The town of Farragut is responding to the Knox County Board of Education's
State law requires 50 percent of the tax revenue collected from mixed-drink sales go to education. Farragut owes Knox County Schools more than $1 million dating back to the 1980s.
Under a new law passed this year, school districts have until June 1 to take court action to get all back-payments.
The county said earlier this week it plans to sue Farragut for the money.
Farragut says while it hasn't paid the liquor tax, it has paid the school district every year to help fund the Farragut schools and Hardin Valley Academy.
"So that's something over $800,000 that we've given the schools and we think that ought to count. I don't think the school board agrees with that," said Mayor Ralph McGill.
At its meeting next week, the Board of Education is expected to approve the lawsuit against Farragut.