California Legislature Approves Local News Funding Bill

The California legislature has passed Assembly Bill 2222, also known as the Community Newsroom Employment and Workforce Sustainability Act, a significant piece of legislation designed to provide financial support to local news organizations. This bill establishes a system of refundable tax credits directly tied to the number of journalists employed by news outlets within the state. The legislation passed the State Senate on Sunday night and subsequently cleared the Assembly with a supermajority vote of at least 54 votes, moving forward to Governor Gavin Newsom for his signature into law. The program is slated to generate an estimated $40 million annually for California's newsrooms. Funding for this initiative will be derived from a restriction on corporate tax deductions for executive compensation exceeding $1 million, with a portion of the resulting revenue being redirected to support local journalism. Rebuild Local News, a nonprofit organization that sponsored the bill, explains that the Community NEWS Act offers refundable tax credits for both full-time and part-time journalists, as well as for sole-proprietor local news providers. The term "refundable" signifies that any tax credits exceeding an organization's tax liability will be disbursed in cash, functioning similarly to a grant. The bill includes a job retention credit valued at $20,000 per journalist for up to five positions, with an additional $15,000 credit for each journalist employed beyond the initial five. Part-time journalist positions are supported with credits of $7,500. Furthermore, a "new hire" credit of $15,000 is available to news organizations that increase their journalist headcount, and this credit can be combined with the retention credits. For instance, a nonprofit community news website employing three full-time journalists covering the Central Valley would be eligible for $60,000 annually under this program. If that publication were to hire an additional reporter or transition a freelancer or part-time staff member to a full-time editorial role, its annual benefits would increase to $95,000. Matt Pearce, Rebuild Local News’s director of policy, articulated the bill's incentive structure by stating, "if you hire more people, you get more money." He further elaborated that "If you lay people off, you get less money. If you don’t employ anyone, you don’t get anything." This direct correlation between employment numbers and financial support aims to incentivize growth and stability within the local news sector. The legislative action comes at a time when local news outlets across California and the nation have faced significant financial challenges, leading to widespread newsroom closures and staff reductions. The bill's passage represents a substantial effort by the state to counteract these trends and preserve vital local reporting.