The Ohio Supreme Court today permanently enjoined the city of Cincinnati from enforcing an excise tax on billboard advertising imposed in 2018 to help close a $2.5 million city budget deficit, holding that it violated the billboard operators’ First Amendment rights.

Writing for the Supreme Court majority, Justice Sharon L. Kennedy stated that regardless of whether the city intended to censor the billboard messages or not, “a selective tax creates the intolerable potential of self-censorship by the press and abuse by governmental actors aimed to suppress, compel, or punish speech.”

The Court majority reversed the decision of the First District Court of Appeals, which concluded that the tax did not impinge on the billboard owners’ First Amendment rights. The Supreme Court, therefore, reinstated a permanent injunction granted by the Hamilton County Common Pleas Court.

Chief Justice Maureen O’Connor and Justices Patrick F. Fischer, R. Patrick DeWine, and Melody J. Stewart joined Justice Kennedy’s opinion. Eighth District Court of Appeals Judge Anita Laster Mays, sitting for Justice Jennifer Brunner who did not participate in the case, also joined the opinion. Justice Michael P. Donnelly concurred in judgment only.

Targeted Tax Imposed Largely on Two Members of the Press
Faced with a budget shortfall, Cincinnati City Council passed an ordinance in June 2018 levying an excise tax on outdoor billboard advertising. The ordinance applied only to “off-site” signs, not those on the premises of a business, and excluded signs on public property, as well as smaller signs. The law called for a 7-percent tax on the gross receipts generated by the billboard or an annual minimal amount based on the sign’s size and location. The city projected the tax would raise about $709,000 annually.

Lamar Advantage GP Company and Norton Outdoor Advertising control more than 90 percent of Cincinnati’s billboard signs, which are limited in number and location by other city ordinances. The two companies each initiated lawsuits to block the implementation of the tax. They noted that because the billboard tax would make it unsustainable to operate their least-profitable billboards, 70 to 80 of the 865 billboards the companies operate in the city would be removed.

Companies Raise Speech-Suppression Concerns
About 70 to 75 percent of Lamar and Norton’s billboards host paid advertisements while the remaining 25 to 30 percent contain donated space for public-service announcements and Lamar and Norton’s own speech, such as tributes to notable public figures and veterans.

The paid advertisements include political advertisements purchased by candidates for local office, as well as messages from nonprofit organizations, religious groups, advocacy groups, and charities. The donated billboard space contains messages for charities and nonprofit organizations, public-service announcements, Amber Alerts, and public-health-and-safety messages.

Company executives testified that city council members have contacted the businesses to request donation of space and to press for removal of messages, including a paid political message posted by Norton that stated, “Voter Fraud Is a Felony.” While the company did not perceive the message to be incorrect or inflammatory, Norton removed the display.

The billboard operators cited the voter fraud billboard as an example of exercising editorial control over the content of the messages displayed, and they noted that they edit advertisements to ensure the information conveyed is accurate and meets community and company standards. The companies argued in common pleas court that the tax violated their First Amendment rights and sought an injunction preventing the city from enforcing the tax.

The trial court granted a permanent injunction, but the First District reversed that decision because the tax did not relate to the content of the billboard messages and did not single out billboard operators in a way that threatens to censor their speech. The billboard companies appealed the decision to Supreme Court, which agreed to hear the case.

Supreme Court Analyzed Rights of the Press
Justice Kennedy explained that the “press” includes not only newspapers, books, and magazines, but has been extended to many other media, including cable television. The opinion stated that courts have consistently rejected arguments, such as those by Cincinnati, that the First Amendment provides the “institutional press” more protection than other speakers. The Court concluded that Lamar and Norton’s rights as “speakers and publishers” are protected by the same free speech and press rights as other publishers.

The opinion noted that the U.S. Supreme Court has addressed the issue of imposing taxes on the press as an attempt to censor communications or a means of raising revenues. The Court pointed to the impact of the British “Stamp Tax” on newspapers in the 1700s as one of the factors that roused the American colonists to revolt.

Today’s opinion cited the U.S. Supreme Court’s 1983 Minneapolis Star & Tribune Co. v. Minnesota Commr. of Revenue decision, in which Minnesota lawmakers imposed a tax on the ink and paper purchased to publish newspapers. The law exempted the first $100,000 in purchases, effectively making only 16 of the 374 newspapers with paid circulation subject to the tax. One publisher, the Minneapolis Star & Tribune, paid roughly two-thirds of all the state tax. The high court invalidated the tax, ruling that a tax that singles out a small number of publications “gives a government a powerful weapon against the taxpayer selected.”

The Ohio Supreme Court opinion stated that under Minneapolis Star & Tribune Co., a selective tax on certain members of the press is subject to “strict scrutiny,” which means the government must prove it has a compelling interest that it cannot achieve with some other type of taxation.

The Court explained that the press may be subject to taxes that are generally applicable to other businesses. But First Amendment violations occur if the government must look at the content of the speech to determine whether the tax applies, the opinion stated, or if the tax singles out the press or targets a small group of speakers. The Court noted it is not necessary for the taxpayer to prove that the purpose of the tax is to suppress or punish speech to show that it violates the First Amendment.

City Tax Fails Constitutional Test
The Court rejected Cincinnati’s argument that the tax is permissible because it taxes only the commercial transaction between the billboard operator and the advertiser. The opinion noted that the tax is not part of a broader tax on property and services, especially because it exempts thousands of signs located on the premises of businesses.

“The city’s billboard tax resembles the type of taxes that were a cause of the American Revolution: taxes that curtail the amount of revenue raised by the press through advertisements and tend to directly restrict the circulation of protected expression,” the opinion stated.

Citing the Minneapolis Star & Tribune decision, the opinion stated that a need to raise revenue cannot justify a discriminatory tax on the press when an alternative method of achieving the same goal can be used without raising First Amendment concerns. The Court concluded that the city could have raised revenue through general taxation and avoided the potential for censorship that arises from a selective tax on the press.

2020-0931. Lamar Advantage GP Co., L.L.C. v. Cincinnati, Slip Opinion No. 2021-Ohio-3155.

View oral argument video of this case.

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