(The Center Square) – Legislation is being considered in the Washington Legislature to benefit local journalism by replacing an existing tax break. According to official estimates, the cost in foregone government revenues would climb from $423,000 per biennium to $3.9 million in the same period with more to come later.
The legislation, dubbed SB5199, was proposed by state Sen. Mark Mullet, D-Issaquah, at the behest of Washington State Attorney General Bob Ferguson, who testified for the bill.
“I know we all agree that local journalism plays a critical unique role in the fabric of our society. It provides jobs in every county of our state,” said Ferguson in a hearing before the state Senate Business, Financial Services, Gaming & Trade Committee on Jan. 12. “It also serves an important function in protecting our democracy.”
If enacted, it would replace a law that has been in place for over a decade. The current regime grants newspapers a preferential business and occupation tax rate. According to the state auditor, that adds up to about $423,000 in tax relief over the 2022-2024 biennium.
“The preference has been in place for 12 years, and according to the report, the newspaper industry has continued to lose revenue and jobs,” said legislative staffer Clint McCarthy in the same hearing.
That preferential rate expires on Jan. 1, 2024. Rather than simply let it expire, the proposed replacement legislation would create a tax deduction increasing employer tax-saving nearly 10-fold, according to the Washington State Department of Revenue.
The DOR report concluded that SB5199 would result in benefitting employers to the tune of $3.9 million and $5.9 million in the 2023-2025 and 2025-2027 bienniums respectively for a total of $9.8 million.
This order of magnitude increase led the bill’s sponsor Mullet to say during the hearing, “It seems like we will have to work with the Department of Revenue to define that.”
With the new bill, the definition of eligible media organizations would expand to include digital content with the following restrictions: The news organization must publish at an interval not longer than once every three months, have between two and fifty employees, feature primarily written content, and be available exclusively in electronic format.
“We’re just trying to expand it to make sure it includes some of the other legitimate online newspapers as well, not the ads you might get for your local grocery store every week, but the ones that are actual journalism,” Mullet said.
