Baltimore’s tax on commercial billboard operators does not violate their constitutional right to free speech in the advertisements and messages they post, Maryland’s top court ruled Monday in upholding the city’s charge.
In its 6-1 decision, the Court of Appeals said the city’s uniform tax ordinance passes First Amendment muster because it does not discriminate based on the viewpoint conveyed on the billboards and is rationally related to the city’s legitimate goal of raising revenue.
The high court’s decision was a defeat for Clear Channel Outdoor Inc.’s constitutional challenge to the billboard tax based on the argument that “taxing the means of speech threatens the exercise of speech.”
Judge Robert N. McDonald, writing for the high court majority, said Baltimore’s tax “does not depend on what messages are displayed on a billboard, who a message is attributed to, or how long any particular message is displayed.”
“What matters is whether Clear Channel charges the person or entity responsible for the message to display it on the billboard,” McDonald added. “If Clear Channel devoted a billboard entirely to its own message or to a message of someone else without a charge, no tax would be levied under the ordinance, regardless of the substance of the message. It is the commercial transaction, not the content of the message, that triggers the tax.”
Clear Channel’s lead attorney, Virginia A. Seitz, did not immediately return telephone and email messages Monday seeking comment on the court’s decision and whether the company plans to seek review by the U.S. Supreme Court. Seitz is with Sidley Austin LLP in Washington.
Baltimore Solicitor James L. Shea, the city’s chief attorney, said he was “pleased” by the high court’s decision upholding a tax that brings in $1.5 million per year to the city.
The billboard assessment is “an important source of revenue and does not censor speech,” Shea said, adding that the tax is charged regardless of the content of the message or of the billboard operator’s customer.
Judge Joseph M. Getty, the Court of Special Appeals sole dissenter, called billboards “a constitutionally protected medium of communication and, thus, any legislation potentially affecting the ‘speech’ from this platform implicates free expression concerns.”
As such, Baltimore’s tax on billboards passes constitutional muster only if it is “essential” to further the city’s goal of raising revenue, Getty wrote.
“In evaluating the constitutionality of the ordinance, this court should not overlook the role billboards serve in the local media landscape, their ability to provide alternative means of communication, and the public interest the tax may serve compared to the public interest it may hinder if access to this form of messaging is limited by the tax’s economic burden,” Getty wrote.
“Campaigns expressing controversial, non-traditional, or marginalized views often utilize billboards as speech platforms,” he added. “In all, billboards are an accessible medium that the non-incumbent may use to challenge the status quo.”
Clear Channel, which owned more than 95 percent of the city’s billboards as recently as 2017, challenged 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 its as-yet-unsuccessful First Amendment challenge.
The company 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.
The high court rendered its decision in Clear Channel Outdoor Inc. v. Director, Department of Finance of Baltimore City, No. 9 September Term 2020.