Arguing that billboards should be protected as free speech by the First Amendment, media firm Clear Channel Outdoor has filed a federal lawsuit against Baltimore and its new billboard tax.
Baltimore began imposing a tax last month on billboard advertisements within the city limits — $15 per square foot for billboards that electronically change images, and $5 per square foot for those that don't.
City officials expect to take in about $1 million annually from Clear Channel, which has a near-monopoly on Baltimore's advertising market. The levy is part of a package of measures designed to close the city's long-term $750 million budget shortfall.
Clear Channel, which has billboards across the country, has been embroiled in lawsuits in several states, including California and Pennsylvania, fighting what the company views as oppressive fees or rules against outdoor advertising. The suit filed this week in U.S. District Court in Baltimore alleges that the city is violating several constitutional provisions.
"It is not something we do lightly, or we use as a sword," said Clear Channel's general counsel, Sara Lee Keller. "Municipalities have been really pressed for revenue. There are many different ways to approach this issue. Assessing a fee against one payer is not the way to do it.
"We had to do what we felt was right," she said. "We felt the city is wrong on the law."
Keller said the company would rather work with local governments than file lawsuits and still hopes to avoid a protracted legal battle. Clear Channel had offered the city more than $1 million in free advertising if the administration would drop plans for a tax on billboards.
Mayor Stephanie Rawlings-Blake rebuffed the offer, saying it wouldn't help close the city's revenue gap.
City officials said they expected the legal challenge from Clear Channel. The company testified in April that it planned to sue if the City Council passed Rawlings-Blake's legislation.
City Solicitor George Nilson said his lawyers have "carefully considered" four letters from Clear Channel's attorneys arguing against the billboard tax, but they remain confident the tax is legal.
"We will defend, and I believe we will prevail," Nilson said.
City lawyer Elena R. DiPietro wrote in a letter to the City Council that the new tax, which began July 1, does not violate the First Amendment because it is intended to "raise revenue and lessen the negative impact of billboards," not curb speech.
"It is clear that a tax on speech is constitutional if it is not based on the content of speech and therefore does not aim to suppress ideas," she wrote.
The billboard tax law states that "the Council has determined that outdoor advertising endangers public safety by distracting the attention of drivers from the roadway and may otherwise endanger the public health, safety, and welfare."
"The Council has also determined that outdoor advertising may harm the City by creating visible clutter and blight, and by promoting a negative aesthetic impact in the City," the law states.
Clear Channel's lawsuit also takes issue with the language in the law calling billboards a "public nuisance" and a safety problem. Keller said that such allegations are unfounded and that digital billboards, which have been criticized as driver distractions, are "safety neutral."
"We don't think the city did much due diligence to determine what they were saying was actually correct," she said.
But the crux of the legal fight revolves around the constitutional questions.
"Outdoor advertising is a constitutionally protected medium of speech," the lawsuit states. "In particular, insofar as Clear Channel's signs carry commercial messages, they constitute constitutionally protected commercial speech."
The company was among a group of billboard operations that sued Philadelphia in 2005 when that city imposed a billboard tax. The suit was voluntarily dismissed after the company reached an out-of-court agreement with the city, Keller said.
In 2002, the company sued Los Angeles over about $1 million in fees the city sought to impose; the judge in that case upheld Los Angeles' program as constitutional, and the parties came to an agreement to dismiss the suit in 2007.
The billboard tax was among several pieces of legislation the administration passed last year to help fund the city's $2.4 billion operating budget, which closed a $30 million shortfall. Rawlings-Blake has said her budget represents the initial steps of a 10-year financial plan necessary to fix a long-term $750 million structural deficit.
Clear Channel owns about 95 percent of the billboards in Baltimore and gives free ads to several city agencies, including the police and fire departments. In its lawsuit, the company states the city's new law could cost it as much as $1.5 million annually.
But the tax also affects smaller firms.
Jean Smith, president of Eastern Outdoor Advertising, which owns about 30 billboards in the city, said the tax would cost her business $87,000 annually. She testified against the bill in April but said she felt that City Council members didn't take her concerns seriously.
"We certainly support the lawsuit, and we hope they will prevail," Smith said. "We feel this is highly discriminatory, but we'll leave it up to the judge to decide."