Welcome to Email News: Column: California provides tax breaks to Hollywood. Why not struggling news outlets?

September 14, 2026 | View in browser

By George Skelton

Capitol Journal Columnist

President Trump and the Republican Congress have unintentionally provided California state government with the financial means to subsidize — help save — endangered local news reporting.

Now it’s up to Gov. Gavin Newsom to capitalize on the unanticipated gift.

He can sign or veto legislation to end state tax breaks for large corporations paying top executives $1 million-plus salaries and, instead, provide tax breaks for struggling California news outlets employing local reporters.

The state legislation would conform California law to a little-known provision of Trump’s “Big Beautiful” tax bill that eliminated corporate deductions for execs’ compensation exceeding $1 million.

California newsrooms — print, broadcast, digital — would receive an estimated $43 million in tax credits for employees’ wages. There’d still be a net $15 million left over for a small state revenue boost.

I’ll admit to feeling a bit squeamish about this.

First, it’s a conflict of interest, arguing that a governor — whom my colleagues and I write about often — should shovel public dollars into our profession.

Second, why should state government and taxpayers be asked to subsidize a private enterprise that’s flailing in the marketplace? Especially one that prides itself in being an impartial watchdog over government actions and politicians’ behavior. The dog shouldn’t be begging for food from the critters it watches.

Well, one answer is that state government provides tax breaks for lots of interests, including Hollywood movie studios. We’re allotting $750 million annually in tax credits for films produced in California.

And there’s a bill on the governor’s desk to offer $100 million annually in tax credits for post-production work, such as editing, sound mixing and visual effects.

That’s all fine. What would California have become without a healthy Hollywood? I don’t want to imagine.

Newsom also recently provided $3,500 rebates to first-time electric vehicle buyers, benefiting Tesla and other EV makers. It was “investing in our future,” the governor explained.

OK, but subsidizing local news reporting is investing in democracy. Robust coverage of city halls, school boards, Sacramento politicians and the like is essential for self-government.

And that journalism is in free fall all across America as exploding technology and social media opportunism have altered news consumption, mostly bypassing local communities and often spewing misinformation.

So this legislation, AB 2222 by Assemblyman Christopher Ward (D-San Diego), reaches far beyond just helping the troubled news industry. It’s about more than providing media outlets with financial incentives to retain and hire local reporters. It’s bolstering democracy.

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Independent journalism is a pillar of democracy, providing citizens with reliable, fact-based information about how their elected representatives are performing their duties, fulfilling their campaign promises and cozying up to special interests.

You’re not going to glean that information from the politicians. You’re going to get mostly self-serving spin — government propaganda — whether it emanates from the White House, the state Capitol or the local mosquito abatement district.

That’s why the nation’s Founders protected press freedom in the Constitution’s 1st Amendment.

Thomas Jefferson famously wrote: “Were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to prefer the latter.”

Of course, that was early in Jefferson’s political career, before he became vice president and later president. He ultimately turned into a harsh press critic. For example: “Nothing can now be believed which is seen in a newspaper. Truth itself becomes suspicious by being put into that polluted vehicle.”

Jefferson, like countless politicians ever since, apparently carried a huge chip on his shoulder because of reporting on his job performance that ticked him off.

Newsom is a master at attracting friendly national news coverage, especially on cable TV. But he naturally shudders at more critical coverage by Sacramento beat reporters.

As of this writing, the governor hadn’t publicly disclosed how he feels about the local reporter tax credit bill.

His finance department, which crafts the state budget, opposed the measure when legislators were considering it. The state would “not [be] receiving any incremental economic benefit to justify the expenditure,” its analysis read.

Again, even if that were true, citizens and democracy would benefit.

Also, the analysis contended, the tax credit would likely “provide windfall benefits” for news media owners “rather than encourage new hiring activity.”

That’s not quite accurate. Anyway, it could discourage layoffs and save reporters’ jobs.

Late last week, the McClatchy newspaper chain — owner of the Sacramento Bee and several medium-sized California papers, plus dozens across America — announced massive newsroom layoffs.

Since 2002, more than 12,000 local journalism jobs have been lost in California, according to the bill’s sponsor, the advocacy group Rebuild Local News. More than 3,500 newspapers have closed nationwide.

Many communities have become “news deserts.”

When that happens, fewer citizens turn out to vote, tax money gets spent more carelessly and political corruption increases.

Under the legislation, California media outlets — big and small — would be granted modest tax credits for each employee covering state and local news. There’d be $20,000 for up to five full-time positions and $15,000 for each of the rest. On top of that, there’d be an additional $15,000 for every new full-time job that’s created. Part-timers would be entitled to $7,500.

“National news outlets would be excluded. So would partisan ‘pink slime’ sites controlled by political action committees,” says Matt Pearce, policy director for Rebuild Local News, a former Los Angeles Times reporter and newspaper guild leader.

It would be the most ambitious program of its kind in the country. New York, Illinois and New Mexico currently offer local news subsidies.

“It’s about civic infrastructure and the foundation of democracy. We’re teetering toward autocracy,” says former state Sen. Steve Glazer (D-Orinda), an ex-mayor who has long pushed for stronger local news coverage.

This bill won’t save local newsrooms. But it may give them breathing room while the big thinkers try to concoct a more profitable business model for democracy’s watchdog.