LJSA

The government policy element has long been a bit of a riddle. The collapse of local news has been devastating to democracy and the health of communities but it’s no easy task to design policies that would help without endangering editorial independence.

That’s why I’m so excited about the Local Journalism Sustainability Act, which was just introduced by Senators Maria Cantwell, Ron Wyden and Mark Kelly and reintroduced by Reps. Dan Newhouse (R-WA) and Ann Kirkpatrick (D-AZ). This clever, bipartisan bill would provide more help for local news than any time in about a century, yet it’s done in a very First-Amendment-friendly way.

It relies on a series of tax credits that help consumers buy local news subscriptions or donate to nonprofit news organizations; helps newsrooms bear the payroll costs of retaining journalists; and helps small businesses to buy advertising in local media.

In general, the bill:

• Focuses entirely on local news (where the crisis is acute). No benefits for national media.
• Helps local news by amplifying the choices of consumers and small businesses, rather than having the government pick winners and losers
• Is strictly nonpartisan and guards against government favoritism or manipulation of media
• Helps small media as well as larger players, nonprofits as well as commercial models, including communities of color and rural areas.
• Helps a variety of platforms, including digital-first websites as well as newspapers, radio and TV
• Is based in the tax code and is therefore not subject to annual appropriations process or limits
• Would help create a stronger, more inclusive local news system in the future, not merely prop up existing players.

Ok, now I’m going to dive deep into the weeds. As journalists, we know that the devil is always in the details. Here is the one pager created by Reps. Kirkpatrick and Newhouse, and here is the legislative language itself for the House bill.

1) Tax credit of up to $250 each year for subscriptions or donations to local news.

For subscriptions, the credit covers 80% of subscription costs in the first year and 50% in subsequent four years. To receive the full $250 credit, a subscriber would have to spend at least $312.50 in the first year, and $500 each of the following four years. This is so the taxpayer has some “skin in the game.”

A donation to a nonprofit news organization mostly becomes a tax credit (which is subtracted, below the line, from your final tax bill) instead of a less-beneficial tax deduction (which is subtracted from your taxable income). The amounts work the same way: if you donate $312.50, you would get a $250 credit.

There are several things I like about this. First, instead of a government agency picking newsrooms to support – what could possibly go wrong with that? – it amplifies the buying power of residents. It’s sort of like the charitable deduction that way. You can imagine local newsrooms promoting this benefit in the community as part of subscription or donation drives.

Second, it could really goose digital subscriptions, which most local news leaders believe are the only way that local news can become sustainable. We don’t want legislation that just ladles water into sinking ships. We want to create incentives for a better, more inclusive, more durable model.

One item I might change in this proposal is that the tax credit is not refundable. That means while many newsrooms will indirectly benefit, the only taxpayers who would benefit would be those who pay federal taxes and itemize. If we believe that we should be helping Americans be better informed, that benefit should be offered to all residents, regardless of income.

(Fantasy digression: this might even be a voucher. Imagine if you’re going through your taxes and could just allot the money to newsrooms, which would then get a check from the IRS!)

2) Payroll tax credit for journalists.

News organizations would get a benefit of up to $25,000 in the first year and $15,000 per journalist in years 2-5 to help cover the salaries of journalists.

This goes right at the problem, that the business models don’t support the labor-intensive types of journalism. The number of newspaper reporters has dropped 60 percent since 2000. Thousands of communities have no reporters covering the basics of local government.

This tax credit could change the dynamics within newsrooms by making the hiring or retaining of journalists relatively more appealing. Because it’s a payroll tax break, rather than an income tax break, it is also available for nonprofit organizations.

3) Refundable tax credit to small businesses to advertise in local news.

Local small businesses could get up to $5,000 credit for advertising in local newsrooms in the first year and $2,500 in years 2-5. I could easily imagine community media organizations rallying together to make sure that businesses know about this benefit, and making the case that small and hyperlocal media should be among the biggest beneficiaries.

While the first two benefits relate only to newspapers and news websites, this tax credit could also be spent on local TV and radio. In addition to helping local news, it will also help many small businesses get back on their feet as they try to recover from COVID-19.

What’s the definition of a local newsroom and a journalist?

One of the hardest parts of crafting policies about journalism is deciding which news organizations would qualify without having to set up some elaborate bureaucratic mechanism or licensing system. There may be room for improvement but this bill gets it quite close. Here are the definitions provided in the bill along with my comments:

Strangely, the bill defines a local “newspaper” as a “print or digital publication” (so mentally delete the word ‘paper’ as you read the bill) that also meets these tests:

“The primary content of such publication is original content derived from primary sources and relating to news and current events.”

I think I like the “original content” provision, which would knock out pure aggregators.

“Such publication primarily serves the needs of a regional or local community.”

They should change this to “primarily covers a local or regional community or a state.”

“The publisher of such publication employs at least one local news journalist who resides in such regional or local community.”

This would provide a modest guard against ‘ghost newspapers’ that provide no original reporting

“The publisher of such publication employs not greater than 750 employees.” (It’s 1,000 in the Senate version)

Sorry New York Times and Washington Post.

For purposes of the employment tax credit, a local “journalist” means someone who works at a local “newspaper” (see definition above) and who: “Regularly gathers, collects, photographs, records, writes, or reports news or information that concerns local events or other matters of local public interest.”

This seems to be a relatively modern definition.

One question has been what, if anything, should a government approach do to avoid scuzzy pay-for-play websites, or news sites that are set up by dark-money political operations. Ideally, we’d rather that this money not go to them — but we also don’t want government officials making micro-judgments about quality. The focus on subscriptions actually helps with this a bit. None of these “pink slime” newsrooms have subscriptions (because people wouldn’t pay for it) so they wouldn’t be eligible for the first credit.

The bill can and should be improved as it goes along its way. But this is an outstanding place to begin. The bill is now supported by:

America’s Newspapers

Local Independent Online News Publishers

Institute for Nonprofit News

National Association of Hispanic Publications

National Newspaper Publishers Association

The NewsGuild-CWA

National Newspaper Association

Local Media Consortium

National Federation of Community Broadcasters

Report for America/The GroundTruth Project

American Journalism Project

Solutions Journalism Network

Lenfest Institute for Journalism

Chalkbeat

Public Knowledge

Richner Communications

Wick Communications

JournalList.net

Association of Alternative Newsmedia

Colorado Media Project

Journalism Funding Partners

PEN America

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Steven Waldman is president of Rebuild Local News and co-founder of Report for America, a national service program that places journalists into local newsrooms to report on under-covered topics and communities. It is an initiative of The GroundTruth Project.