A state bill that will provide significant financial support for local news organizations was passed by the California Legislature on Aug. 31 and awaits consideration by Gov. Gavin Newson.

Assembly Bill 2222, which was authored by Assemblyman Chris Ward (D-San Diego), will provide approximately $40 million in refundable tax credits to local news organizations to retain staff and expand coverage. Known as the Community Newsroom Employment and Workforce Sustainability Act, or Community NEWS Act, Ward said the tax credits are necessary during a period when many community news organizations are struggling.

The bill will provide a $20,000 tax credit for up to five full-time journalists, and $15,000 for each additional full-time journalist employed by the organization. Tax credits of $7,500 will be provided for part-time journalists, and outlets that increase staff with new positions could receive an additional $15,000 per new employee.

The tax credits would be offset in the state budget by redirecting money from corporate tax deductions for executive compensation over $1 million to news outlets.

“I am elated at the passage of AB 2222 and am eager to see Gov. Newsom sign the bill,” Ward said. “At a time when the Trump administration and big tech companies are eating into the legitimacy of journalistic integrity and the bottom line of our local newsrooms, I am delighted to know my colleagues believe that keeping our local newsrooms open is a priority for this state. Our local news organizations have regularly been at the forefront of disasters that hit our communities and provide critical, often free to access and fact-checked coverage of legitimate issues. I urge Gov. Newsom to sign this legislation and prove where the Trump administration is lacking in integrity, California can step up and keep its journalistic independence free from influence.”

Newsom has until the end of September to either sign or veto the bill. A spokesperson for the governor’s office said Newsom does not comment on legislation pending his consideration.

AB 222 has support among local lawmakers.

“A healthy democracy relies on strong journalism that can maintain accountability and keep residents informed. However, local reporting has faced significant challenges across the country, risking our ability to access reliable information about important developments,” California Sen. Ben Allen (D-Santa Monica) said. “I’m glad California is taking a step to uplift the newsroom and protect civic engagement simultaneously.”

The California News Publishers Association also backs AB 2222.

“We are cautiously optimistic,” CNPA president and CEO Charles F. Champion said. “It’s the most sizable impact that we’ve seen so far, but work still needs to be done. We are not done yet.”

Champion added that opposition to the bill may come into play.

“This is a revenue neutral, or actually revenue positive event for the state. But there are people that are in opposition to it because of the $1 million salary cap that pays for this, removing deductions for any employee making over a million dollars. As you might imagine, there are a lot of tech companies that are paying their people millions of dollars and are taking those deductions so they don’t pay state tax on those individuals,” Champion said. “This closes that tax break for them in order to pay for this. So, I’m not entirely sure what [Newsom] is going to do. Generally speaking, when the governor doesn’t want to see these things and be the bad guy, he basically gets them stopped earlier than this. So I’m cautiously optimistic.”

The California Taxpayers Association opposes AB 2222, claiming it will increase taxes on publicly traded companies by limiting the tax exemption over $1 million, and that companies will pass the costs on to consumers.

“AB 2222 proposes to raise taxes at a time when the state’s residents are rightly concerned about affordability. California has already increased taxes on employers this year by billions of dollars … and this bill would add to this burden by increasing taxes on publicly traded companies by tens of millions of dollars more,” read a statement from the California Taxpayers Association. “Financing an industry-specific tax credit with a tax increase on an unrelated group of taxpayers is an unsound way to budget. It ties an ongoing program to a narrow and volatile revenue source that fluctuates with executive compensation decisions, and bypasses the scrutiny that would accompany a direct appropriation. If the Legislature believes support for local journalism warrants investment, that decision should be made through the budget process and weighed against other spending priorities, not funded by singling out one class of employers for higher taxes.”

Champion added that more needs to be done to support local journalism beyond AB 2222.

“The problem that the government is attempting to solve is far greater than the solution that they have offered. It is a good step in the right direction, but there is still quite a bit that needs to be done, and not necessarily by the government itself,” Champion said. “There are other players – the technology companies – that should be stepping to the plate in a greater manner in order to solve the problem that they, in essence, have created.”