As local journalism continues to slowly decline, California is attempting to do something about that. The Golden State is counting on money to solve the issue.
A bill sits on Gov. Gavin Newsom’s desk that would create a state tax credit for news organizations that hire and retain journalists. Larger credits would support local and community newsrooms.
“This legislation makes it more affordable to hire and continue employing local journalists,” Matt Pearce, director of policy for Rebuild Local News, told Straight Arrow. “It’s done through tax credits given to local news outlets of all kinds.”
The argument for
Qualifying California newsrooms would receive up to $20,000 per full-time journalist for the first five journalists. Plus, an additional $15,000 for each additional journalist.
Part-time journalist positions would qualify for a $7,500 credit.
“It’s not New York Times, CNN, etc.,” Pearce said. “It’s your local newspaper website that covers city council, city hall, civic life.”
The legislation is considered “news-neutral,” meaning eligibility isn’t based on whether an outlet is a newspaper, TV station, magazine, digital publication, nonprofit or another qualifying structure.
There is some proof that this kind of legislation will work.
Illinois passed similar legislation, although on a much smaller scale, in 2024.
“We’ve heard back from local news publishers like newspapers and nonprofit sites that even just the kind of marginal support that tax credits like these do for their newsrooms is enough to even keep them from going out of business or gives them the ability to not have to do layoffs this year,” Pearce said.
The argument against
The California Franchise Tax Board (FTB) estimates this bill would cost taxpayers roughly $121 million over the next three fiscal years.
The California Chamber of Commerce, CalTax, and others have pushed back on the bill.
“They’re actually not opposed to the principle generally overall of using a tax code to support the local news sector,” Peace said. “Specifically, they’re concerned with how we’re paying for it.”
The credits are being funded through what’s called the tax conformance measure. Essentially, the plan aligns part of California’s tax code with federal law.
Specifically, the part of federal law that does not allow corporations to make executive compensation above $1 million tax-deductible. California currently allows those deductions.
CalTax and others argue the state has already increased the tax burden enough on corporations recently.
“This bill would add to this burden by increasing taxes on publicly traded companies by tens of millions of dollars more,” CalTax and others wrote in a letter obtained by Straight Arrow. “In addition to these taxes, tax increases have been imposed on California employers as a result of the unaddressed debt in the state unemployment insurance system.”
They also claim the higher costs will be passed on to consumers.
Even with the bill targeting executive compensation, they argue taxes imposed on employers often ripple down.
“Higher costs are passed through to taxpayers in the form of higher prices, fewer jobs, lower wages, and reduced investment and expansion,” the letter reads.
The groups don’t believe a connection exists between the credit and those being taxed.
“It ties an ongoing program to a narrow and volatile revenue source that fluctuates with executive compensation decisions and bypasses the scrutiny that would accompany a direct appropriation,” the letter reads.
The decline of local journalism
The severity of local journalism’s decline is no secret. The U.S. has lost some 80% of local journalism jobs since 2002.
That has an impact.
“Local bond prices often increase because there are fewer people watching how local governments are spending,” Pearce said. “Fewer people know who their elected officials are. Fewer people actually run for elected office, so you have fewer competitive elections. Loneliness even increases because people have less sense psychologically of being part of a local community.”
The question really becomes whether this kind of legislation actually solves that problem.
While some newsrooms in Illinois have vouched for the benefits of this kind of legislation, there’s been no official research on it.
“Generally speaking, because the sector has been shrinking more than it’s been growing, the primary effect of this sort of policy is to probably diminish layoffs, while also, in the few places that are growing, to stimulate growth even faster there,” Pearce said.
Newsom has not publicly commented on the bill. He has until Sept. 30 to sign it or veto it.
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