LENOIR CITY, Tenn. (WATE) - A state lawmaker from Knox County wants to amend legislation enacted in 1970. That's when a private act was passed that allows Lenoir City to collect payments from Lenoir City Utilities Board customers, including those who don't live in Lenoir City.
The issue has come up twice before, in 1992 and 2005.
Special legislation that applies only to either an individual or group is called a private act. State legislators passed one in 1970 that allowed LCUB to target in lieu of taxes directly to Lenoir City, which was a small community 48 years ago.
Knox County tried to declare the private act unconstitutional in 1992, but the effort failed. The in lieu of tax issue came up again in 2005 and at that time, a compromise was reached.
An amendment has now been proposed.
The money Lenoir City collects is used to string electrical wires and poles, to build substations and other infrastructure to approximately 62,500 customers. All of the in lieu of tax payments go to the city of Lenoir City, even though a large percentage of LCUB's customer base is in Knox County.
From the utility company's control room, technicians monitor substations in 15 different locations, including the vast area of west Knox County, the City of Farragut, Loudon County, parts of Roane County and Lenoir City. Records show a little more than 59,000 customers are from 14 of these areas. Only about 4,700 customers are from Lenoir City.
"We're operating under a law, the 1970 Private Act passed by the legislature, that simply states that all in lieu of tax payments will be deposited in the treasury of the city of Lenoir City," said Shannon Littleton, the general manger of the Lenoir City Utilities Board.
"It's created a huge cash cow for Lenoir City. I don't blame Lenoir City government," said State Rep. Harry Brooks.
Brooks would like to see the 1970 Private Act amended. He's proposed a bill in the state legislature that would provide increased representation on the LCUB board and increased payments to various communities that presently get no revenue.
"Keep in mind, 80 percent of all the revenue going to LCUB comes from Knox County rate payers," said Brooks. "Sixty-two percent of the customer base is in Knox County. I say it is not fair. It's not equitable."
Lenoir City Mayor Tony Aikens is also chairman of the LCUB board. He and the general manager say the proposed change could be devastating.
"The whole system of government has relied on those funds. If any piece of that falls, if you will, the entire small city of Lenoir City could have catastrophic issues," said Littleton.
"It would mean a substantial tax increase or the loss of the school system to lose the amount of money that we are talking about," said Aikens.
The loss could amount to more than a third of Lenoir City's $10 million annual budget according to the city mayor.
The issue of the distribution of in lieu of taxes between Lenoir City and Knox County came up in 2005. It was settled without litigation. Knox County gained representation on the utility board. The board chairman sees no reason to revisit the issue.
"The agreement back in 2005, they felt it was fair. The legislators then at that time felt it was fair. Knox County Mayor Tim Burchett was a state senator at the time. He was the one who helped broker the deal. It was fair then, it is fair now," said Aikens.
"What was accomplished was adding two people in a very minority position on the board," said Brooks.
Brooks admits he has an uphill fight with his proposal, but he believes the continued expansion of West Knox County and political pressure eventually may lead to change.
"To them this issue is important. It's going to be around. This issue is going to be around for a good while," Brooks said.
Brooks is retiring this year, but he believes the outcome of his proposal may interest new local members of the legislators and new Knox County commissioners who will take office after this year's general election.
However, board members of LCUB believe they have a good argument on their side to prevent any proposed changes to the private act.