Austin has lost the latest — and perhaps final — round in a court battle over billboard fees.
The state Supreme Court on Friday declined to hear appeals in the case, letting stand a 2016 appellate court ruling that struck down the city’s $190 annual billboard fee as an unconstitutional tax.
Austin collected $98,430 in billboard fees in fiscal 2015, the most recent figure available Tuesday.
“We are disappointed in the Texas Supreme Court’s decision not to take the case,” city spokesman David Green said Tuesday. “This case involves legal nuances where the federal court found it did not have jurisdiction to consider the city’s fee and the state court found that the city was able to charge its registration fee. Because of the complexity of the issue, we are carefully reviewing next steps.”
The Texas Constitution requires local governments to limit taxes to no more than 50 percent of a tax charged by the state. Because Texas doesn’t tax billboards, Austin’s fee was inherently well beyond the 50 percent limit and is therefore unconstitutional and “void from its inception,” the Austin-based 3rd Court of Appeals ruled last year.
That ruling also found the city should refund $198,450 to Reagan National Advertising, which filed the challenge to the city’s fee. Reagan owns about 80 percent of the billboards in Austin, according to court filings.
The company filed its first lawsuit in federal court in 2010, after Austin started imposing an annual registration fee on billboard owners. Previously, the city had charged a biennial fee to property owners who had a billboard on their site.
U.S. District Judge Lee Yeakel dismissed that lawsuit in 2011, ruling that because the fee was in reality a local tax, U.S. law required the issue to be decided by state, not federal, courts.
So Reagan filed its challenge in state court, and initially the city prevailed there as well. District Judge Stephen Yelenosky ruled in 2015 that the fee wasn’t a tax, but rather properly reimbursed the city for its costs in regulating billboards. “The city’s fee is reasonable and constitutional,” Yelenosky concluded.
But his ruling was overturned in June 2016 when the all-Republican 3rd Court of Appeals found that the federal judge already had declared that the fee was a tax in 2011 and that the issue shouldn’t have been relitigated in state court.
Reagan has paid nearly $480,000 in billboard fees from 2009 to 2014, but the company requested reimbursement of only $198,450, the amount it said it overpaid based on its expert’s calculation that the city’s true cost of regulation was $115 per billboard.