SACRAMENTO — Gov. Gavin Newsom signed a historic bill Wednesday that would provide a financial boost to California’s struggling newsrooms.
Assembly Bill 2222 will create refundable tax credits for local news organizations in California based on the number of journalists they employ. He went through both rooms. It is an innovative but controversial attempt to slow the decline of local journalism.
The bill, called the Community Newsroom Employment and Workforce Sustainability Act, works by providing a “job retention credit” of $20,000 per reporter for up to five positions, and then $15,000 for each additional reporter. Part-time positions will receive half credits. It also accumulates an additional credit of $15,000 for each new hire to encourage the increase in the number of journalists.
The bill – considered the largest relief package for journalism in the United States to date – comes at a time when local media is experiencing a sharp decline across the country. Many news consumers have turned their attention to social media for critical information, which has sometimes allowed misinformation to spread quickly.
At a press conference before signing the bill, Newsom spoke about what he called “the assault on press freedom and the First Amendment… coming from Washington, D.C. and Donald Trump.” Last week, Trump was forced by a federal judge to temporarily reinstate press badges for CNN, MS NOW and Politico after barring them from the White House.
“It’s the journalists who have to report these stories and the local journalists who have to uncover and sort of peel away the facade if democracy is to survive, let alone thrive,” Newsom said.
The bill was supported by the California News Publishers Assn., of which the Los Angeles Times is a member, and a wide range of other community news proponents. Backers said it could be a lifeline for local news organizations, many of which have struggled to maintain staff numbers over the past two decades.
California has lost more than 12,000 of its local journalists since 2002, according to the nonprofit advocacy group Rebuild Local News. And nearly 40 percent of all U.S. local newspapers have disappeared, according to an annual report on the state of local news released by Northwestern University’s Medill School of Journalism.
To pay for the credits, the bill would change California’s tax code to align with a little-discussed element of President Trump’s “Big Beautiful” tax bill that raised taxes on some businesses by eliminating a deduction for executive salaries above $1 million a year.
It is common for the state to consider aligning its tax code with the federal structure to make it easier to file taxes and administer them more cost-effectively. But California has not yet sought to pass this federal tax change, a measure that would increase state tax revenue.
California Taxpayers Association. and groups representing business interests such as the California Chamber of Commerce oppose the bill because it raises taxes on employers who they say already face billions of dollars in new taxes.
They say the higher costs will be passed on to consumers.
The governor’s finance office released an analysis opposing the bill because it does not cap tax credits, thereby creating “unlimited fiscal liability to the state,” and said the bill primarily subsidizes existing activities rather than encouraging the creation of new jobs.
Speaking to reporters Wednesday, Newsom acknowledged some of the concerns raised about who will benefit from the bill’s funds, particularly hedge funds and billionaire owners and media outlets he has accused of spreading propaganda.
“It subsidizes those who don’t need it,” he said. “We have hedge funds in this space. We have billionaires in this space. We have people who are profiting from this space by gutting newsrooms and extracting value from the space who are also the beneficiaries.”
Newsom said he chose not to veto the bill because he believed its benefits outweighed its harms. He added that he hopes the Legislature and the next governor can work to determine who benefits most from the legislation.
“We should not be subsidizing hedge funds,” he said. “We should focus on where the need is greatest, in my humble opinion, and I think when there’s no cap, the open-ended nature of that…for some of the wealthier organizations, where they can now just get the benefits out of this bill that they didn’t even ask for or need, goes without saying.”
In signing the bill, Newsom emphasized the role of journalism in uncovering scandals and wrongdoing.
“The LA Times, to its credit, did a big investigation on Bell, and people were getting paid a million dollars in some cases, local government officials, a damn million dollars a year. Nobody would have known about it without local journalism,” Newsom said. “How many other Bells are there, not just in this state, but across the country?” »
A similar credit model, with certain limits, has already been adopted in New York, Illinois and New Mexico. But supporters of the legislation said California’s bill could be a model for the nation.
“I’m just thrilled,” said Matt Pearce, political director of the national nonprofit Rebuild Local News, which sponsored the bill. Pearce, a former Los Angeles Times reporter, said he has seen how “desperate” the environment is for local newsrooms across the state, including in print and online.
AB 2222 is expected to provide about $200 million to outlets over the next five years, according to Pearce. The hope is that these funds will help newsrooms continue to produce and even increase their journalism.
“If you fire people, you’ll make less money. If you hire people, you’ll make more money,” he said.
Charles Ford Champion II, president and CEO of the California News Publishers Assn., told the Times he was “thrilled” that Newsom signed the bill, but he disputed the suggestion that funding should be limited to certain news organizations.
CNPA was part of a broad coalition of unions, state press associations, journalism support organizations, independent and nonprofit publishers and others that supported the bill.
“Ownership of the newspaper, whether owned by a billionaire or a small businessman, should not determine whether or not the government will provide tax credits,” Champion said. “When journalists go out on the streets, their capitalization is not what they worry about. They worry about their pace. They write stories and the editors edit the stories and they get published without interference from the owners.”
Assemblyman Christopher M. Ward (D-San Diego), author of the bill, said the governor’s signature shows California’s commitment to a free press at a time when newsrooms are shrinking and misinformation is rampant.
“Local journalism is the backbone of an informed democracy, and today California made clear that the people who do this essential work are worth investing in,” Ward said in a statement. “This historic investment will help retain journalists in our communities, strengthen public and nonprofit media, and ensure Californians continue to have access to trusted, fact-based local information.”
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