Baltimore’s tax on commercial billboard operators unconstitutionally infringes on their right to free speech in the advertisements and messages they post, an attorney for the city’s leading billboard owner told a skeptical Maryland high court Friday.
Billboards are “a venerable form of media,” like newspapers and books, Virginia A. Seitz said.
Baltimore’s “targeted tax” on billboards stifles speech in violation of the First Amendment because operators might feel compelled to alter the content of their signs, lest the city leaders raise the fee if they do not like the message, she told the Court of Appeals.
“The city could use the tax to chill speech,” said Seitz, pressing Clear Channel Outdoor Inc.’s constitutional challenge. The tax, if deemed constitutional, could give the city “a discretionary tool to punish those billboards (operators) if they engage in disfavored speech,” added Seitz, of Sidley Austin LLP in Washington.
But Rachel A. Simmonsen, the city’s attorney, said the tax is a general charge on billboard operators without any regard to what their signs state. Such a “content-neutral” tax does not implicate the right to free speech, Simmonsen told the court.
“The paramount concern of the First Amendment is censorship,” said Simmonsen, an assistant Baltimore solicitor. “There is nothing expressive here that is being burdened.”
Several high court judges appeared to side with Simmonsen that the First Amendment does not apply to the billboard tax.
Judge Robert N. McDonald noted that many jurisdictions permissibly ban billboards, though such an absolute prohibition would violate the First Amendment if it were imposed on newspapers.
Judge Joseph M. Getty distinguished billboard operators, who generally accept whatever message a customer wants to post, from newspaper publishers, who exercise greater editorial discretion regarding the news or views the publication wants to convey.
And Judge Jonathan Biran said billboard operators are not the ones speaking but are merely providing a platform on which their customers speak.
In response, Seitz said a targeted tax on billboards is no different than a tax on newspaper ink – which the Supreme Court has held unconstitutional – in that the cost of the fee can act “like a prior restraint on speech and chill the speech.”
She added that billboard bans raise First Amendment concerns but can be constitutional if narrowly tailored to achieve the government’s compelling goal of fostering traffic safety and protecting neighborhood aesthetics.
But a billboard tax achieves no such compelling interest and “gives the government a tool to punish disfavored speech.,” said Seitz, who led the U.S. Justice Department’s Office of Legal Counsel for more than two years during the Obama administration.
Simmonsen responded that the billboard tax does not impact the First Amendment and passes constitutional muster because it is rationally related to the city’s goal of raising revenue for municipal expenses.
Clear Channel, which owned more than 95 percent of the city’s billboards as recently as 2017, is challenging the constitutionality of the 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 has sought a refund based on what it hopes will be a successful First Amendment challenge.
The company initiated its challenge 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 Outdoor to seek review by the Court of Appeals.
The high court is expected to render its decision by Aug. 31 in the case, Clear Channel Outdoor Inc. v. Director, Department of Finance of Baltimore City, No. 9 September Term 2020.