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March 7,  2024 - Graham Responds to City Lawsuit

Bedford County Mayor Chad Graham has released the following statement:

“I, and the commissioners with whom I’ve spoken, are disappointed with the city’s latest public statements. They say, ‘let’s talk,’ and yet they’re the ones who have initiated legal action.

“As I said in a statement last month, the current structure is both fair and legally binding. Shelbyville’s sales tax base is supported by shoppers from throughout the county; those shoppers, who include both rural and city residents, make the city’s commercial property more valuable and so they indirectly support the city’s property tax base as well. The sales tax is also paid by tourists. Tourism has been an important part of the local economy and will only increase in importance with some of the projects now in development.

“If that sales tax revenue were not available to schools, the county would have to get the money from a property tax increase – one which would penalize both rural and urban residents and which would not be felt by tourists at all.

“The current sales tax structure is essential for the day-to-day operation of our schools and the ability of our schools to respond to the growth that is taking place throughout the county.

“The city’s statement mentions changes in state funding for schools, but those changes are completely irrelevant to this discussion. The state changed its funding formula for all school systems. That money is not intended to replace any local funding, and in fact it can’t replace any local funding -- the state has ‘maintenance of effort’ laws that prohibit any local government from cutting local school operational funding. Bedford County, as a whole, must still contribute as much or more money to school operations under the state’s new formula as it did under the old formula. Even if we could reduce local funding, that would only put our children at a disadvantage compared to children in other, surrounding communities.

“A strong, high-quality school system benefits all of us, no matter whether we live inside or outside the city limits. It’s essential for attracting high-quality jobs to Shelbyville and for retaining our current employers. We want to make sure that every student, inside and outside city limits, has access to a good education. The current tax structure is what makes that possible.

“We remain open to constructive conversations with the city about taxes, education, economic development, and other issues facing the future of Bedford County. Working together, we’ve been able to make great progress in economic and community development in the past few years. We need to continue that united front rather than starting a court case that benefits no one.

“We in county government aren’t the ones trying to take this to court, although we’ve had to prepare to defend the current system against the city’s lawsuit.”


In 1974, the city and the county signed a contract under which the city voluntarily gave up its portion of a sales tax increase which was passed that year so that the money could be used to fund public education. The city is now seeking to end that agreement, which would return that revenue to the city’s budget going forward and force the county to restructure the way it funds education.

In September 2023, Bedford County Board of Commissioners voted to hire the law firm Holland & Knight LLP to represent the county in discussions with the City of Shelbyville over the distribution of sales tax revenue.