SACRAMENTO — Gov. Gavin Newsom on Wednesday signed a landmark bill that would give a financial boost to California’s struggling newsrooms.
Assembly Bill 2222 will create refundable tax credits for California local news organizations based on the number of journalists they employ. It passed through both houses. It marks an innovative yet controversial attempt to slow the decline of local journalism.
The bill, called the Community Newsroom Employment and Workforce Sustainability Act, works by assigning a “job retention credit” of $20,000 per journalist for up to five positions, and after that $15,000 for every additional journalist. Part-time positions will be awarded half-credits. It also stacks an additional $15,000 credit for each new hire to incentivize expanding journalist head counts.
The bill — believed to be the largest journalism relief plan in the U.S. to date — comes at a time of steep declines in local news outlets across the country. Many news consumers have turned their attention to social media for critical information, which has, at times, allowed misinformation to spread quickly.
During a news conference before signing the bill, Newsom spoke about what he called the “assault on the free press and the First Amendment … coming from Washington, D.C., and Donald Trump.” Trump last week was forced by a federal judge to temporarily reinstate press badges for CNN, MS NOW and Politico after he banned them from accessing the White House.
“It’s journalists that need to report those stories and local journalists that need to uncover and sort of peel back the facade if democracy is going 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 boosters. Backers said it could be a lifeline to local news organizations, many of which have struggled to maintain staffing levels over the last two decades.
California has lost more than 12,000 of its local journalists since 2002, according to nonprofit advocacy group Rebuild Local News. And almost 40% of all local U.S. newspapers have vanished, according to an annual report on the state of local news put out by Northwestern University’s Medill journalism school.
To pay for the credits, the bill would amend California’s tax code to align with a little-discussed component of President Trump’s “Big Beautiful” tax bill that expanded taxes on some companies by eliminating a deduction for executive salaries above $1 million annually.
It is common practice for the state to consider aligning its tax code with the federal structure to make filing taxes easier and administering them more cheaply. But California has not yet sought to adopt this federal tax change, a move which would increase tax revenue to the state.
The California Taxpayers Assn. and groups representing business interests such as the California Chamber of Commerce oppose the bill because it raises taxes on employers that they argue already face billions of dollars in new taxes.
They contend that the higher costs will be passed along to consumers.
The governor’s finance office issued an analysis opposing the bill for not including a cap on the tax credits, thus creating “unlimited fiscal liability to the state,” and said the bill mainly subsidizes existing activity rather than encouraging the creation of new jobs.
While speaking with reporters on Wednesday, Newsom acknowledged some of the concerns that have been raised about those who will receive benefits from the bill’s funds, specifically hedge funds and billionaire owners and outlets that he accused of spreading propaganda.
“It does subsidize those that don’t need to be subsidized,” he said. “We have hedge funds in this space. We have billionaires in this space. We have people that are profiteering in this space by gutting the newsrooms and extracting value out of the space that also are the beneficiaries.”
Newsom said he chose not to veto the bill because he believes its benefits outweigh the liabilities. He added that he hopes the Legislature and next governor can work to narrow down who benefits most from the legislation.
“We should not be subsidizing hedge funds,” he said. “We should be focused on where the need is the greatest, in my humble opinion, and I do think when you have no cap, the limitlessness of this … to some of the most well-heeled organizations, where now they simply could pull from this bill the benefits that they didn’t even ask for or need, is self-evident.”
In signing the bill, Newsom emphasized the role of journalism in uncovering scandal and wrongdoing.
“The L.A. Times to their credit did a big investigative piece on Bell, and people getting paid a million dollars in some cases, local government officials, a million damn dollars a year. No one would have known had it not been for local journalism,” Newsom said. “How many more Bells are out there, not just in this state, but all across the country?”
A similar credit model, with certain caps, already has been enacted in New York, Illinois and New Mexico. But supporters of the legislation said California’s bill could be a model for the nation.
“I am just overjoyed,” said Matt Pearce, policy director for the national nonprofit Rebuild Local News, which sponsored the bill. Pearce, a former Los Angeles Times reporter, said he’s seen firsthand 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 the funds will help newsrooms continue to produce or even increase their journalism.
“If you lay people off, you’re going to get less money. If you hire people, you get more money,” he said.
Charles Ford Champion II, president and chief executive of the California News Publishers Assn., told The Times he was “delighted” that Newsom signed the bill, but he took issue with the suggestion that funding should be limited to certain news organizations.
CNPA was among a broad coalition of labor unions, state press associations, journalism support organizations, independent and nonprofit publishers and others that supported the bill.
“Ownership of the paper, whether it’s owned by a billionaire or whether it’s owned by a small entrepreneur, should not determine whether or not the government is going to allow for tax credits,” Champion said. “When journalists go out on the street their capitalization isn’t what they worry about. They worry about their beats. They write stories and editors edit the stories and they are published without interference of owners.”
Assemblymember Christopher M. Ward (D-San Diego), the bill’s author, said the governor’s signature shows California’s commitment to the 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 doing this essential work are worth investing in,” Ward said in a statement. “This historic investment will help keep reporters in our communities, strengthen nonprofit and public media, and ensure Californians continue to have access to trusted, fact-based local news.”
