affirming the trial court’s grant of summary 

judgment in favor of the county). 

In the current analysis, the County is requesting that this Court interpret the 

language of Tennessee Code Annotated § 57-4-306(a)(2)(A) (2013) to mean that twentyfive percent (half of the amount returned to the local political subdivision by the 

 

6

The definitions in brackets are provided pursuant to Tennessee Code Annotated §§ 49-1-103(2) (2016) 

(LEA) and 49-3-302(18) (2016) (WFTEADA).
19

Commissioner) of the gross receipt liquor-by-the-drink taxes collected within the 

incorporated limits of the City would be paid in the manner of the county property tax to 

the county school fund for distribution to all of the LEAs in the County, including those 

located within the City. Because such a distribution within the County of funds obtained 

from a “local political subdivision” such as the City is possible, see Tenn. Code Ann. § 

49-3-315(a), we do not find the statutory scheme for expenditure and distribution of the 

county property tax for schools to be dispositive of the ambiguity previously identified in 

Tennessee Code Annotated § 57-4-306(a)(2)(A) (2013).

However, we do find the legislative history surrounding the 1982 Amendment, 

which added the ambiguous language at issue to Tennessee Code Annotated § 57-4-

306(a), to be instructive of the General Assembly’s intent. Prior to the 1982 Amendment, 

the subject statutory section, then codified at § 57-162, provided in full:

Distribution of collections.—All gross receipt taxes collected under 

subdivision (b) of § 57-157 shall be distributed by the commissioner of 

revenue as follows:

(a) Fifty percent (50%) to the general fund to be earmarked for 

education purposes; and

(b) Fifty percent (50%) to the local political subdivision.

(1) One half (1⁄2) of the proceeds shall be expended and 

distributed in the same manner as the county property 

tax for schools is expended and distributed.

(2) The other one half (1⁄2) 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, towns, to the city or town wherein such 

tax is collected.

Tenn. Code Ann. § 57-162 (1968). 

In introducing the applicable Senate bill to the Finance, Ways and Means 

Committee in March 1982, Senator Albright explained the bill’s purpose as follows:
20

Right now, the law provides that one-half of one percent of the gross 

receipts by liquor by the drink tax goes to the, to, into the school system –

provide into the school system – goes to the city for the school systems. In 

many counties, the cities do not operate a school system. They have been 

turning this over to the county because the county provides that school 

system for the city. There has been some. There was a couple of ‘em. I

have a whole bunch of little cities around Chattanooga. There was a couple 

of them that did not want to return this money over. They simply asked for 

an Attorney General’s ruling that the legislative intent was that that’s where 

it would go in the school system. And they didn’t have a school system, 

they shouldn’t be getting the money. That’s an Attorney General ruling. 

Our county simply said rather than have an Attorney General’s ruling, 

which – cause they would like to put this in legislation. And this just 

provides, however, then if proceeds expanding or distribution to 

municipalities which do not operate their own school system separate from 

the county, are required to remit one-half of their proceedings from the 

gross receipts liquor by the drink tax to the county school fund. And that is 

where it is intended to go anyway. 

As the sponsoring legislator, Senator Albright then engaged in the following exchange 

with a committee member, Senator Crouch:

Senator Crouch: In other words, if, uh, we [are] still operating a city 

school system it doesn’t affect –

Senator Albright: It doesn’t affect you at all. It goes to the city –

Senator Crouch: They’re still getting their . . . percent?

Senator Albright: See the legislation . . . says for the school fund. 

That’s what the –

Senator Crouch: Okay.

Senator Albright thus assured Senator Crouch that if a municipality were operating its 

own school system, the provision added by the 1982 Amendment would not affect the 

municipality because the liquor-by-the-drink taxes returned by the commissioner would 

still go “to the city.” 
21

In introducing the bill to the committee, Senator Albright referenced a “ruling” of 

the attorney general. At this point in time, the attorney general had issued two opinions 

interpreting the distribution scheme set forth in Tennessee Code Annotated § 57-4-306, 

the first in September 1980 (“1980 AG Opinion”), see Tenn. Op. Atty. Gen. 80-457, 1980 

WL 103875 (Sept. 19, 1980), and the second in April 1981 (“1981 AG Opinion”), see 

Tenn. Op. Atty. Gen. 81-270, 1981 WL 142843 (Apr. 27, 1981). We note that “although 

opinions of the Attorney General may be persuasive authority, they are not controlling.” 

Beacon4, LLC v. I & L Invs., LLC, 514 S.W.3d 153, 173 (Tenn. Ct. App. 2016). 

However, we do afford such opinions “‘considerable deference,’” particularly because 

“‘government officials rely upon them for guidance.’” See id. (quoting State v. Black,

897 S.W.2d 680, 683 (Tenn. 1995)). As to the statutory section at issue in this action, a 

series of three attorney general’s opinions, released from 1981 to 1983, are informative 

concerning the situation surrounding the 1982 Amendment. Moreover, insofar as 

legislators indicated while introducing and explaining the 1982 Amendment that they 

were responding to various municipalities’ reliance on the attorney general’s 1980 and 

1981 opinions, those opinions are integral to the legislative history as well. 

The question proffered in the 1980 AG Opinion focused on the situation presented 

when a municipality had passed a liquor-by-the drink referendum but the county in which 

the municipality was located had not. See Tenn. Op. Atty. Gen. 80-457, 1980 WL 

103875, at *1. The attorney general opined:

It is the opinion of this office that if a municipality but not the county has 

approved by referendum the sale of alcoholic beverages for consumption on 

the premises the fifty percent (50%) distribution, under T.C.A. § 57-4-

306(2), of the gross receipts tax collected would go entirely to the local 

municipality.

Id. The attorney general further concluded:

[I]f there has been no countywide election approving the sale of alcoholic 

beverages for consumption on the premises in accord with T.C.A. § 57-4-

103, then the provisions of Chapter 4 dealing with both the imposition of 

the tax and the distribution of the tax would have no application to such 

county and it would not be entitled to a distribution of any amounts under 

T.C.A. § 57-4-306(2) which go to the local political subdivision. Such 

local political subdivision, i.e., the city or town, would then be required to 

expend one half of the amount received in the same manner as the county

property tax for schools would be expended within the city or town.
22

Id. at *2 (emphasis added). Thus, according to the 1980 AG Opinion, a municipality 

acting as the local political subdivision receiving gross receipt liquor-by-the-drink taxes 

would be required to expend and distribute one-half of the monies returned by the 

commissioner solely to the schools located within the municipality. 

The 1980 AG Opinion did not address the distinction between a municipality that 

operated its own school system and one that utilized a county school system to educate its 

students. However, this question was the focus of the 1981 AG Opinion, with the 

attorney general opining: “[T]hose municipalities which do not operate their own school 

system separate from the county would be required to remit one-half of [their] proceeds 

of the gross receipts liquor-by-the-drink tax to the county school fund.” Tenn. Op. Atty. 

Gen. No. 81-270, 1981 WL 142843, at *1. Building on the prior analysis of Tennessee 

Code Annotated § 57-4-306 in the 1980 AG Opinion, the attorney general reasoned as 

follows:

If the local municipality does not operate a separate school system, 

the one-half of the proceeds expended and distributed in the same manner 

as the county property tax for schools as mandated by subparagraph (A) 

would naturally have to be remitted to the county school fund.

It appears clear that the purpose of the statute is to earmark a certain 

percentage of the proceeds of such taxes for the purpose of local education. 

This objective could be accomplished by the remittance of such amount to 

the county school fund where the municipality itself does not operate its 

own school system.

Tenn. Op. Atty. Gen. No. 81-270, 1981 WL 142843, at *1.

In introducing to his committee the Senate bill that became the 1982 Amendment, 

Senator Albright expressed an intent to codify the attorney general’s opinion, requiring 

municipalities not operating their own school systems “to remit one-half of their 

proceedings from the gross receipts liquor by the drink tax to the county school fund.” In 

sponsoring the bill during a March 4, 1982 session of the entire Senate, Senator Albright 

stated in pertinent part: 

This bill . . . just puts into law what’s been the practice. And it says that 

one-half of the proceeds of the gross receipt liquor by the drink to the 

county school system where the city does not provide one.

The following exchange occurred in response:
23

Senator Darnell: Senator Albright as I understand it this is to make sure 

that the funds actually go to, to the county for schools 

– is that the intent of the bill? Or is that just a 

peripheral sort of thing that’s involved here?

Senator Albright: This just makes sure – right some of, in my area in 

Chattanooga – we’ve had a couple of them that had to 

be told, you don’t have your own school system – the 

county permits this – the statute says – can I just read 

one brief sentence –

Senator Darnell: --they won’t turn over the money to the county?

Senator Albright: This would make it that they have to turn it over.

This exchange demonstrates that when he stated previously that a city would have to 

distribute gross receipt taxes to the county in which it was located “where the city does 

not provide one,” Senator Albright meant a city that does not provide a school system. 

At the close of the March 4, 1982 session, the Senate approved the bill as sponsored by 

Senator Albright. 

We determine that as presented to and adopted in the Senate, the legislative intent 

of the 1982 Amendment 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. 

Subsequently, Representative Davis introduced the companion bill to the House 

Calendar and Rules Committee on April 7, 1982, by stating in relevant part:

Mr. Chairman and Members of the Committee House Bill 2277 provides 

that if, provides that in the distribution of liquor, local liquor by the drink 

taxes that it will be distributed as it is now in the same fashion that local 

property taxes is distributed for education. In the event that the 

municipality affected operates a school system, right now the, the reason 

for division in the law originally was for this percentage of the money to go 

[to] education – fifty percent to the county, fifty percent to the municipality 

involved. There are municipalities such as the one involved in my county 

that are collecting this tax but that are, that are not operating school 
24

systems. This simply changes the law to provide that in the event the city 

does not operate a, a, the school system, that the money will go to the 

county. 

In response to a committee member’s question regarding under what circumstances the 

proviso added by the 1982 Amendment would be “activated,” Representative Davis 

replied: 

If there’s, if a municipality is operating its own system it’ll continue to get 

its share of the liquor by the drink money. Uh, only if it’s not operating a 

school system and thereby using the county school system uh, will the 

money that has been going to the municipality for education go instead to 

the county.

The House approved the bill, with an amendment added to exclude Bedford 

County, in a vote taken during a full session conducted on May 5, 1982.7 In introducing 

the bill to the House as a whole during an April 8, 1982 session, Representative Davis 

presented it as a remedy to a situation in which “[a]t the present time, there is no 

provision . . . that those municipalities that do not operate school systems will permit the 

money – which is to go to education from the liquor by the drink tax – to go to the 

county.” The Senate subsequently adopted the bill as amended by the House without 

further discussion.

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, we hold that the General Assembly’s intent in enacting the 1982 

Amendment to Tennessee Code Annotated § 57-4-306(a)(2)(A) was to require solely

those municipalities that did not operate their own school systems to share liquor-by-thedrink tax proceeds with the counties in which they were located. This conclusion is also 

supported by an opinion issued by the attorney general in January 1983, six months 

following enactment of the 1982 Amendment (“1983 AG Opinion”). See Tenn. Op. Atty. 

Gen. No. 83-36, 1983 WL 166853 (Jan. 18, 1983). Concluding that “the 1982 

amendment to the statute was merely a codification of our opinion dated April 27, 1981,” 

the attorney general opined in pertinent part: 

It is the opinion of this office that the proper distribution of the liquor-bythe-drink gross receipt privilege taxes under T.C.A. § 57-4-306(2)(A) 

depends upon whether a municipality maintains a separate school system, 

 

7 During the April 7, 1982 House Calendar and Rules Committee meeting, Representative Phillips from 

Bedford County explained that his county was requesting an exception because a municipality within the 

county owned and paid expenses on buildings operated by the county’s school system.
25

when the municipality but not the county has approved by referendum the 

sale of alcoholic beverages for consumption on the premises.

* * *

If the municipality does operate a separate school system, it would be 

entitled to the fifty percent of the liquor-by-the-drink gross receipts 

privilege tax collected under T.C.A. § 57-4-306(2)(A).

Id. at *1. Although opinions of the attorney general are but persuasive authority, see

Beacon4, 514 S.W.3d at 173, we conclude that the 1983 AG Opinion merits considerable 

deference given its issuance contemporaneously with the General Assembly’s enactment 

of the 1982 Amendment and its consistency with the 1980 and 1981 opinions referenced 

by legislators who sponsored the 1982 Amendment. See id.

C. 2014 Amendment to Tennessee Code Annotated § 57-4-306

Having concluded that the General Assembly’s intent in enacting the 1982 

Amendment 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, we further determine that nothing in the General Assembly’s adoption of 

the 2014 Amendment contradicts this conclusion. It is undisputed that the 2014 

Amendment was not adopted with retroactive application. As the County notes, when 

analyzing legislative intent, we may view a subsequent, non-retroactive amendment as 

“‘declaratory of the original legislative intent.’” See Sneed v. City of Red Bank, 459 

S.W.3d 17, 32 (Tenn. 2014) (quoting Fretwell v. Chaffin, 652 S.W.2d 755, 757 (Tenn. 

1983)). However, being mindful of the thirty-two-year time span between the 1982 and 

2014 Amendments, we agree with the City that the best indicator of legislative intent in 

this instance is the legislative history surrounding the 1982 Amendment itself.

Moreover, although, as the trial court found, the 2014 Amendment provided for a 

process by which counties that were owed funds by municipalities under Tennessee Code 

Annotated § 57-4-306 could seek those funds and negotiate settlements as applicable, we 

determine that nothing in the amended statutory language provided that municipalities 

operating their own kindergarten through twelfth-grade school systems, separate from the 

counties in which the municipalities were located, owed such funds to the corresponding 

counties. See Tenn. Code Ann. § 57-4-306 (Supp. 2014); 2014 Tenn. Pub. Acts, Ch. 901 

§ 1 (H.B. 1403). As amended in 2014, Tennessee Code Annotated § 57-4-306(a) 

provided:
26

(a) All gross receipt taxes collected under § 57-4-301(c) shall be 

distributed by the commissioner of revenue as follows:

(1) Fifty percent (50%) to the general fund to be earmarked for 

education purposes; and

(2) The other fifty percent (50%) to be distributed to local 

political subdivisions as follows:

(A) Collections for privileges exercised in an incorporated 

municipality shall be distributed by the commissioner 

to the city recorder; and

(B) Collections for privileges exercised in an 

unincorporated area of the county shall be distributed 

by the commissioner to the county trustee.

Subsection (a) was thus amended to expressly provide for more than one local political 

subdivision, with distribution of collections for privileges exercised to be sent to the city 

recorder for those collections originating from a municipality and to the county trustee 

for those collections originating from unincorporated areas of a county. See Tenn. Code 

Ann. § 57-4-306(a) (Supp. 2014). Subsections (b) through (h) then provided a 

distribution scheme for liquor-by-the-drink proceeds received from July 1, 2014, until 

June 30, 2015. See id. at -306(b)-(h).

8

 Although we find a detailed analysis of this 

distribution scheme unwarranted in an analysis of the prior version of the statute, we have 

examined the distribution scheme of the 2014 Amendment and determined that it 

essentially follows the ongoing intent of the General Assembly to have a portion of the 

proceeds from the liquor-by-the-drink tax benefit children who attend school within the 

jurisdiction, incorporated municipality or unincorporated county, wherein the gross 

receipts originated. See id. Insofar as the County argues that the 2014 Amendment 

demonstrates a contrary legislative intent underlying the 1982 Amendment, the County’s 

argument is unavailing. 

Finally, the County posits that the trial court properly determined that public 

policy regarding funding education equally for all students and principles of equity 

support the conclusion that a municipality must share its liquor-by-the-drink tax revenue 

with the county in which it is located. However, as the City notes, Tennessee Code 

 

8 As noted previously, the General Assembly has amended Tennessee Code Annotated § 57-4-306 each 

year since the 2014 Amendment, extending the amended language in subsequent years, one year at a time. 

See 2015 Tenn. Pub. Acts, Ch. 220 §§ 1, 2 (S.B. 990); 2016 Tenn. Pub. Acts, Ch. 885 §§ 1, 2 (H.B. 

1691); 2017 Tenn. Pub. Acts, Ch. 346 §§ 1, 2 (S.B. 1262).
27

Annotated § 57-3-106(a) (2013 & Supp. 2017) provides for a local option election in any 

county wherein the voters may decide to either permit or forbid “the manufacture, 

receipt, sale, storage, transportation, distribution and possession of alcoholic beverages . . 

. .” Even in counties, such as the County in this action, that have not approved a liquorby-the-drink referendum, students benefit from the distribution of fifty percent of liquorby-the-drink gross receipt taxes to the state’s general fund, earmarked for education. See

Tenn. Code Ann. § 57-4-306(a)(1). 

Moreover, such an argument concerning perceived fairness of the tax distribution 

scheme provided by the statute would properly be directed to the General Assembly 

rather than to this Court. See, e.g., City of Athens Bd. of Educ., 467 S.W.3d at 466 

(“However compelling this argument [regarding the city’s receiving its “fair share” of 

property taxes designated for county capital improvements] may be, it is properly 

directed to others, e.g., the General Assembly, not to this Court.”). Inasmuch as we must 

apply Tennessee Code Annotated § 57-4-306 as it was amended in 1982 and as the 

General Assembly intended the amendment, we hold that, as a matter of law, the 

applicable version of the statute did not require the City to share its liquor-by-the-drink 

proceeds with the County.9 The trial court erred by granting declaratory judgment in 

favor of the County on this issue. We therefore reverse the trial court’s grant of 

declaratory judgment and grant summary judgment, as a matter of law, in favor of the 

City, dismissing the County’s complaint.

V. Conclusion

For the reasons stated above, we reverse the trial court’s declaratory judgment in 

favor of the County. We grant summary judgment, as a matter of law, in favor of the 

City and dismiss the County’s complaint. This case is remanded to the trial court, 

pursuant to applicable law, for collection of costs assessed below. The costs on appeal 

are assessed against the appellees, the Washington County School System, by and 

through the Washington County Board of Education, and Washington County, 

Tennessee.

_________________________________ 

THOMAS R. FRIERSON, II, JUDGE

 

9

In support of its position, the City also argues that if this Court were to adopt the County’s interpretation 

of Tennessee Code Annotated § 57-4-306 (2013) and hold that a privilege tax collected in the City should 

have benefitted citizens of another jurisdiction, such a holding would render the statute in violation of 

Article II, Section 29 of the Tennessee Constitution. Having determined that the applicable version of 

Tennessee Code Annotated § 57-4-306 did not require the City to share its liquor-by-the-drink proceeds 

with the County, we further determine the City’s constitutional argument to be pretermitted as moot.