Renew state support for newspapers

There is an easy, low-cost way for Washington state to help save local journalism.

Legislators would make a difference by renewing a small but significant tax benefit to newspaper publishers that’s set to expire in a few years.

They should also consider increasing the benefit to further help news organizations retain what’s left of their newsrooms.

Extending this business and occupation tax preference for publishers would save them about $800,000 per biennium. That isn’t gravy. It’s dollars that will save jobs serving the public through journalism.

The cost is a rounding error in a state budget with $58.4 billion in projected revenues and a $3.8 billion surplus over the next biennium.

It’s small compared to publishers’ financial problems. Gross revenues for 109 newspapers receiving the preference fell $136 million from 2015 to 2020, according to the Joint Legislative Audit and Review Committee (JLARC).

Still, the preference is critical to publishers counting pennies to keep lights on and journalists employed.

Yes, it’s that bad. Newspapers’ newsroom employment fell 57% between 2008 and 2020 nationally, according to Pew Research tallies, before getting socked by the pandemic.

Last year the preference saved The Columbian newspaper in Vancouver $20,187.64, according to public disclosure reporters.

Publisher Ben Campbell told me the tax savings may not seem like much, but it’s “extremely helpful.”

“For a paper our size, depending on the year and how our advertising/circulation revenue levels are performing, the tax preference could be the difference between profitability and an expense reduction/layoff,” he said via email.

The largest beneficiary is The Seattle Times, which saved $135,822.34 last year, helping it avoid further cuts. Over the last decade its head count went from more than 1,000 employees to around 450 as its print advertising declined 80% and digital advertising, a market monopolized by a few tech giants, grew just 10%.

The family-owned newspaper also sold all of its Seattle real estate and a printing plant in Bothell to continue publishing and invest in technology needed to evolve and survive.

States have limited tools to sustain local news but some are trying. New Jersey is providing direct grants to support local news and civic engagement.

This complements good work by Congress, particularly Washington’s delegation, which seems close to advancing promising bills to help save local journalism.

Even President Joe Biden recently voiced concerns about the loss of local newspapers.

Policymakers involved know that none of these responses is a total solution to sustain local journalism that informs voters, builds community, increases public engagement, reduces corruption, and holds government and institutions accountable.

Just as we need layers of virus protection — masks, distancing and vaccines — layers of support are needed to prevent further decimation of local news coverage.

Policies proposed won’t make publishers beholden to government. They are designed to provide short-term relief, so the industry can stabilize and retool to better compete.

“It’s not a handout, it’s a hand up, to help them find a sustainable path forward,” U.S. Rep. Dan Newhouse, a Yakima Valley Republican co-sponsoring the bipartisan Local Journalism Sustainability Act, told me in June.

Temporary support is also needed until antitrust enforcement against dominant tech platforms concludes, hopefully ending their anti-competitive business practices, forcing them to pay for news content they profit from, and giving publishers a fair chance.

Thousands of newspapers closed since 2004. Many survivors are barely solvent and unable to provide more than scant coverage of their communities.

Washington lost 16 newspapers between 2004 and 2019, including three dailies, according to the University of North Carolina’s “News Desert” tracking.

The Legislature stepped up before, when newspapers were struggling to recover from the Great Recession.

Starting in 2009 it reduced their B&O tax from .484% to .2904%, bringing it in line with other manufacturers. The rate is now .35%.

That benefited 164 companies, including 109 newspapers, between 2016 and 2020. Eligible publishers must produce a physical product, manufacturing newspapers or supplements, at least twice a month.

In 2016 the preference reduced newspapers’ taxes by an estimated $620,000. In 2023, it’s expected to save them a total of $399,000. That’s because newspapers’ taxable revenues are expected to decline 36% over that period.

Preferences aren’t unique to publishers. Washington provides dozens of B&O preferences to support all manner of industries, including solar-energy system manufacturers, affordable housing developers and dairy producers.

Altogether the state has 748 tax exemptions that saved taxpayers an estimated $35 billion last year, according to the Department of Revenue. Beneficiaries range from child-care providers to software giants.

JLARC preliminarily recommends the Legislature review the newspaper preference before it expires in 2024, to determine whether the relief is sufficient “and if additional assistance is needed to help these businesses stabilize financially.”

One committee member recently opined that preference may be futile, comparing it to support for aluminum smelters that have since closed. I hope legislators still think it’s worth giving medicine to sick patients, even if one died in a different ward.

Besides, Washingtonians still get aluminum from out of state.

You can’t import local journalism, it must be produced locally, and the Legislature can help make sure that continues.

If you’re concerned about losing local journalism, consider testifying in support of extending the newspaper tax preference at a public hearing scheduled for 10 a.m. on Sept. 9. Testimony can also be emailed to jlarc@leg.wa.gov.