Opinion: Saving local news could also save taxpayer money

By Steven Waldman

Zak Podmore did not bring down a corrupt mayor. He did not discover secret torture sites or expose abuses by a powerful religious institution. But there was something about this one article he wrote as a reporter for The Salt Lake Tribune in 2019 that changed my conception of the value of local news.

Podmore, then a staff journalist for the Tribune and a corps member of Report for America, a nonprofit I co-founded, published a story revealing that San Juan County, Utah, had paid a single law firm hundreds of thousands of dollars in lobbying fees. Among other things, Podmore found that the firm had overcharged the county, the poorest in the state, by $109,500. Spurred by his story, the firm paid the money back. Perhaps because it didn’t involve billions of dollars, but rather a more imaginable number, it struck me: In one story, Podmore had retrieved for the county a sum that was triple his annual salary.

Steven Waldman

I’ve grown used to talking about the threat that news deserts pose to American democracy. After all, the whole concept of democratic self-government depends on the people knowing what public officials are up to. That’s impossible without a watchdog press. Researchers have linked the decline of local news to decreased voter participation and higher rates of corruption, along with increased polarization and more ideologically extreme elected officials. At this point, I can make high-minded speeches about this stuff in my sleep, with Thomas Jefferson quotes and everything. Recently, however, I’ve come to realize that I have been ignoring a less lofty but perhaps more persuasive argument: Funding local news would more than pay for itself.

Unlike other seemingly intractable problems, the demise of local news wouldn’t cost very much money to reverse. Journalists are not particularly well compensated. Assuming an average salary of $60,000 (generous by industry standards), it would cost only about $1.5 billion a year to sustain 25,000 local-reporter positions, a rough estimate of the number that have disappeared nationwide over the past two decades. That’s two-hundredths of a percent of federal spending in 2022. I personally think this would be an amount well worth sacrificing to save American democracy. But the amazing thing is that it wouldn’t really be a sacrifice at all. If more public or philanthropic money were directed toward sustaining local news, it would most likely produce financial benefits many times greater than the cost.

What do government officials do when no one’s watching? Often, they enrich themselves or their allies at the taxpayers’ expense. In the 2000s, some years after its local paper shut down, the city of Bell, California, a low-income, overwhelmingly Latino community, raised the pay of the city manager to $787,637 and that of the police chief to $457,000. The Los Angeles Times eventually exposed the graft, and several city officials ended up in prison. Prosecutors accused them of costing taxpayers at least $5.5 million through their inflated salaries. These salaries were approved at municipal meetings, which is to say that if even one reporter (say, with a salary of $60,000) had been in attendance, the city might have saved millions of dollars.

Sometimes the work of journalists prompts government investigations into the private sector, which, in turn, produce fines that go into the public’s bank account. After the Tampa Bay Times found that a battery recycler was exposing its employees and the surrounding community to high levels of lead and other toxins, regulators fined the company $800,000. A ProPublica investigation into one firm’s questionable mortgage-backed securities prompted investigations by the Securities and Exchange Commission, which ultimately assessed $435 million in fines. A review of more than 12,000 entries in the Investigative Reporters and Editors awards found that about one in 10 triggered fines from the government, and twice as many prompted audits.

In other cases, local-news organizations return money directly to consumers by forcing better behavior from private institutions. MLK50, a local newsroom in Memphis, teamed up with ProPublica to report that Methodist Le Bonheur Healthcare had sued more than 8,300 people, many of them poor, for unpaid hospital bills. In response, the faith-based institution erased nearly $12 million in debt.

Of course, most journalism does not convert quite so immediately into cash on hand. The impacts may be enormous but indirect. One study of toxic emissions at 40,000 plants found that when newspapers reported on pollution, emissions declined by 29 percent compared with plants that were not covered. The study did not track the ripple effects, but it stands to reason that residents in the less polluted areas would have fewer health problems, which in turn would translate to lower medical costs and less lost work time. Another study, by the scholars Pengjie Gao, Chang Lee, and Dermot Murphy, looked at bond offerings in communities with and without local news from 1996 to 2015. It concluded that for each bond offering, the borrowing costs were five to 11 basis points higher in the less covered communities. That translated to additional costs of $650,000 per bond issue, on average.

One academic tried to track the economic effects even further downstream. In his book Democracy’s Detectives: The Economics of Investigative Journalism, Stanford University professor James Hamilton looked at a series by KCBS in Los Angeles that uncovered a flawed restaurant-inspection program. The exposé prompted Los Angeles County to require restaurants to display their inspection scores, which in turn led to a 13.3 percent drop in L.A. County hospital admissions for food poisoning. Hamilton estimated a savings of about $148,000. In another case study, Hamilton analyzed a series by the Raleigh News & Observer that found that, because the state criminal-justice system didn’t adequately keep track of those under supervision, 580 people on probation in North Carolina killed someone from 2000 to 2008. After the state implemented reforms, murders committed by people on probation declined. Applying the statistical “value of human life” used by the U.S. Department of Transportation, Hamilton concluded that society saved about $62 million in just the first year after the policy changes. The series cost only about $200,000 to produce.

Ideally, investment in local news would come from the federal government, which has more freedom to think long-term than cash-strapped states and municipalities do. The Rebuild Local News Coalition supports legislation that would provide a refundable tax credit for news organizations that employ local reporters, and a tax break for small businesses that advertise in local news. A new version of the bill was just introduced in the House of Representatives by Republican Claudia Tenney and Democrat Suzan DelBene. Civic-minded philanthropists focused on high-impact donations should also put money into local news, given the likely societal returns. It’s impossible to quantify exactly how much money would be generated for government and consumers by restoring the health of local news. But it’s nearly as hard to deny that the investment would pay off handsomely. And the saving-democracy part? Well, that’s just gravy.

Steven Waldman is president opf the Rebuild Local News Coalition, which includes the Institute for Rural Journalism and Community Issues, which publishes The Rural Blog.