April 8, 2022

The Local Journalism Sustainability Act has sometimes been characterized as a government handout that will provide more profits to wealthy hedge funds. That is like saying that pizza (with or without the mozzarella cheese) provides sustenance to criminals and fuels their activities. Sure, criminals may occasionally eat pizza, but so do a lot of other people, including me. Saying that pizza is abetting criminals is just plain silly.

The LJSA is a bill that would provide tax credits to newspapers and other journalism organizations that are providing local news and information to their communities. The most recent budget reconciliation act, Build Back Better, included a key provision of the LJSA that would provide tax credits for newsrooms that meet the criteria. Those credits are 50% of the employees’ salary (capped at $50,000), or up to $25,000 per qualifying newsroom employee in year one, and up to $15,000 in years two through five.

The organization receives the refundable tax credits (they get the dollars whether they owe taxes or not) based on qualifying newsroom employees, so the more newsroom employees they have, the bigger the tax credit.

But, there are specific criteria that the news organization must meet that make it difficult for partisan outlets or those that don’t really cover local news to qualify. The criteria also include a provision that the organization must have been in existence for at least a year.

The bill provides incentives to retain and even hire more newsroom employees, so the return on newsroom investment is more apparent than ever. The monetary impact of retaining and hiring newsroom employees will be obvious, even to those who might be math-challenged.

The smallest independent rural newspapers with just a couple of employees to the largest newspaper groups, even if they are owned by a hedge fund, will be eligible for the tax credits. They all will be incentivized to maintain or grow their newsroom staff.

Without getting overly wonky, it is important to note that there are provisions in the bill that would limit the amount that any one organization can receive, so the largest groups will have some caps. Plus, national organizations like The New York Times and The Wall Street Journal will not qualify. These tax credits are tied directly to local news, and local news organizations, from the small rural weekly to large daily metro newspapers, will receive tax credits based on their total number of newsroom employees.

More than 2,000 newspapers have closed across the U.S. in the past two decades, and more than 100 have closed since the beginning of the pandemic. While the exact number of closed papers is not clear, no one would argue that local newspapers and other providers of local news, including radio and TV, aren’t experiencing incredible challenges and many are not expected to survive the decade. There is increasing recognition of the value of local newspapers by members of Congress, and they have been responsive in filing bills to help the industry. They understand that when a newspaper in their district closes, the community suffers in multiple ways.

It has also been said that newspapers shouldn’t be supported by the government and that newspapers need to be independent. Newspapers have accepted advertising from local merchants for hundreds of years, and they don’t hold back on reporting accurate local news, even if it means offending an advertiser. That is their job, and whether the revenue comes from the local car dealer or government tax credits, publishers and editors know that the truth can’t be bought. Newspapers also receive discounted rates for using the U.S. Postal Service, and they certainly don’t hold back on reporting on problems about the mail.

There are now rumors in Washington that a new smaller budget reconciliation bill might be introduced. Senior leadership in the House and Senate have indicated their desire to include the tax credits for newspapers and other local news organizations in the next budget bill.

America needs strong local journalism, and the LJSA is a giant step forward for the industry while it continues to evolve. We encourage our leaders in the House and Senate to continue their support for local journalism.

On behalf of its approximately 1,500 newspaper and associate member companies, America’s Newspapers is committed to explaining, defending and advancing the vital role of newspapers in democracy and civil life. We put an emphasis on educating the public on all the ways newspapers contribute to building a community identity and the success of local businesses. Learn more: www.newspapers.org

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Dean Ridings is CEO of America’s Newspapers
Dean Ridings

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