Judge may decide Friday to halt city billboard tax, leaving $837k hole in Cincinnati's budget

Judge may decide Friday to halt city billboard tax, leaving $837k hole in Cincinnati's budget
Posted at 5:00 AM, Sep 07, 2018
and last updated 2018-09-07 08:01:44-04

CINCINNATI -- A judge may decide on Friday to ban the city of Cincinnati from collecting a new billboard tax, which could leave a $837,000-hole in the city's budget.

Attorneys for two of the city's biggest billboard companies, Norton Outdoor Advertising and Lamar Advertising, sued the city in July, alleging the city violated their constitutional right to free speech and the tax was unfair.

Hamilton County Court of Common Pleas Judge Curt Hartman temporarily halted the billboard tax on July 30, but he will decide after Friday's hearing whether to issue a preliminary injunction and place the tax on hold until the court case ends, possibly several years from now.

"Given the judge's language in the TRO, I would be surprised if he changed his decision at the preliminary injunction stage," Councilman David Mann said. "We have a hole in the budget we have to address."

Acting City Manager Patrick Duhaney estimated the size of that budget hole to be $837,000.

In advance of Friday's court hearing, the city has turned over 15,500 pages of documents and allowed attorneys for Lamar to depose four high-level city officials: Arthur Dahlberg, director of building and inspections; Matthew Shad, zoning administrator; Reginald Zeno, finance director; and Christopher Bigham, budget director.

"Various jurisdictions around the state have a tax on billboards. We don't. We became aware of that," Mann said. "The city solicitor said it's a lawful tax and we implemented it. And those that operate billboards would prefer not to have it."

To help balance a $32 million shortfall, city council passed a budget in June containing a host of taxes and fee increases, including a hefty billboard tax hike to be paid by people who own billboards.

Fee hikes include: $70 to $280 for a construction permit fee for outdoor advertising; $40 to $160 for a permit renewal fee; $50 to $400 for a renewal fee of a sign requiring inspection.

But the judge believes the billboard tax is "a direct tax on the means of engaging in speech. The tax is effectively no different than a tax specifically targeted to being imposed on news print or a print press used to produce newspapers," according to his July 30 order.

If Hartman doesn't change his mind after Friday's hearing, city leaders may have tough budget negotiations in the coming weeks.

"The administration is seeking direction from the mayor and city council on budget changes to address the FY 2019 budget shortfall," Duhaney wrote in an Aug. 15 memo. "In the meantime, the execution of contracts associated with the billboard excise tax ordinance will be delayed until the issue is resolved in court."

To fill the budget gap, Mayor John Cranley proposed $159,000 in funding cuts to CincyTech, Cintrifuse and the Hillman Accelerator. But the biggest cut -- $550,000 -- would be for the Center for Closing the Health Gap, a nonprofit that has been the subject of a city audit and media scrutiny for how it spends taxpayer dollars.

"Its just not something that government money should be spent on, especially in light of the questions raised by the audit and the reporting, which questions whether they are even delivering what they promise under the city contract," Cranley said. "It's just not an essential service of city funding."

Mann is hopeful that once the final budget adjustment ordinance becomes available in mid-September, it will show the city has extra money to restore funding to those projects.

But a budget fight may be brewing, if council members try to spend city emergency reserve funds.

"The one thing I can promise you is I am going to oppose and veto an effort to take contingency reserves, emergency reserve funds -- dollars that are there for us in a snow emergency, or in a flood … or if we run low on salt in the winter," Cranley said. "I will not at all support taking money from those funds to pay for an organization that has questionable value."