Md. high court will consider billboard tax’s constitutionality

Maryland’s top court will consider whether Baltimore’s tax on commercial billboard operators unconstitutionally infringes on their right to free speech in the advertisements and messages they post.

The Court of Appeals this month agreed to hear Clear Channel Outdoor Inc.’s appeal of a lower court ruling that the city permissibly taxed the company’s business of operating billboards and did not restrain the messages they conveyed. The intermediate Court of Special Appeals in January rejected the company’s argument that “taxing the means of speech threatens the exercise of speech.”

The Court of Appeals will hear arguments in the case in November. The high court is expected to render its decision by Aug. 31, 2021, in Clear Channel Outdoor Inc. v. Director, Department of Finance of Baltimore City, No. 9 September Term 2020.

Clear Channel, which owned more than 95 percent of the city’s billboards as recently as 2017, is challenging the constitutionality of a 2013 Baltimore ordinance that imposes an excise tax on billboard owners who charge fees for outdoor advertising displays of at least 10 square feet. The assessment is $15 per square foot for an electronic outdoor display that changes images at least twice a day and $5 per square foot for any other outdoor display.

Clear Channel has paid its annual assessment each year since the ordinance’s enactment but seeks a refund based on its as-yet-unsuccessful First Amendment challenge.

In its successful petition for Court of Appeals review, Clear Channel likened billboard operators to other industries that provide a forum for advertisements yet have been found to be protected from a targeted tax because it would impinge upon their right to free speech.

“The First Amendment protects billboard operators’ interest in publishing speech for the public,” the company’s lead attorney, Benjamin Rosenberg, wrote in the petition.

“Were the law otherwise, book publishers, bookstores, journals, newspapers and magazines (which publish op-eds, letters to the editor, and advertisements), radio and television stations, cinemas, and theaters could not claim First Amendment protection for their businesses of selling the speech of others,” added Rosenberg, of Rosenberg Martin Greenberg LLP in Baltimore. “The government could target speech by asserting, as Baltimore does here, that it was merely taxing the business, not the speech itself.”

Rosenberg was joined on the brief by Jamar R. Brown, an associate at the law firm, and attorneys with Sidley Austin LLP in Washington.

In response to Clear Channel’s petition for review, Baltimore stated that its billboard tax does not impinge on speech but is a neutral assessment designed to fix the city’s long-term structural deficit while easing the burden of property taxes on homeowners. The city added it imposes other similar assessments, including a cable franchise fee.

“The ordinance makes no reference to speech,” Assistant Baltimore Solicitor Rachel Simmonsen wrote in the city’s Court of Appeals filing. “The only condition that triggers the tax is the act of charging others to use the billboard, regardless of whether the advertising promotes coffee from McDonald’s, charity for war veterans, or the government’s ‘see something, say something’ campaign, which encourages transit users to report unattended bags and unusual behavior.”

Clear Channel initiated its constitutional challenge to the assessment in U.S. District Court in Baltimore in 2013.

U.S. District Judge George L. Russell III dismissed the case two years later when he agreed with the city that the federal court lacked jurisdiction under the Tax Injunction Act. The U.S. law precludes federal courts from enjoining state taxes if state law provides a remedy through the state’s courts.

The Maryland Tax Court, Baltimore City Circuit Court and the Court of Special Appeals subsequently ruled for the city, prompting Clear Channel to seek review by the Court of Appeals.