Bipartisan House bill seeks financial relief for local newspapers

SEATTLE — A bipartisan House bill seeking financial relief for the nation’s local newspapers was introduced Thursday that would offer three types of tax credits to help stimulate an industry the proposal’s supporters describe as vital to the country.

The Local Journalism Sustainability Act provides three types of tax credits — for local newspaper subscribers, advertisers and journalist compensation — over a five-year period. Initially co-sponsored by Rep. Dan Newhouse, a Republican from the Yakima Valley town of Sunnyside, and Arizona Democrat Ann Kirkpatrick, the bill was endorsed by an additional 15 congressional members — 10 Democrats and 5 Republicans — ahead of being introduced during Thursday’s pro forma session.

“Local journalists and newspapers are essential to ensuring the public remains informed,” Newhouse said in a news release. “Local news is crucial — particularly within our rural communities in Central Washington — and our local journalists provide in-depth perspectives that inform their readership regarding local current events.

“Unfortunately, due to transforming business models and changes to advertising mediums, many of our locally owned newspapers have been struggling to make ends meet, and the pandemic has only exacerbated their situation. By providing tax credits for readers and local businesses and by empowering our local journalists, we can begin to help our newspapers remain resilient and continue to provide important information and updates to our rural communities.”

The bill is the latest measure aimed at sustaining local papers hard-hit by the COVID-19 crisis, years of advertising revenue losses to online aggregating conglomerates like Google and Facebook, and consolidation by hedge fund companies selling off their assets. Even as local news outlets have seen a surge in readership during the pandemic, their advertising revenue has been decimated from businesses and events being forced to shut down.

Thousands in the media industry have been laid off, furloughed or taken pay cuts as newspaper companies, alternative weeklies, local broadcast networks and digital outlets shed costs.

The core of the bill provides a refundable tax credit of up to $25,000 for the first year and $15,000 in each of the subsequent four to allow local newspapers — defined as print or online news and current events content providers with a majority of readers in state or within a 200-mile radius — to employ and adequately compensate journalists. The credit would be for an amount equaling 50 percent of a journalist’s salary up to $50,000 in the first year and then 30 percent for each ensuing year.

If the credits compiled are greater than taxes owed by the paper, the difference would be given as a refund.

“It creates a runway during which you hope we get past this pandemic and then after five years, hopefully we get past this economic crisis,” Seattle Times publisher Frank Blethen said.

The Times already received a $9.9 million federal Payroll Protection Program loan in April to help sustain the paper’s full operations into mid-summer. Blethen now sees the proposed payroll credits helping stem further cuts to newspaper coverage as the country enters a critical election season and braces for another wave of COVID-19 hospitalizations.

“That piece is a real game-changer,” Blethen said. “I mean, the industry is just falling apart right now.”

The bill also proposes a nonrefundable tax credit of up to $250 annually for subscribers to local newspapers. The credit covers 80 percent of subscription costs in the first year and 50 percent in the subsequent four years.

Another nonrefundable credit of $5,000 the first year and $2,500 in each of the next four years would go to small and mid-sized businesses advertising in local papers as well as more narrowly defined local radio or television stations operating within 50 miles of 90 percent of their audience.

Along with Newhouse and Kirkpatrick, the bill was co-sponsored by Reps. Denny Heck (D-Olympia), Brian Fitzpatrick (R-Pennsylvania), Thomas Suozzi (D-New York), Peter Welch (D-Vt.), Rodney Davis (R-Illinois), David McKinley (R-W.Va.), Pete Visclosky (D-Indiana), Collin Peterson (D-Minnesota), Chuck Fleischmann (R-Tennessee), Raul Grijalva (D-Arizona), Stephen Lynch (D-Massachusetts), Randy Weber (R-Texas), Mark Takano (D-California), Andre Carson (D-Indiana), and Josh Harder (D-California). It has also received support from the News Media Alliance, National Newspaper Association, America’s Newspapers, Report for America and the Rebuild Local News Coalition.

“As journalists are on the front lines reporting on the coronavirus crisis, as well as the public unrest on our nation’s streets following the death of George Floyd, the public’s demand for local news has never been greater,” David Chavern, president and CEO of News Media Alliance, said in Thursday’s release announcing the proposed legislation.

Matt Adelman, president of the National Newspaper Association, added: “If there is anything worse than losing journalists in a pandemic, it is losing journalists during a pandemic in an election year.”

Beyond Thursday’s effort, other initiatives watched closely by the news industry include a non-newspaper-specific employee retention tax credit within the $3 trillion Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act. Newspapers view this second economic stimulus package — a sequel to the $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act passed last March — as vital to maintaining cash flow and avoiding further staff cuts into early 2021.

The U.S. House of Representatives passed the HEROES Act two months ago but has been held up in the Republican-controlled Senate. Majority Leader Mitch McConnell dismissed the HEROES Act as a “liberal wish list” and vowed the substance of the bill would be re-crafted by Republicans with full Trump administration support and input by Democrats.

Sen. Maria Cantwell, D-Wash., has been crafting a bipartisan grant program to preserve and increase local newspaper employment nationwide. The grants would be distributed equitably based on population.