Billboards, viewed as business aids or 'visual pollution,' escape fee increases since 1985

Billboards in South Dakota can be as much as 2,400 times the size of a license plate, but it’s typical for a motorist to pay a bigger state fee for a plate than a sign company pays for a billboard.

Part of the reason for that surprising contrast is that South Dakota’s billboard permit fees have gone unchanged for 24 years, since 1985. The biggest billboard size allowed in South Dakota is 1,200 square feet, and the annual fee for a billboard of that size — the size of some homes — is $32.

License plates, by comparison, measure about a half of a square foot. Annual plate fees for noncommercial vehicles range from $21 to $65.

State Rep. Mark Kirkeby, R-Rapid City, thinks it’s time to collect more money from companies like Louisiana-based Lamar Advertising, the biggest billboard firm operating in South Dakota.

“I think the public would certainly support having a Louisiana company leave some additional revenues in South Dakota,” Kirkeby said, “to help compensate for us having to look at their billboards every single day.”

Kirkeby has a history with Lamar. He was a member of the Pennington County Commission when it enacted stiffer billboard regulations earlier this decade, and he made a failed attempt at increasing the state’s billboard fees during this year’s legislative session.

Doug Rumpca, vice president and general manager for Lamar Advertising of South Dakota, said the failure of Kirkeby’s legislation this year was the legislator’s own fault.

“He was not willing to meet in the middle,” Rumpca said. “He made it very clear that he wanted to make this effectively hurt Lamar.”

Such is the world of billboard advertising, in which environmentalists and like-minded activists are locked in a dual with billboard companies, advertisers and — especially in South Dakota — the tourism industry.

Opponents of billboard proliferation think the giant signs pollute roadside scenery. The nonprofit organization Scenic America calls billboards “visual pollution,” “sky trash,” “litter on a stick,” and “the junk mail of the American highway.”

“Nothing destroys the distinctive character of our communities and the natural beauty of our countryside more rapidly than uncontrolled signs and billboards,” the organization says on its Web site, scenic.org.

Rumpca disagreed with that assessment but did say this about the number of billboards in South Dakota:

“Certainly I’d say we’re at capacity. We do not need anymore.”

5,800 in S.D.

According to the state Department of Transportation, there are about 5,800 known billboards in South Dakota. Some of them are within city limits and are not subject to state fees.

A 1997 report by Scenic America said South Dakota had the 14th most billboards of any state. The report said that across the nation, there were 450,000 billboards on federal-aid highways with 5,000 to 15,000 new billboards being added every year. The report said four states — Vermont, Alaska, Hawaii and Maine — ban billboards.

The location of billboards is regulated by federal legislation from 1965, called the Highway Beautification Act. The act aimed to prohibit the placement of new billboards along rural or scenic federal-aid highways, and to require the removal of non-conforming billboards. Critics of the billboard industry say the law lacks teeth and has failed to stop the rampant spread of outdoor advertising.

Detailed information about individual billboards in South Dakota, including their locations, their sizes, their owners, and the fee revenue they generate, is difficult to obtain. The state’s billboard database is an open record, but it’s stored on an antiquated computer system that can be fully reviewed only by printing out all 885 pages for a state-imposed fee of $220. The Daily Republic opted not to pay the full printing fee for this story and was denied a request for a waived or reduced fee.

A South Dakota DOT official said the limitations of the state’s database make it impossible to compile historic, annual data on the number of billboards in the state. Based on informal observation, the DOT guesses that the number of billboards in South Dakota has declined by about 200 over the past few years.

The decline is attributed partly to the gradual removal of signs that predated the 1965 federal act. The grandfathered signs were allowed to remain standing, a DOT official said, but the state mandates their removal when they sustain damage greater than 50 percent of their replacement cost.

Bad for scenery, or good for business?

From Kirkeby’s perspective, statistics are not necessary to make the argument that the state has too many billboards. He thinks that conclusion should be obvious to anyone who drives the busy highways leading into the Black Hills.

“At nighttime it looks like a landing strip for aliens that want to come and land down here along Interstate 90,” Kirkeby said. “The aesthetic value and the beauty that we have here in the Black Hills is oftentimes really clouded with these billboards that stand 30 to 40 feet in the air.”

On the flip side are arguments about the importance of billboards to South Dakota’s economy, and especially tourism, which is estimated to generate nearly $1 billion in spending and is the state’s second-largest industry behind agriculture.

There are about 25 billboards that advertise Mitchell’s Corn Palace to tourists, and Hannah Walters, director of the Mitchell Convention and Visitors Bureau, said visitors frequently mention the signs.

“Wall Drug has made their entire marketing effort around billboards,” Walters said. “Billboards work. They get people to stop.”

Not surprisingly, Wall Drug owner Ted Hustead was one of 10 people listed as opponents to the original version of Kirkeby’s billboard-fee increase during the bill’s first legislative hearing.

Several other influential figures also lined up against the bill: Gov. Mike Rounds’ sister, Michele Brich, who lobbied on behalf of the South Dakota Inn Keepers Association; David Owen, who represents the state’s entire business community as president of the Chamber of Commerce and Industry; and Dick Gregerson, who not only lobbies for billboard-industry giant Lamar Advertising but also is a member of the state’s Transportation Commission.

State’s cost not covered

Kirkeby considered Gregerson’s dual roles a conflict of interest. As a member of the Transportation Commission, Gregerson helps oversee the state Department of Transportation, which is the very agency to which his lobbying client, Lamar Advertising, pays its billboard fees.

Gregerson told The Daily Republic that he did not consider himself conflicted, because the legislation came from Kirkeby and not from the DOT.

“If his had been a DOT bill, I wouldn’t have touched it,” Gregerson said. “But it wasn’t.”

If the DOT had been a party to the legislation, Gregerson said, the agency would have sought only to cover the cost of administering its billboard program. Currently, there is an estimated $25,000 shortfall between the roughly $50,000 in revenue that the state’s annual billboard fees generate and the estimated $75,000 that it costs the DOT to inspect the billboards for compliance with size regulations, zoning laws and appearance standards.

The original version of Kirkeby’s bill was aimed at raising far more than $25,000. As first introduced, the legislation would have imposed a fee of $45 on the first 15 square feet of every billboard and $3 for every additional square foot or portion thereof. That would have bumped the annual fee for the biggest allowable billboards, which measure 1,200 square feet, from $32 to $3,600.

Gregerson said that originally proposed increase was outrageous.

“No other state would have come close to what they were trying to do here,” he said.

Big vs. small

Kirkeby’s aim was to raise the fees for big billboard companies that erect giant, steel billboard structures while keeping the fees low for “mom and pop” businesses that may have one or two small, plywood signs. He quickly agreed to amend his bill, though, when billboard advertisers big and small told him that his legislation would put them out of business.

The amendment — which turned out to be the first of many — retained much of Kirkeby’s original intent. It would have bumped the existing fee on the smallest billboards from $8 to $10 and the fee on the biggest billboards from $32 to $300. By the time the bill wound its way through the House and Senate and a conference committee of members from both houses, the proposed high end of the fee range was watered down to $64.

Kirkeby viewed that as insufficient, and he withdrew his support for the bill and allowed it to die. He said he was exhausted by the bill’s long and arduous journey.

“It was a tough one to sell,” he said. “That’s why I’m not sure if this will ever come back during my tenure serving in the Legislature.”

Rumpca, of Lamar Advertising, sardonically quipped that he’s sure Kirkeby “will be rested up” by next year’s legislative session. And Rumpca stands ready for further talks.

“We very much have no problem with fee increases. It’s time,” Rumpca said. “But we’re for a fair increase and a standard increase across the board.”

Rumpca considers a fair increase to be one that affects small and large billboards equally and goes no further than covering the state’s administrative costs. Anything more than that would amount to a tax instead of a fee, he said, and billboards, like other forms of advertising, are protected from taxation.

Kirkeby’s idea of fair remains a much higher fee for bigger billboards, and only a modest increase for smaller billboards.

Other ideas

Lawmakers commonly look to the practices of other states for solutions to problems, but no clear guidance can be obtained by looking at other states’ billboard fee schedules. The fees in South Dakota’s six border states are enormously varied.

At the extreme low end is North Dakota, which imposes only one $50 fee for the entire lifetime of a billboard, regardless of its size. At the high end is Montana, which imposes a $100 application fee and then annual fees as high as $150 for a double-sided sign.

By their own admission, South Dakota DOT officials have paid little attention to billboard fees over the years, because billboard regulation is a relatively tiny part of the department’s work. Kirkeby’s effort to increase billboard fees came at a time when every fee on the state’s books was being eyed for potential increases that could lessen the budget deficit, and many attempted fee increases failed. The federal stimulus package made many fee hikes and budget cuts unnecessary, at least for now.

Besides raising the fees on the largest billboards, Kirkeby also thinks the state should impose property taxes on billboards. He acknowledges the protection of advertisements from taxation, but he equates a billboard site to the site of a newspaper office. A newspaper company doesn’t pay sales taxes on the advertising in its pages, Kirkeby said, but it does pay property tax on its building and the land under it.

Gregerson, the Lamar lobbyist, rejected that argument. He said billboard companies have home offices and other operational locations that already are subject to property taxes.

A lot of money for the state, landowners, billboard companies and advertisers is at stake in the dispute. Rumpca said leases for land to erect billboards range from $200 to $2,000 per year, and the rent charged to businesses that post ads on billboards ranges from $200 to $2,000 per month.

Kirkeby said the largest billboards and some of the new electronic billboards with revolving ads can cost up to six figures to build. The new electronic billboards are not addressed by South Dakota’s billboard laws, though some states charge special fees for them or ban them out of concern that they dangerously distract drivers.

With so much potential for bigger state revenues and with new issues arising over electronic billboards, Rumpca doubts that Kirkeby will tire of the fight. Kirkeby, who maintained throughout much of a recent interview that he’s worn out and has no plans to introduce billboard legislation next year, finally succumbed to the possibility.

“We’ll just have to wait and see,” he said. “I very well may get the ambers glowing under me again next winter.”

Tags: news, billboard, legislature